An Open Scandal

My old friend, Matthew Partridge, writes:

A few days ago the BPP College of Professional Studies became the first private university college in Britain since 1976. David Willetts, the minister in charge of universities, evidently believes that competition in higher education, and the incentive of profits, will cut costs and drive up efficiency.

Willetts also believes that experience elsewhere shows that the for-profit sector "helps widen access, focuses attention on teaching quality and promotes innovative learning methods, such as web-based distance learning".

However, the entrance of the for-profit sector into higher education provision raises some questions, especially regarding standards. Supporters of private higher education, such as the University of Buckingham vice-chancellor, Terence Keeley, point out that many of the world's top private universities, such as Harvard and Princeton, have extremely high standards.

Indeed, as Geoffrey Alderman notes, the private University of Buckingham has several well-regarded departments. But Harvard and Princeton, like Buckingham, are run on a not-for-profit basis. This means they can maintain high academic standards, even if it reduces their income from student fees in the short term.

In contrast, the only concern that commercial providers have is for their bottom line. The BPP is currently well regarded by law students, but less scrupulous providers may be tempted in the future to dilute entry and course standards, in order to keep the maximum number of students on their books. Such lowering of standards risks reducing the overall reputation of British higher education, penalising more responsible institutions and their students. The problem will be compounded if, as Vince Cable has hinted, the for-profit sector is granted access to public funding and subsidies.

The high dropout rates and low quality of the education offered by some American commercial providers, much of it at public expense, is fast becoming an open scandal. At the University of Phoenix, the largest for-profit provider of higher education in the US, nearly 17 out of every 20 students fail to finish an undergraduate degree within six years. Indeed, some institutions are so desperate for students that they are offering to provide substantial academic credit for "life experience", enabling people to receive part, or the whole of a degree, without entering a lecture theatre, taking an exam or writing an essay.

As well as having low standards, the for-profit providers have managed to leech public funds away from other universities. Although they only educate one in 10 students, they account for 25% of subsidies allocated for low-income students. This low-quality, high-cost model has resulted increased in criticism from Congress and the Obama administration. However, disillusionment with their model has extended beyond the centre-left. The maverick financier, Steven Eisman, who was the first to spot the mortgage crisis, declared in March that for-profit higher education was "as socially destructive and morally bankrupt as the sub-prime mortgage industry".

There is nothing intrinsically wrong with institutional diversity in higher education. In fact, handled properly, competition from the private sector could help existing universities, students and taxpayers. However, the American experience demonstrates that the for-profit sector requires a higher degree of regulation than the traditional model of provision.

If Willetts and Cable believe that private universities are a way of delivering higher education on the cheap, then they are mistaken. Not only could it destroy one of the best-regarded higher education systems in the world, it could also end up becoming an expensive nightmare for students, employees and taxpayers alike.