UK warned of risks in growing private higher education

The growth of private higher education provision, especially via for-profit providers, requires better regulation to reduce the “often considerable” risk to students, according to a six-country study.

The study found that while private provision extended opportunities to study, there was little evidence of improvement in the quality of provision and warned that the risks for students were frequently very significant.

The study, The Entry and Experience of Private Providers of Higher Education in Six Countries, published by the Centre for Global Higher Education at UCL Institute of Education, looked at the emergence and nature of the private higher education sector in the United States, Australia, Germany, Poland, Japan and Chile.

The study was requested by the UK’s Department for Business, Innovation and Skills – the government department responsible for higher education until the new Prime Minister, Theresa May, moved it back into the Department for Education in July.

It was conducted in March and April this year by Dr Stephen Hunt, UCL Institute of Education, Professor Claire Callender, Birkbeck, University of London and UCL Institute of Education, and Professor Gareth Parry, University of Sheffield.

According to Callender there are some important lessons from the report for the UK’s higher education system, particularly in the light of the White Paper and the Higher Education and Research Bill currently going through parliament.

There has already been a shift towards market conditions via the raising of tuition fees and the removal of student quota controls in England, and the planned further reforms will encourage the entry of new and alternative higher education providers, with the possibility that this will be at the expense of current providers.

Callender warned: “There is limited evidence from the countries we studied that increasing higher education competition and expanding the private sector has improved the quality of provision, contributed to innovation, or driven down prices in either the public or private sectors.

“Indeed, relative to the public sector, the quality of provision, especially in the for-profits, is often found wanting, while tuition fees are usually higher. This suggests the need for much tighter regulations in the UK for all private providers, and not just those receiving government funding.”

Common characteristics

The study shows that most private providers in the six countries – the US, Australia, Germany, Poland, Japan and Chile – rely on tuition fees as their main source of income, apart from some cases where they also receive public funding.

They are able to expand through students being given access to state financial support. But the reliance on tuition fees, especially among for-profit providers, makes them vulnerable to the consequences of fluctuating demand, the report said.

“This can mean being forced to close when demand for courses falls and can have serious educational and financial consequences for students, who risk being left in limbo,” the report says.

There were common characteristics to private providers in all six countries. They tend to be teaching-oriented; offer low-cost subjects in the humanities and social sciences, especially business, law, computing, hospitality and tourism, and management; they tend not to focus on research; and they are generally less prestigious, except for most not-for-profits in the US.

On the plus side, according to the report, they have played a key role in expanding higher education participation, often for those from more disadvantaged or lower income backgrounds. At the undergraduate level, students from lower socio-economic backgrounds tend to populate private institutions in Japan, Chile and Poland, and have a significant presence in the for-profit providers in the US.

However, tuition fees charged by private institutions tend to be higher than those charged in public sector higher education institutions. In Japan, Chile and Germany, the study found, the greatest costs of obtaining a degree tend to fall, therefore, on those with the least resources.

Where it becomes difficult to compare private provision between countries is in the level, nature and rigour of state regulation, accreditation regimes and quality assurance, which varies from one country to another.

Similarly, access of private providers to government funding and their students’ access to government financial support varies from country to country, as does the level and scale of misuse or abuse of public funds arising from that access.

Auxiliary role

The researchers noted differences between the development, role and nature of private provision between two sets of countries, the US, Australia and Germany on the one hand, and Poland, Japan and Chile on the other.

In the former group, only a minority of higher education institutions are private and only a minority of undergraduate students attend private institutions and the countries achieved mass higher education participation via the public sector. In the latter group, however, private providers have been key to enabling massification.

In the US, Australia and Germany, private providers play an auxiliary role. They have the advantage that they can swiftly provide courses to meet unmet demand and deliver them in flexible ways, such as online or in the evening and over the weekend.

However, for-profit providers in the US – as opposed to the prestigious non-profit private providers – and private institutions in Australia and Germany tend only to offer low-cost vocationally oriented courses or niche subjects, delivered in colleges rather than universities.

In these three countries private providers are widening access by having low entry requirements. According to the report they therefore “attract significant numbers of individuals previously excluded from higher education and have opened up opportunities for those who missed out on higher education when they were young (second chancers)”.

However, in Australia for-profit institutions – as opposed to all private providers – have contributed “relatively little” to widening higher education participation for disadvantaged and low-income groups compared with the public sector.

“This is because private for-profit providers are more expensive than public sector providers, concentrate on recruiting international students paying full fees, and lack the resources and infrastructure to support disadvantaged and academically weak students,” the report says.

Misappropriation of funds

In the US in particular, but also Australia, there have been allegations of misappropriation of funds by private providers. One complaint is that for-profits have used aggressive marketing and recruitment methods to attract students who qualify for federal and state aid but who have little prospect of successfully completing their course.

"Such inadequately prepared recruits… are more likely to fail their courses, drop out of higher education without securing a qualification and to be left with large student loan debt,” the report says.

“These outcomes bring into question the idea that greater competition, and private provision in particular, improves quality.”

In the US the credibility of for-profits has been questioned in terms of the quality of the teaching, high non-completion rates, high student loan default rates, and the labour market value of qualifications, the report says.

“In Australia, there is no evidence to suggest that competition between universities has had a positive impact on quality and innovation,” the report adds.

Key role in massification

By contrast, in Poland, Japan and Chile private provision has played a “very important role” in the realisation of mass higher education participation. In all three countries the majority of higher education institutions are private and in Japan and Chile the majority of higher education undergraduate students study in private institutions.

In those two countries, and to a lesser extent in Poland, the most prestigious ‘free’ or government-subsidised public sector higher education is inaccessible to most potential students. These students have to rely on expensive private, but less prestigious, provision. The cost can be significant and falls on the student or their family, the report says.

In all three countries the key role of private higher education has been to absorb the rising demand that national or local governments have been unable or unwilling to meet. But in Chile and Poland the credibility of private higher education has been questioned in terms of accreditation, the quality of teaching, high non-completion rates, and the value of qualifications.

The report cites 40% dropout rates from Chilean universities due to the high cost of tuition fees and widespread discontent among students which has led to protests and social unrest and demands for an end to tuition fees, increased public funding, better quality and an end to profit-making.

In responding, the current government has gone as far as to offer free universal undergraduate education, although so far it has only been able to extend free participation to the poorest 50% of families and since this group is the least likely to achieve the necessary qualifications to gain a place in higher education, the take-up is expected to be only 17% of the 1.2 million student population, the report says.

Lessons for the UK

The study draws conclusions on the lessons for the UK and notes a series of trade-offs, in particular:
  • • between regulation and quality assurance regimes and allowing private providers the ability to respond swiftly and flexibly to changing demand; and

  • • between aiding the expansion of private education by allowing students access to financial support and regulation to ensure these funds are not abused by providers.
The report says is difficult to assess the effectiveness of claimed advantages and strengths of the private sector without comprehensive data on dropouts, non-continuation, graduation rates and labour market outcomes for students, along with data on the socio-economic characteristics of students attending private institutions.

Nevertheless, it concluded that “there is very limited evidence to suggest that the presence of the private sector, in the countries studied, has improved the quality of provision or driven down prices in either the public or private sectors”.

“Indeed, relative to the public sector, the quality of provision in the private sector is often found wanting, while tuition fees usually are higher,” the report says.

The UK government will need to ensure that regulations are tighter in the UK to avoid facing similar issues.

The report underlines the need for a proper accreditation system for private universities, the results of which should be accessible and comprehensible, so that students can choose where to study based on clear information.

Australia, for example, has a national quality assurance system covering both the public and private sectors; and a revised framework will come into force in 2017.

Given that institutions’ marketing campaigns and websites are geared almost exclusively to increasing enrolments, prospective students need reliable information on which to assess the worth of an institution and the quality of provision on offer.

Private institutions must provide assurance that they not only represent value for money – both to students and the general public – but that they have a strong financial foundation and will not ‘fail’ should the demands of the market change.

Callender said that the Teaching Excellence Framework or TEF proposed for England in the higher education White Paper does attempt to give prospective students more information about teaching standards and their job prospects to help them make informed choices, but most private and for-profit higher education providers are likely to opt for the most basic status when registering.

The White Paper proposes different ways to become a higher education provider. ‘Registered’ providers, the lowest of three tiers of providers, is a basic status that allows those providers who do not want to access government funding to gain limited recognition, but they will not be obliged to provide information about their students and how they fare, and will not participate in and be rated under the TEF.

“In the broadest sense the TEF is really aimed at private and public providers that access government funding and whose students get government-funded student loans and support," said Callender.

"To protect students and to ensure they receive a good-quality higher education, we need to question whether all private or public institutions, not just those receiving public funds, should provide reliable comparable information about student satisfaction, the level of dropouts, the job outcomes for graduates and other indicators of quality,” she told University World News.

She added that internationally there is a difficulty in providing rankings that could adequately cover most private providers because they are generally teaching-focused institutions and it is very difficult to gather comparable information on teaching standards across countries.