Go compare – The emerging threat to higher education

Commodification is increasingly likely to be a word that universities need to recognise, understand and apply to their business planning as technology levels the playing field for international student recruitment.

Investopedia tells us that it means ‘a basic good used in commerce that is interchangeable with other goods of the same type’. When you put it alongside Clayton Christensen’s ‘jobs to be done’ and the growing availability of university comparison or application sites, it’s easy to see emerging comparisons with the marketplace for car insurance.

The point about the ‘jobs to be done’ approach is that it highlights that the purpose of buying a particular good or service is to ‘make progress in specific circumstances’. For most international students (and increasingly home students) the purpose of getting a degree is to get a job and to have decent career prospects.

Higher education may want students to study for love of a subject, but the harsh reality for a generation that is poorer than its parents is that this does not seem to be leading to what they need.

A world where outcome is all that counts

A 2013 report by Oliver Wyman shows that, in the United Kingdom, price comparison websites (PCWs) were securing 60% of new motor insurance policies after starting up just a decade before. It suggests that many people were content to make their purchasing decision in this way rather than studiously interrogate the terms and conditions of every company individually.

There is no doubt that the ability to consider price alongside any other factors was vital in the rise of such sites. Moreover, the report found that the reality was that many of the insurance products were virtually indistinguishable.

Choosing a university may not be exactly the same as choosing car insurance, but aggregator sites could present dozens of business and finance courses that all end with a degree from an institution.

In the case of the UK these are accredited by the Quality Assurance Agency for Higher Education (QAA). The QAA Quality Mark or Review Graphic shows that the provider has “met or exceeded the UK expectations for quality and standards in their QAA review”. In principle, every UK university with this seal of approval has degrees with equal status, but they offer them at significantly different prices.

The great and the good of higher education may be shaking their heads at this and thinking of Lord Darlington’s quote from Oscar Wilde’s Lady Windemere’s Fan about ‘a man who knows the price of everything and the value of nothing’. But, in a situation where the customer has access to alternatives at the touch of a button, they have the means to determine the price they are willing to pay for the outcome they want.

Lord Darlington’s remark was about the nature of a cynic and it is arguable that young people are increasingly sceptical about the value of higher education.

Price, grades and rankings as differentiators

Institutions will undoubtedly look for ways of distinguishing themselves, but there are very few that have the financial muscle or marketing wit to be able to do so on a global scale.

It was not unknown before the internet for lowly institutions to inflate the tuition fees of their courses to international students on the basis that ‘price is a proxy for quality’. Better accessibility to information and ubiquitous university rankings have put a halt to that ploy so there will be a need for different tactics.

Entry qualifications, which are often seen as a signal of a quality institution, could become a way of communicating quality. But it has become clear that, with the number of universities going SATs free in the United States and the propensity for UK universities to be very flexible with international students, this is shaky ground.

It’s made even more complex by pathway operations that will offer international students a route to entry based on getting the required language level and passing the pathway’s own academic tests.

It would also seem counterproductive for most institutions to try to distinguish themselves by having high tariff entry points on a comparison site. Student matching may be sophisticated, but there is limited scope for nuance about such a defining piece of information and losing volume is not something that most institutions can afford to do.

Trying to impress with output grades is an equally risky business given the potential for grade inflation and the ability of institutions to decide how many of their students get ‘good degrees’.

University ranking may offer a different sort of quality test for students and, whether you love them or hate them, they have become a popular measure of distinction. However, research from the 2020 QS International Student Survey, recently presented at the Universities UK International Higher Education Forum, showed that there is a significant mismatch between the way rankings are compiled and the perceptions of students.

Prospective international students were asked to rank, in order of importance, what they thought a university’s good ranking indicated about the institution.

The top result was that 72% believe graduate employment rate is the most important factor. This was even above the 69% mark for the qualification level of staff members at the institution and 64% for student satisfaction. How a university is perceived by employers was deemed important by 49%, above the 48% for the number of citations in academic journals.

In short, students believed that employment outcomes and employer views were more important than staff quality, student satisfaction and research publications.

Price, ranking and employability

In that context it is disappointing that no current rankings include international student graduate employment as an input.

Within the QS World University Rankings, “employer reputation”, which is not the same as graduate employment rate but could provide some indication, accounts for just 10% of the measure. The Times Higher Education World University Rankings 2021 methodology did not include any element related to international employability or graduate outcomes.

Government-mandated graduate outcomes data collected in the majority of countries are usually only published with responses from domestic students. As the vast majority of international students – in the UK the estimate is 85% or more – still return to their home country, it would be inaccurate and misleading to use them as a guide to international student employability.

With rankings publishers forming partnerships with agents, aggregators and other interested parties to gain international student eyeballs, it is important for them to pay more attention to this important area.

International student graduate outcomes are being collected by private organisations and would bring real added value that is demonstrably aligned with the aspirations of students willing to invest to study abroad.

Without incorporating this key metric, the rankings will remain more of a vanity contest between institutions than a relevant and useful guide to applicants.

Price, ranking and international student employability are likely to become the key measures of a university’s value proposition when degree information is simple to compare and most institutions are obliged to engage with the aggregator sites.

Being a commodity product means a race to the bottom on price if that is where the institution chooses to compete.

Rankings are fickle, difficult to manage and leave the institution’s fate in the hands of publishers looking to satisfy their own ends. This is a good moment to really focus on providing the student customer with what they want and find ways to enhance value by proving that the institution provides a route to employability.

Alan Preece is an expert in global education, business transformation and operational management and runs the blogging site View from a Bridge and Louise Nicol is founder of Asia Careers Group SDN BHD.