Why universities license degrees to foreign colleges

Transnational education has become big business for UK universities. The latest data from the Higher Education Statistics Agency, HESA, reveal that the sector has more international students studying wholly offshore than on universities’ home campuses. The UK government has, in turn, become enthusiastic about the potential growth in this market.

Transnational education offers universities a way of reaching the increasing number of foreign students who want a UK degree, but who are unable or unwilling to travel to the UK for study.

Better yet, transnational education breaks the link between conventional ‘export education’ and student immigration, which is currently so politically controversial in the UK, allowing universities to grow international enrolments without the cross-border movement of students.

International students on-campus vs studying wholly overseas

Of the plethora of ways in which universities can teach foreign students in their own countries, the best known is distance learning.

Although the emergence of massive open online courses, or MOOCs, opens up the possibility that anyone with an internet connection can enrol at a major US university, distance learning has been around for decades in the guise of correspondence courses.

Indeed, the University of London has been providing international distance learning degrees since 1858, just a decade after Samuel Morse transmitted the world’s first telegraph message.

Dominating distance learning as a way of reaching foreign students, and dwarfing the high-profile offshore campuses of some Russell Group universities, is what one critic termed the ‘McDonaldisation’ of higher education.

Like a classic industrial franchise, many UK universities license a third party – usually a private, for-profit company – to deliver their degrees through a foreign college.

In 2010-11, more than 330,000 foreign students were enrolled on UK degrees through such franchisees, compared with 94,000 taking courses by distance learning and 10,000 students enrolled at satellite campuses like the University of Nottingham Malaysia.

There are many flavours of university licensing, just as there are in the corporate world.

Like McDonalds, many universities require their partners to deliver a curriculum and assessment regime that is as close as possible to the same degree on their home campus – the ‘Big Mac should taste the same in Beijing as in Birmingham’ principle.

In other cases, the university may evaluate a degree designed by the foreign partner and, if it deems it to be of acceptable quality, allow the partner to market, teach and award the qualification as a degree of the university.

Export education

Licensing degrees in this way is widely assumed to be a natural extension of export education. With public funding growing scarcer, earning revenue from international tuition provides a welcome route to diversifying and growing revenue streams.

The annual value to UK higher education of (non-European Union) international students on campus exceeds £2.5 billion (US$3.9 billion) in tuition fee income alone.

But for every student who shivers on a UK campus, there are many more who cannot come to the UK for study, either because they cannot afford the cost of tuition and board or because they are deterred by distance or cultural or religious factors.

Licensing degrees to local partners opens up this new market. Local colleges can recruit local teachers at local salaries, unlike their university partners, which need to hire expensive, highly trained academics to support their research as well as teaching.

Local colleges can focus on high-demand courses in low-cost subjects like business and management, avoiding the heavy capital costs of a traditional university campus with laboratories and research libraries.

Offering licensed degrees at much lower tuition fees, which students can study in their own countries, creates a new source of demand for UK degrees and, after deducting local costs and service fees, potentially leaves a healthy royalty for the universities involved.

The government’s policy focus on the importance of transnational education, the vast numbers of students involved and the growing professionalisation of university management, all point to licensing being driven by an overwhelmingly financial imperative.

But a recent study published in the Higher Education Quarterly, “Why do English universities really franchise degrees to overseas providers?”, suggests there may be other motives operating behind the scenes.

The study finds that licensing is a predominantly post-92 university phenomenon, with most ‘redbrick’ universities shying away from the principal-agent risk inherent in allowing a third party to recruit to, teach and-or assess a degree under the university’s badge.

Licensing developed in the 1990s in a unique set of circumstances. The post-92 universities gained degree-awarding powers in 1992 after years of being validated centres of the Council for National Academic Awards.

Unlike their redbrick counterparts, the post-92 universities had sophisticated quality assurance systems and were expert at designing curricula and assessment regimes for external audit. It was a short step from being a validated centre to becoming a validating institution.

The post-92 universities were also keen to take advantage of the growing market for international students and, as private companies began to court the ‘new’ universities to allow them to offer their degrees, licensing offered a quick and effective way of internationalising a university and raising its profile in new, otherwise inaccessible markets.

So far, so good.

But overlaying this dynamic was another feature of the 1990s, the end of the Cold War and the availability of huge sums of European Union funding for UK universities to work with former Soviet bloc counterparts and develop their curricula.

At a time when most university academics regarded themselves as providers of public goods, this created an atmosphere in which international partnerships, including licensing arrangements, were seen primarily as development aid projects, with any profit a happy by-product.

Strong affiliations

The study also finds that, a decade and a half later, many of the participants interviewed across several universities felt that licensing arrangements had been maintained for extended periods for a range of non-financial motives.

University staff developed strong affiliations with their colleagues in the partner colleges and visiting the partners provided a range of benefits from staff development, building a spirit of camaraderie among staff and, at worst, a welcome break from day-to-day teaching.

Many champions of licensing passionately believe they are supporting the educational development of the countries in which they operate.

Overall, this study challenges the notion that licensing degrees has been an aggressive strategy of market penetration by UK universities, which has the scope to be – in Universities Minister David Willetts’ words – “one of Britain’s great growth industries of the future”.

Instead, it finds that licensing has often been driven by a desire to be internationally connected and engaged in the educational development of other countries, and has been sustained over an extended period by enthusiasts with personal loyalties to colleagues thousands of kilometres away, reinforced by visits and longstanding friendships.

In the end, licensing might be ‘big business’, but while it may not be good business in financial terms, it is also not the money-grubbing cultural imperialism feared by so many of its critics.

* Nigel Healey is pro-vice-chancellor (international) at Nottingham Trent University, UK.