GLOBAL: Growing global role for private institutions

The potential role of the private for-profit sector in global higher education was highlighted at a forum in Canada last week, where 120 university and corporate leaders from more than 20 countries met to explore how best to expand higher education across international borders.

Both university leaders and representatives from corporations partnering with universities said that while a negative perception of for-profit institutions and private capital in higher education persists, the private sector is playing an important role in increasing education opportunities for non-traditional students and students in developing countries.

"It used to be that private institutions weren't willing or able to offer the quality that was needed, but that is changing," said Dr William Lawton, Director of The Observatory on Borderless Higher Education, which hosted the forum in Vancouver.

"In India, for example, the private sector is filling in where the public sector can't." More than half of post-secondary students in India study at private institutions.

Dr Joseph D Duffey, Senior Vice-president of Laureate International Universities Network, agreed that private capital is fueling growth in higher education in countries where governments are not responding to education needs through the public system.

The labels 'for-profit' and 'non-profit' are becoming increasingly blurred, and ultimately distract from making progress on regional education goals, Duffey said.

"Non-profit universities aren't always non-profit − they've built sizable endowments − and governments can't afford to expand education. We need to look for any solutions that work for students, not just faculty."

Dr Svava Bjarnason, Senior Education Specialist with the International Finance Corporation (IFC), believes that the higher education community should be more open to the private sector. "It's about not being imprisoned by one's perspective, by saying public equals good, private equals bad," she said.

Having been in the public system before working for the IFC, which is the corporate arm of the World Bank, Bjarnason's own view of the role of the private sector has changed. "I have much different insight now," she said.

"What you hear is, 'Does the private sector really offer the same level of quality?' Well, yes, in the institutions [the IFC] would invest in. But is the quality there in all of the public institutions here in Canada or across the world? I would argue, not so much."

Bjarnason identified a number of global trends. Governments around the world are beginning to recognise the value of the private sector to meet demand and increase access. The sector is continuing to grow, especially in Asia and Latin America.

In countries with a well-established private sector, small institutions are being consolidated and larger institutions are pursuing initial public offerings. The sector is also professionalising as international groups like Laureate International Universities Network and public institutions invest in foreign universities or open branch campuses.

The growth of for-profit higher education institutions in the United States is an interesting case study of the results of unleashing private funds in higher education.

While for-profit institutions are not new in the United States, their scale, nature and ambition have changed significantly in the past 15 years. For-profit schools increasingly offer degree and graduate programmes, while they previously focused primarily on non-degree programmes, and are now more likely to be publicly-owned than family-owned.

Richard Garrett, Managing Director of the for-profit research group Edventures, has closely studied the rise of for-profit institutions in the United States. They typically focus on career training and target non-traditional students, he explained.

"These schools are asserting that working adults have essentially been neglected by the public system, despite a century of continuing education, distance education, outreach and evening degrees." The institutions believe they are offering a valuable alternative by treating their students like consumers and prioritising convenience.

Critics of private post-secondary education counter that enrolment in these schools is driven by marketing rather than value.

"They worry that this is higher education stripped of its roundedness or its liberal nature," Garrett said. They see for-profit schools as being second-rate. Media scrutiny has focused on the fact that 44% of federal student loan borrowers who attended for-profit institutions default on their debt.

Assessing the actual success of for-profit universities and colleges is difficult. Although retention and graduation rates are not tracked, the growth of the sector suggests that they are providing a service valued by students. Between 1997 and 2010, the number of students enrolled in for-profit schools increased by 440%, while the overall higher education system only grew by 10% in the United States.

The significant impact of the for-profit sector can be seen most clearly by looking at the growth in enrolments of adult undergraduate students (those over the age of 25), according to Garrett.

Since 1987, the number of adults enrolled in four-year programmes at public institutions has not significantly grown. While enrollment at private non-profits grew modestly, for-profit institutions demonstrated a dramatic shift. More adult undergraduate students now attend for-profit schools than private, non-profit schools.

"Dedicated programming, services, marketing and positioning has definitely exposed a demand that was not previously thought to be there," Garrett conclude.