Tuesday, August 14, 2012

Fear and Loathing in British Higher Education: Pearson Enters The Market

If one has to put markers to trace the rapid change in the British Higher Education space, some watershed events will stand out: 

First, on 26th July 2010, it was announced that BPP University College of Professional Studies, a For Profit institution which was taken over by the US-based Apollo Group only a year earlier (August 2009), will be granted degree granting power, a first for private sector in nearly 30 years. This led to fierce criticism from the Public Sector Universities and Teachers' Unions alike, who criticised that this amounts to a foreign, albeit American, invasion of British Higher Education, which will lower standards and dumb down student experience. BPP came with a history of Professional Education, primarily in Law and Accounting, and there was resentment about blurring of boundaries between these disciplines and the walled garden of Higher Education, a preserve of the pure.

Then, in June 2011, A C Grayling, a prominent philosopher and atheist, announced the formation of New College of Humanities (NCH), an elite For-Profit college with a celebrity faculty line-up including Richard Dawkins and Niall Ferguson, modelled after elite US liberal arts colleges like Amherst. The degrees they offered were the popular University of London external degrees. The public university community was up in arms again, this time purportedly on the proposed fee tag of £18,000 a year. The objection was seemingly directed at the elitism of the school as most students will not be able to afford the fees (though British universities regularly charge overseas students from poorer countries a fee of £10,000 upwards a year). There was a sense of betrayal in one of their own going over to the dark side of For-Profit Education, and since then, Grayling's lectures and events have regularly been disrupted by angry protesters.

Finally, today, when the entry of Pearson into Higher Education was announced and somewhat dominated the BBC News. Pearson, publishing conglomerate which also owns the examinations body Edexcel, is on the other end of the spectrum from NCH, charging £6000 a year for undergraduate degree (which comes from Royal Holloway, an University of London college). Indeed, in between the BPP announcement and Pearson's entry, a number of other colleges, including the American-owned Regents College, were granted the degree granting status. Pearson's scheme was the most modest among all these events, as they only announced plans to admit 30 students each in two locations, London and Manchester, and instead of setting up a college, their courses were to be delivered within their offices. The idea is to build a strong linkage with work experience, allowing the graduates to work within Pearson's own businesses and elsewhere using their industry relationship. Surprisingly, though, this generated the maximum unease among the vested interests, with Million+ (an universities group) Chief Executive Pam Tatlow going public on BBC with her, rather unfounded, concerns about lack of regulation on private sector (not material, as Pearson is offering University of London degrees, and therefore, regulated) and about channelling the public subsidies to private organisations (again, irrelevant, as Pearson students will not receive student loans at this time). 

It was long anticipated that Pearson will enter the market, with the Universities minister being criticised about the amount of time he spent consulting private sector companies, including Pearson, on the eve of Higher Education funding reforms in 2011. One can argue that Pearson's entry was a rather damp squib compared to the expectations of a real disruptive entry, as it did not get the degree awarding power (and is unlikely to get it for five more years), and more surprisingly, they positioned themselves at the lower end of the price spectrum, trying to wean away students from universities by price incentive. The fact that they have put an innovative offering together, bolstered by a strong learning-at-work message, may be somewhat undermined by the lack of confidence in going for a higher price point. The risk is, indeed, of being perceived as a mickey-mouse degree provider, a popular British tag which they need to avoid at any cost. However, though they are providing a degree with greater prestige than the NCH (a full University of London degree rather than an external one), NCH may have trumped them in prestige at the outset simply due to their outrageous pricing.

So, the furore surrounding Pearson's entry to the market is a rather surprising. At this time, their market positions and offering threatens no one; the public universities have long been working with private providers and Further Education colleges based in the UK, and this is another such event. However, it surely seems that the British public universities, particularly the mass market ones which does not excel either in research or teaching, and are currently surviving by exploiting their advantageous positions derived through their charter, are really feeling the heat, and their reaction is not against Pearson, but the change of the system itself. Their position is that they don't like companies making profit out of education, though rent seeking is alright; and, also, while public money should not be spent helping students get a qualification from one of these private institutions which seek to connect education with work more closely, it should be given out to them to maintain the Oxbridge pretentions of the mediocre academics. Pearson really hits a raw nerve here; this is so far the biggest organisation, with a $1 billion war chest, to enter Higher Education in Britain. Despite its modest start (and, it must be mentioned, rather poor record in businesses other than the core ones), they are really shaking things up.

Indeed, this is just the start, and more will happen in the coming months, with new players, exciting offerings and greater innovation (some of which will fail). The British government is effectively bailing itself out from Higher Education, by moving to a system where money follows the students, and giving out strong signals to the universities not to depend on public purse anymore. I remember attending a colloquium in British Academy, where Michael Crow, the President of Arizona State University, reminded one serial moaner (who complained about the funding regime) that American State Universities only receive less than 20% of their funding from the government and treat government as one of their many customers. Indeed, some of the British Universities, created in the heydays of welfare state and governed by career bureaucrats, living without government funds and treating everyone else, particularly the students, as customers, is unthinkable. Pearson's entry may signal that those times indeed may have come. 

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