A written submission to the House of Commons Public Accounts Committee of 6 December 2012 noted, among other things, that the cash paid to private colleges has trebled in one year and now exceeds £100m.
At the same time, the number of students studying with private colleges on unregulated courses has doubled in one year; 23 per cent of the total public money involved was captured by one provider, the Greenwich School of Management, which is owned by the private equity fund Sovereign Capital; Sovereign Capital’s co-founder advised the government on public sector reform, and is now government spokesman on education in the House of Lords.
Private providers in the UK are exempt from many of the obligations of public institutions. They have not had to observe controls on the number of students they recruit and are not, it seems, legally obliged to publish information about recruitment figures or completion rates. And there’s nothing private capital likes better than a newly deregulated sector: in 2009 the Apollo Group formed a consortium with the Carlyle financial group to take over the now ubiquitous BPP College in a £303.5 million deal. Part of the attraction was that in 2007 BPP had been granted degree-awarding powers. It is now known as BPP University. What it did to deserve this elevated status is not clear.
In 2011 Sovereign Capital acquired the Greenwich School of Management for an undisclosed sum. (Its American BBA degrees are awarded by Northwood University, Michigan, founded in 1993.) In 2012 GSM launched a second campus in Greenford, West London, to accommodate a further six thousand students. In 2012, Montagu Private Equity acquired the College of Law for around £200 million. With remarkable speed, the college was granted full university status a few months later: it is now known as the University of Law. Again, what criteria were used to justify this ennoblement? We do not know.
In July 2012 it was announced that Regent’s College (in Regent’s Park) had been given degree-awarding powers by the Privy Council. In February this year Regent’s College acquired the for-profit American InterContinental University London from Career Education Corporation. In March the Department for Business, Innovation and Skills (BIS) announced that Regent’s College had met the criteria to become a university. Since then, Regent’s University London, as it is now known, has advertised itself vigorously. For most courses it charges £14,200, far more even than top-charging ‘public’ universities. It does offer bursaries for some students unable to meet the high fees, but it appears the take-up is low. As the head of RUL put it, ‘the majority of students who come here are from relatively comfortable families, ranging from comfortably middle-class to staggeringly wealthy.’
It has now been decreed that no more than 750 students need to be following degree-level courses for one of those tinpot places to call itself ‘University’.
The starting point for this all-for-profit masquerading as not-for-profit is (like most things the Conservatives admire) the United States of America. There, at the end of July 2012, the Senate Committee on Health, Education, Labor and Pensions presented an 800-page report, the culmination of a two-year investigation into private higher education institutions.
The senators found that at such institutions a mere 17.4 per cent of annual revenue was spent on teaching, while nearly 20 per cent was distributed as profit (the proportion spent on marketing and recruitment was even higher). They also found that huge numbers of people from the least advantaged sections of society are stuck with large debts, having enrolled in, and very quickly dropped out of, courses which were never suitable for them. (‘Subprime degrees,’ McGettigan observes, ‘like subprime mortgages, are sold to communities relatively unfamiliar with the product.’) The explosive growth of the for-profit sector in the US dates from the late 1990s and the involvement of investment banks and private equity. For example, in 1998 Ashford University had just three hundred students; it was taken over by Bridgepoint Education Inc, and by 2008 boasted 77,000 students, nearly all online. Bridgepoint was described by the Senate committee’s chairman as a ‘scam’, still collecting profits despite having drop-out rates of 63 per cent for Bachelor’s degrees and 84 per cent for Associate degrees.
Now you may believe the Education Department’s guff about not-for-profit meaning not-for-profit, but this really isn’t true at all. A not-for-profit college which is a subsidiary of a parent company can distribute its own profits to directors and shareholders. Despite Grayling-brain’s protestations to the contrary, surpluses can and do go up the chain to the top.
I’m obliged to Slogger Philip for pointing out this very important article on the subject. Once again, I am left asking whether it’s that these Ministers are malignant, blind zealots, or just dumb.