Higher education funding letters: another bundle of joy

On government HE funding letters

The Secretary of State for Business, Innovation and Skills has written to HEFCE with the Department’s annual message on funding and helpful bag of instructions.

The letter

sets out Government funding and priorities for HEFCE and for higher education for the second year of the new financial arrangements for higher education in England. The Government’s vision for higher education, outlined in the higher education white paper ‘Students at the heart of the system’, remains, and HEFCE is asked to continue to support learning and teaching activity, quality assurance, widening participation and an enhanced student experience. HEFCE will also continue our support for postgraduate provision.

Super. More instructions.

Not only does it offer even more directions to HEFCE, at 36 paragraphs and eight pages it is the second longest of the four to date issued by the Secretary of State and the Minister and confirms a return to the sterling epistolary efforts made by the previous government.

Last January’s effort really set the standard though – although it contained 35 paragraphs was in fact nine pages long. The December 2010 was somewhat shorter at only 28 paragraphs and can be seen as the BIS duo just getting into their stride.

The earlier post on this topic back in August 2010 noted:

The most recent funding letter of June 24 2010 from Vince Cable and David Willetts to the Chairman of HEFCE is distinctive for three main reasons. First, and unsurprisingly if dispiritingly, it outlines the first major tranche of savings to be made in the 2010-11 financial year. Secondly, it is extremely short – indeed at 10 paragraphs and just over two pages it is the shortest funding letter to the Council in at least 14 years and undercuts all letters under the previous government by some way. Thirdly, it is the first such letter to be signed by both the Secretary of State and the relevant Minister. And thank goodness too or some of us might never have seen this fascinating signature:

Of course those with longer memories will have fond recollections of the briefest of grant letters from the University Grants Committee (UGC) which simply set out the amount of money available for disbursement. Many will long for the golden age of five year funding settlements under the UGC. Whilst it could reasonably be argued that the UGC served as an effective buffer between the state and the universities, the options for the Higher Education Funding Councils, and in particular HEFCE, are much more limited as the directives from government on spending have become ever more detailed and prescriptive. Fortunately though we are able to examine all of the details of these as HEFCE has a nice collection of funding letters going back to 1996.

This decidedly dubious summary of these letters draws on this collection but refers only to English funding allocations. I’m sure the other funding councils receive similar missives from their respective governments but it is beyond my capacity to deal with them I’m afraid.

The length of funding letters has seen two peaks in the last 14 years: January 2003’s letter was 73 paragraphs long and the December 1998 note ran to 66 paragraphs. The November 1999, November 2000 and December 2001 letters ranged from 40 to 46 paragraphs but the January 2004 letter and subsequent missives tend towards the more traditional brevity of only 15-25 paragraphs of instruction to HEFCE.

Just for completeness then here are some of the details about English Higher Education’s most exciting epistles:

1. The first letter in this series is the last prepared under the previous Conservative government, way back in November 1996. This 41 paragraph note (signed by a Civil Servant) covers: linking funding to assessment of teaching quality, expanding part-time provision, the importance of closer links with employers, not wanting to see longer courses, a planned reduction in student numbers by 2,000 for the following year and keeping the participation rate at around 30%. Some interesting parallels here with the most recent letter from the current government perhaps?
2. The December 1998 letter is the first New Labour funding letter. At 66 paragraphs it is one of the longest in recent times and the last one to carry the name of a senior Civil Servant rather than the Secretary of State. Topics covered include sector spending, lifelong learning, increasing participation, maintaining quality and standards (a recurring theme down the years), widening access, promoting employability, research investment, capital spend, tuition fee arrangements and Year 2000 issues (we were all worried then).
3. The November 1999 letter, 43 paragraphs long, provides David Blunkett with the opportunity to wax lyrical on the importance of maintaining quality and standards, increasing participation and employability, widening access, equal opportunities for HE staff, dealing with student complaints, new capital funding, pfi/ppp opportunities, research funding and HE pay.
4. David Blunkett, in his November 2000 letter, which runs to a sprightly 46 paragraphs, makes some big points on widening participation as a key priority, business links and the e-university.
5. In November 2001 Estelle Morris provides a neat 40 paragraph letter which gives lots of direction on widening participation, maintaining quality and standards, strengthening research, the importance of links with industry and communities, as well as something on the value of the e-Universities project (remember that?) and, last but not least, social inclusion.
6. January 2003 represents the high water mark of recent funding letters: in 73 action packed paragraphs Charles Clarke, in his first outing as Secretary of State, is clearly keen to lead the way. The letter covers, among other things, improvement in research, expanded student numbers, foundation degrees, widening participation, improving teaching and learning and increased knowledge transfer. As if that were not enough we also have the establishment of the AHRC, the introduction of a new quality assurance regime but with reduced burdens for institutions (yeah, right), credit systems, FE partnerships, expanded student numbers and new investments in HE workforce development. A real blockbuster of a letter.
7. The January 2004 message from Charles Clarke comes in at 20 paragraphs in just over 4 pages with reducing bureaucracy, building research and quality and standards and the establishment of Aimhigher as its central features.
8. December 2004 brings a Christmas treat from everyone’s favourite Santa, Charles Clarke. With just 16 paragraphs and 4 pages of direction Clarke stresses the importance of maintaining the unit of funding for teaching, controlling student numbers and making efficiency gains.
9. The January 2006 letter, a first and last offering from Ruth Kelly, comes in at a modest 15 paragraphs and 4 pages. No huge surprises in the text with employer-led provision, more widening participation, additional research and capital funding and a strong steer on reducing bureaucracy being the primary features. Additional points to note include equal opportunities for HE staff, efficiency gains, the new conditions which accompany the new tuition fees regime and reference to access agreements. What’s not to like here?
10. January 2007’s is a punchy 19 paragraphs and merely five pages from Alan Johnson (his one and only letter). Despite the wordiness there isn’t a huge amount in here beyond employer engagement, growing foundation degrees and a lot on widening participation.
11. January 2008: as with its successor letter this one is 24 paragraphs and 7 pages long (and note the online version on the HEFCE website is erroneously dated 18 Jan 2009). In this funding letter Denham indicates that his priorities are increasing student numbers, developing employer part-funded provision, and widening participation. The letter also refers to encouraging HE to develop stronger links with schools and colleges, greater investment in research, the importance of STEM, a green development fund, closer measuring of performance, and the establishment of the fund-raising match-funding scheme.
12. January 2009’s letter is 7 pages and 24 paragraphs long and in it John Denham seeks to encourage HE to support the economy through recession, wider engagement with business, promote employer-led provision, innovative ways to support business, promotion of STEM subjects and widening participation and extending fair access. Additionally, there is the confirmation of the ‘university challenge’ with 20 new HE centres to be established, emphasis on the maintenance of quality and standards, plans for continuing to reduce regulation, commitment to dual support as well as the development of REF, steps to tackle climate change and bearing down on over-recruitment by institutions.
13. The December 2009 letter from Lord Mandelson comes in at 15 paragraphs. This short note follows up on Higher Ambitions (which, in case you had forgotten, “sets out a course for how universities can remain world class, providing the nation with the high level skills needed to remain competitive, while continuing to attract the brightest students and researchers”) and also covers the Economic Challenge Investment Fund, wider and fairer access to HE, increasing the variety of undergraduate provision, new funding incentives to deliver higher level skills, developing REF, new developments in quality assurance including the publication of a standard set of information for students, engaging with communities and penalizing institutions which over-recruit students.
14. June 2010 sees the first funding letter from the new coalition government: Cable and Willetts give us 10 brief paragraphs covering initial savings, efficiencies and cuts but also 10,000 extra places (but with strings).

So, that’s your lot folks. All you never wanted to know about 14 years of funding letters.

The Imperfect University: First for the chop

The Imperfect University: Some people really don’t think much of administrators

Last year I wrote a piece for Times Higher Education on the problem with the term “back office” and the often casual, unthinking use of it in order to identify a large group of staff who play a key role in the effective running of universities but who are the first to be identified for removal or outsourcing in financially challenging times. But what do we mean by the back office?

In a university context, it is generally taken to mean those staff who are neither engaged in teaching or research nor involved in face-to-face delivery of services to students. So they might be, for example, working in IT, human resources, finance or student records. Or they might be the people who maintain the grounds, administer research grants or edit the website.
Too often, their somewhat anonymous roles mean that they are treated as third-class citizens in the university context. Because they are out of sight and largely out of mind, most people really don’t know what they do; as a consequence, it becomes much easier for others to write them off and offer them up as the first to be sacrificed when cuts have to be made. Back-office staff do not have an obvious income line and can easily be regarded as expendable. The attitude is resonant of the Victorian view of those “below stairs”. This perception (or lack of perception) is unhelpful, and not terribly good for morale – particularly among those who are so casually dismissed as being “just back office”.

Two recent reports offer a striking example of this. The first is an Ernst & Young report on the “University of the Future” which has found that the current public university model in Australia will prove unviable “in all but a few cases”.

A story in The Australian quotes the report’s author:

“There’s not a single Australian university that can survive to 2025 with its current business model,” says report author Justin Bokor, executive director in Ernst & Young’s education division.

“We’ve seen fundamental structural changes to industries including media, retail and entertainment in recent years – higher education is next.”

The study compared ratios of support staff to academic staff across a selection of 15 institutions and found that 14 out of 15 had more support staff than academic staff. Four of the 15 universities have 50 per cent or more support staff than academic staff, and more than half have at least 20 per cent more support staff.

The report warned that this ratio “will have to change”.

The report, which can be found here, doesn’t give any details on the definition of “support staff”. However, I would guess that it is a sum of all staff who are not academics (the definition of academics can often be unclear too). I must admit though that I’m not surprised that there are more support staff than academics in most institutions simply because of the sheer scale of university operations. I suspect that the variations are largely down to how staff are counted and categorized and differences in physical and organizational structures.

Despite this definitional imprecision, the report’s author is confident in asserting that universities need to cut:

Organisations in other knowledge-based industries, such as professional services firms, typically operate with ratios of support staff to front-line staff of 0.3 to 0.5. That is, 2-3 times as many front-line staff as support staff. Universities may not reach these ratios in 10-15 years, but given the ‘hot breath’ of market forces and declining government funding, education institutions are unlikely to survive with ratios of 1.3, 1.4, 1.5 and beyond.

Leaving aside the fact that many professional staff, for example those involved in student recruitment, careers work, counseling, financial advice, academic support, security and library operations are unequivocally front-line, the idea that the other staff who help the institution function and who support academic staff in their teaching and research are merely unnecessary overheads, ripe for cutting back, is just not credible.

Then from the US we have another report, quoted in the Chronicle. This report, produced by a pair of economists, has identified the ideal ratio of academic staff to administrators needed for universities to run most effectively. It is 3:1 and therefore makes the Ernst and Young proposition look decidedly half-hearted. However, as the article acknowledges, the definitional problems are far from insignificant:

The numbers are fuzzy and inconsistent because universities report their own data. Different institutions categorize jobs differently, and the ways they choose to count positions that blend teaching and administrative duties further complicate the data. When researchers talk about “administrators,” they can never be sure exactly which employees they are including. Sometimes colleges count librarians, for example, as administrators, and sometimes they do not.

“Look! If I just cross all these people out then we can employ an extra professor!”

Even in the UK, where there is fairly robust collection of staff data by HESA, definitional problems remain. As this earlier post noted there is significant scope for misinterpreting staff data and overstating the growth of the number of managers versus the number of academics working in universities.

These matters are exacerbated in the US for the reasons above and the comments below the piece give an indication of some of the major holes in the economists’ proposition. Nevertheless, the Chronicle finds some willing to support the proposal for an ideal ratio:

Some advocates of increasing the proportion of faculty at universities say they support the researchers’ goal of setting a three-to-one ratio of faculty to administrators.
Benjamin Ginsberg, a professor of political science at the Johns Hopkins University and author of The Fall of the Faculty: The Rise of the All-Administrative University and Why It Matters (Oxford University Press, 2011), has argued that universities would be better off with fewer administrators, people he calls “deanlets.”
The three-to-one ratio “makes a lot of sense,” Mr. Ginsberg said, because it would shift the staff balance in universities. “If an administrator disappeared, no one would notice for a year or two,” he said. “They would assume they were all on retreat, whereas a missing professor is noticed right away.”
Richard Vedder, director of the Center for College Affordability and Productivity and a professor of economics at Ohio University, said shifting the balance back toward faculty is key to keeping universities’ missions focused on teaching, as opposed to becoming too focused on other activities, like business development or sustainability efforts.
“We need to get back to basics,” said Mr. Vedder. The basics are “teaching and research,” he said, “and we need to incentivize leaders of the universities to get rid of anything that’s outside of that.”

Administrative staff – not unnecessary overheads

This is just ridiculous rhetoric and really we should just discount it. However, such views are, unfortunately, not that uncommon and do have to be challenged.

In order for the academic staff to deliver on their core responsibilities for teaching and research it is essential that all the services they and the university need are delivered efficiently and effectively. There is not much point in hiring a world-leading scholar if she has to do her all her own photocopying, spend a day a week on the ‘phone trying to sort out tax issues or cut the grass outside the office every month because there aren’t any other staff to do this work. These services are required and staff are needed to do this work to ensure academics are not unnecessarily distracted from their primary duties.

Although provision of such services is not in itself sufficient for institutional success, it is hugely important for creating and sustaining an environment where the best-quality teaching and research can be delivered. If a university chooses to dispense with the professional staff who deliver these services in order to pursue a mythical ratio then it might find it’s rather hard to hold on to those outstanding academics for very long.

Most recently there is a piece in THE reporting on the launch of the “Council for the Defence of British Universities” which notes that

The council’s initial 65-strong membership includes 16 peers from the House of Lords plus a number of prominent figures from outside the academy, including the broadcaster Lord Bragg of Wigton and Alan Bennett. Its manifesto calls for universities to be free to pursue research “without regard to its immediate economic benefit” and stresses “the principle of institutional autonomy”. It adds that the “function of managerial and administrative staff is to facilitate teaching and research”.

Now whilst I do of course agree that this is a fundamental part of administrators’ roles and it is splendid that the great and the good do accept that administrators exist, there is something here in the tone of this comment that makes me think that some might take this to be that we should be “seen and not heard”. I do hope not.

Austerity in the USA

Savings needed at US Universities

University World News. carries a piece by William Patrick Leonard, vice dean of SolBridge International School of Business in Daejeon, Republic of Korea, suggesting that US Higher education institutions need to rein in their costs. The traditional approaches to meeting financial shortfalls, raising tuition fees or increasing student numbers, are, it is suggested no longer justifiable:

The third internal budget balancing tool, cutting costs, has been the least favoured. It can negatively influence programmes and hence careers. I suggest that many institutions, large and small, have found it politically easier to increase revenue rather than control costs.

They have tended to resist seriously questioning the viability of ineffective or inefficient programmes and services. Simultaneously, many have increased their continuing cost burden by enhancing existing programmes and services as well as adding new ones.

This reflects perhaps the different structural set up and culture of US higher education but the contrasts with the position in the UK do seem rather stark. In particular, after several years of significant financial challenges in this country and in anticipation of many more to come, all institutions have had to make savings. Fees are capped and increasing enrolment is only realistically possible through growing international student recruitment which in itself is more challenging than ever because of visa regulations. So, in the UK we have been dealing with the need for reducing spend for some time.

 

Simplistically, institutional costs may be crudely subdivided into two categories – external and internal.

The external costs are composed of purchased goods and services. Unless the institution has the power to negotiate price, its utility, insurance, contracted services and consumable costs are largely beyond its control. External costs are strongly influenced by the internal costs that institutions should have more control over.

The place to start is internal costs. In American higher education internal costs are governed as much by unquestioned culture as by contractual obligations. Institutions have tended to regard the traditional mix of faculty, curriculum, calendar and infrastructure as immutable. This has been accompanied by an exaggerated sense of entitlement to external support.

The majority of US higher education institutions can no longer rely on the historic levels of government support or philanthropic largesse. Nor can they depend on the continued utility of tuition fees and enrolment increases to align revenue with their immutable culture-driven costs.

I suspect this is a reasonably accurate assessment of the position. Whilst we are now used to the challenges of savings needs in the UK (and indeed are not experiencing them for the first time), it will be a bit harder if there is no prior knowledge of how to respond. Having said that, after many years of growth there is likely to be significant scope for savings.

The Imperfect University: The Cult of Efficiency

The cult of efficiency

I’ve recently been reminded about a great book recommended to me by my former supervisor, Nigel Norris. Half a century since its publication it remains a fascinating read and sits midpoint between two eras of educational change which, perhaps surprisingly, seem to have a lot in common. (Note that a large part of what follows is taken from my book Dangerous Medicine: Problems with quality and standards in UK higher education which is available for Kindle via Amazon at what I’m sure we’d all agree is a very competitive price.)

Callahan’s book, Education and the Cult of Efficiency, published in 1962 offers a salutary warning about the hazards of imposing inappropriate models in education. When I first looked at this I was interested in the ways in which industrial quality assurance frameworks seemed to be enthusiastically adopted by some in higher education with little regard for context, with one of the main drivers for the application of industrial models to HE being the belief that efficiency and economy will result.

The economic imperative is one which has been vested in higher education with ever greater force since the early 1970s but has forerunners in other spheres too. Callahan’s detailed and in many ways prescient study, shows the effect of scientific management, Taylorism, on US schools in the early part of the last century, the effects of which were felt in the American education system until the 1960s.[i] The essence of the problems this approach caused are articulated as the promotion of cost accounting over educational value and these ideas permeated the whole education system including the universities. The notion developed of schools as ‘service stations’ which represented the ‘natural outgrowth of years of business influence’ and the idea ‘that the public should provide the specifications for the educational ‘products’ which were turned out by the schools’.[ii] These concepts provide interesting parallels with the educational landscape in the UK today.

The primacy of the world of business was as real in the US of the second decade of the last century as it is in the UK today with ‘the community’ and ‘the business community’ being seen by many school administrators at that time as synonymous. Students were expected to undertake service for their communities (which often meant cheap labour for local employers) and there was a strong emphasis on the importance of student thrift. The response by school administrators, in the face of a critical public which was concerned with economy in public spending, was to turn educators into technicians producing products to specifications.

Administrators therefore embraced economy measures and accepted increased class sizes based on ‘evidence’ that large classes did not diminish performance, a situation which remained in US schools until the 60s. One of the side-effects of this economy drive was a disproportionate focus on the trivial and measurable, a development supported by the training given to school administrators in graduate schools of education. This resulted in work which focused on measuring, for example, toilet paper use, ink consumption and heating savings.[iii] As late as 1938 a text on the principles of school administration included specific instructions on how a janitor should dust desks. Callahan cites Flexner who shows that the emphasis on service, selling education, mass production and measurement of trivia was equally widespread in US higher education at this time.[iv]

Overall, Callahan characterises the impact of scientific management as tragic with education ‘adopting values and practices indiscriminately and applying them with little or no consideration of educational values or purposes’. The wholesale adoption of basic business values and techniques represented a serious mistake in education and in the period from 1910-1929, when efficiency was demanded, what was actually meant was lower costs with no reference to the quality of the ‘product’. At this time the public was suspicious of public institutions and in awe of the world of business (before the stock market crash) and saw scientific management as an appropriate solution. Administrators were, in this context, entirely complicit with this misapplication of business processes and values. The impact of this period was widespread and enduring (despite the depression), as those trained during this period went on to hold positions of power for many years, and the ideas remained dominant into the 1960s with an emphasis on business and technical values at the expense of the educational. Similar societal factors can be seen in the UK in the 1980s onwards which perhaps helps to explain the potency of industrial ideas in education in this country too.

Looking forward, it is possible to envisage a (not very attractive) future in which most of our schools are ‘free’ and, in the absence of any other direction, turn to inappropriate models and measurements and follow a 21^st Century version of Taylorism in order to deliver ‘products’ which it is believed the country needs. Whether or not such a scenario comes to pass it is to be hoped that a similar cult of efficiency will not take hold in higher education.

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[i] Callahan, R E (1962), Education and the Cult of Efficiency, Chicago: University of Chicago Press.

[ii] ibid, p227.

[iii] ibid, pp242-3.

[iv] ibid, p243, referring to Flexner, A (1930), Universities America, English, German, New York.

From National to Global Universities

A nice piece from David Wheeler in the Chronicle of Higher Education on some of the challenges for universities in going global:

Universities, like companies, may need to make the transformation from being a national brand to being a global one. Siemens, once thought of as a German company, now says that it is “a global powerhouse in electronics and electrical engineering, operating in the industry, energy, and health-care sectors.”

Global brands can be adapted to various local markets, while still staying globally integrated. I just gave away a collection of international Coke cans, consisting of many different shapes and bearing Arabic, Chinese, and Spanish words, among others. But they were all instantly identifiable as Coke cans.

As some universities seek to be global, they often emphasize that a degree in one country will be exactly identical to a degree in another. I’m left wondering if a little more flexibility might be in order.

Human-resources departments may need to rise in importance as universities seek to become more global. The complexities of managing different people in different places are high, and human-resources departments, which are often simply the servants of academic departments at many universities, need to acquire and share their expertise on how to manage a mix of expatriates and local workers in a variety of countries.

I think this flexibility point is well made. Institutions do have to adapt to the environment in which they are operating. Education cannot be entirely context independent. Academic standards do, of course, have to be consistent. So, whilst term dates may be different and the timetable may look a little unusual, the curriculum, learning outcomes, assessment and examinations, admission requirements and academic staff qualifications, to name but a few components, do have to be directly comparable to ensure that the standards of awards and the quality of the student learning experience are maintained. These are fundamental to sustaining the institutional brand.

An earlier post noted the continued growth in branch campus developments by universities. All of the issues faced by global corporations, from maintaining the brand to developing HR operations, are shared by universities looking to grow a presence overseas. But it is very difficult to do this alone:

Lastly, I think that universities can learn from corporations about how to better manage partnerships. It’s a bit of a cliché, but I would be remiss if I didn’t say it: Universities approaching partners need to think of programs that would benefit both parties. Approaching a computer company and asking for money or machines to take back to the university doesn’t work for the company, without some benefit being offered. Companies have their own problems to solve.

The issue of partnerships is crucial. Any institution looking to establish a genuine global presence is not going to be able to do it alone and will in all likelihood require government backing as well as other partners to help with infrastructure development and navigating through a different policy and legal environment. None of this is straightforward but can be done and does bring rewards. In the long run.

There is an interesting link here to the recent story about the UK Universities Minister’s discussions with Goldman Sachs about ways to support offshoring opportunities for British HEIs. Branch campuses are not the solution to domestic economic travails but they are a serious option for universities looking to establish a global brand. Although there are many challenges associated with such developments, the benefits are significant.

Offshoring opportunities – a real alternative?

Minister proposes overseas campuses as alternative to international student recruitment

Times Higher Education reports that David Willetts seems to be pushing overseas campus expansion – with private finance support – to compensate for reduced international student recruitment resulting from government immigration policies. The idea features, not for the first time, in a speech on international higher education he delivered at the Goldman Sachs-Stanford University Global Education Conference on 20 June:

His call for universities to seek alternative financing for expansion overseas comes amid a drive for every government department to identify sources of economic growth.

The minister is also seeking ways for UK universities to maximise the number of overseas students they teach abroad. The government’s tougher immigration controls threaten to cut the number of students able to enter the UK for study at universities.

Mr Willetts said: “Our universities are internationally recognised: they are a great British brand. We can do more to take advantage of our position. Our universities are well financed for what they do but underfinanced for big expansion. I want to see investors from Britain and abroad helping our universities access these big overseas markets. I know that companies like Goldman Sachs who have organised this conference…are keen to investigate this possibility.”

The minister hopes that Goldman Sachs will be able to identify private investors willing to finance developments such as overseas branch campuses and distance-learning operations.

A previous post reported on an earlier speech by Mr Willetts on the issue of internationalisation. He is undoubtedly serious about the proposition. And he is right to point to the success of the University of Nottingham and others in establishing campuses overseas. However, there are several fundamental problems with this notion:

1. The income generated by overseas campuses will do very little to offset losses from underrecruitment of international students in the UK. Even where it may be possible and appropriate to repatriate surpluses, the sums involved will not get anywhere near the level of international student income currently received by UK universities.
2. The de-diversification of UK campuses resulting from the decline in international students will harm the learning experience for all.
3. Building, growing and sustaining an overseas campus is a long game. Even if every UK university had one it would take a very long time to get to a point where they were capable of providing the scale of export benefit the UK currently enjoys.
4. If the primary aim of building an overseas campus is to make money then it is unlikely to provide a good basis for a productive relationship with a host country.

So, even with the backing of Goldman Sachs it is not clear that the overseas campus option is going to come close to compensating for the anticipated impact of immigration policies on international student numbers in the UK. The other angle discussed by the Minister, distance learning, may offer possibilities but again is unlikely to deliver on the scale required. Better perhaps to review those immigration policies instead.

Making money from MOOCs

There aren’t any MOOC business models which stack up. Yet

An earlier Imperfect University post on MOOCs questioned their ultimate impact on traditional university provision. Inside Higher Ed carries an interesting piece on possible business models for MOOC providers which notes that with over 1.5 million people having registered for MOOCs through Coursera, Udacity and edX, the level of demand is significant:

But while demand appears to be high, none of these three organizations — two of which are for-profit companies that will be expected to generate money for investors and the other of which is a nonprofit that will be expected to stand on its own feet eventually — currently has a business plan.

They can afford it, for now. The Massachusetts Institute of Technology and Harvard University together have committed $60 million to edX, Coursera has raised $16 million in venture funding, and Udacity is sitting on an undisclosed infusion from Charles River Ventures. They have cash to burn, and each has focused on establishing partnerships with reputable institutions and professors and harnessing available technologies in its platform.

The MOOC providers are nonetheless in strange territory. They have staked their future on a vision that makes higher education more free than ever before. And yet their task, eventually, will be to figure out how to make money. By declining to charge for content, instruction and assessment, these providers will have to find new ways to cover their overheads and pay back investors.

A huge issue for MOOCs is the absence of accredited certification. One solution might therefore be to forget credentialling altogether and make the link directly between student and employers, charging the the former for promoting them and the latter for access. Alternatively, or additionally, they could offer additional premium paid for content and services which bring them closer to current fee charging online higher education such as tutoring, online assessment support, library resources etc. And if the worst comes to the worst the MOOC providers could always sell advertising space.

It’s still early days though and it will be fascinating to see which way MOOC business plans develop.

International students: not an immigration issue

Students really aren’t immigrants

Excellent piece in a recent edition of Times Higher Education by Edward Acton. The essence of his argument is that international students make a massive contribution to the UK economy and most of them leave the UK after graduating. In other words, they really should not be considered as part of the immigration debate. Unfortunately, for entirely political reasons, they are:

Students, in so far as they are regarded as immigrants at all, cause least concern. The vast majority leave after completing their studies. A Home Office study of the cohort entering in 2004 found that after five years, only 3 per cent had settled. Concern only rises if there is doubt that students are visa-compliant and duly exit when their visas expire. But it is acknowledged by all sides and underlined by the Home Office’s own detailed analysis that those with visas sponsored by universities have excellent standards of compliance.

No queuing here

…one clear solution is to lift university-sponsored students out of the net migration calculation. The case for doing so is overwhelming. These “migrants” are distinct. They are, as public policy in other countries recognises, temporary. They are known to have excellent standards of visa compliance. And, in spite of the Home Office, the government as a whole commits considerable resources to encouraging them to come to the UK.

The data needed to separate them is readily available. The Higher Education Statistics Agency collects from its members meticulous detail on each non-EU student joining and completing a higher education course. Every university records student visa start- and end-dates, as well as passport numbers. From this it is possible to derive and publish annual estimates of both the inflow and the outflow of non-EU students who come to the UK for university study.

While influential figures in both governing parties are supportive of the proposal, the Home Office is nervous. A spokeswoman has talked of the need to avoid “fiddling the statistics”. No doubt this reflects ministerial fear that any change to the net migration calculation might arouse public distrust. The fear is misplaced. It underrates the scope for raising the level of public debate. The pressure group MigrationWatch UK, often taken to be the fiercest immigration guard dog, repeatedly emphasises that legitimate international students are not an immigration problem.

As Acton concludes, students have to taken out of the migration stats. We should be focusing on other migrant categories and not students and then, it is to be hoped, it will be possible to undo the damage done internationally to the UK’s reputation.

The PIE news reports on a wave of media attention for UK student visa cap following an IPPR report which suggests that the government has included international students in the net migration count as a way of “gaming” the figures:

IPPR points out that the UK’s main competitors in the overseas student market – the USA, Canada and Australia – do not include temporary or “non-immigrant” admissions in immigration figures, and says only the 15% of overseas students who stay on to work permanently in Britain should be counted within the net migration figures.

More worryingly, it says the government’s plans – which include issuing 250,000 fewer student visas by 2015 – threaten to wipe £4bn to £6bn a year off the UK economy.

The major media response to the report will be welcomed by the education sector, and put pressure on the government as it prepares to announce the latest immigration statistics on May 24.

Higher education is one of the UK’s biggest and most successful export earners and one sector in which we enjoy a real competitive advantage. Now more than ever we need to support it.

A higher level of ranking?

A new higher education ranking – this time of countries

U21 has published some new work on national education systems that gives the first ranking of countries which are the ‘best’ at providing higher education:

The Universitas 21 ranking of national higher education systems has been developed to highlight the importance of creating a strong environment for higher education institutions to contribute to economic and cultural development, provide a high-quality experience for students and help institutions compete for overseas applicants.

Research authors at the Melbourne Institute of Applied Economic and Social Research, University of Melbourne, looked at the most recent data from 48 countries and territories across 20 different measures. The measures are grouped under four headings: resources (investment by government and private sector), output (research and its impact, as well as the production of an educated workforce which meets labour market needs), connectivity (international networks and collaboration which protects a system against insularity) and environment (government policy and regulation, diversity and participation opportunities). It also takes population size into account and produces some interesting results.

The top 20 nations according to this ranking are as follows. No surprises about which country is in first place but some of the other nations at the top of the table are perhaps a little surprising.

1 United States
2 Sweden
3 Canada
4 Finland
5 Denmark
6 Switzerland
7 Norway
8 Australia
9 Netherlands
10 United Kingdom
11 Singapore
12 Austria
13 Belgium
14 New Zealand
15 France
16 Ireland
17 Germany
18 Hong Kong
19 Israel
20 Japan

Looking a little more closely at the detail of the measures used:

The measures are grouped under four main headings: Resources, Environment, Connectivity and Output.

The resource measures we use relate to government expenditure, total expenditure, and R&D expenditure in tertiary institutions. The environment variable comprises the gender balance in students and academic staff, a data quality variable and a quantitative index of the policy and regulatory environment based on survey results. We surveyed the following attributes of national systems of higher education: degree of monitoring (and its transparency), freedom of employment conditions and in the choice of the CEO, and diversity of funding. Our survey results are combined with those from the World Economic Forum. Data limitations restrict the connectivity variables to numbers of international students and articles written jointly with international collaborators.

Nine output measures are included and cover research output and its impact, the presence of world- class universities, participation rates and the qualifications of the workforce. The appropriateness of training is measured by relative unemployment rates. The measures are constructed for 48 countries at various stages of development.

And the US is not top in every category. It’s an interesting and different approach deliverng a ranking which presumably will not change very much over time. I wonder though if national governments will react to it.

The full report, U21 Rankings of National Higher Education Systems 2012, is available here.

The Shape of Things to Come – Going Global 2012

The shape of things to come: global trends and emerging opportunities to 2022

I was privileged to chair this session at the British Council’s Going Global event on 15 March:

Over the next five to ten years, which will be the countries with fastest growing higher education systems? Which countries will have environments rich in opportunities for student mobility; for cross-border education provision; and for collaborative research? The new research from the British Council begins to provide answers to these questions. It reveals the new big emerging markets for international students, along with those countries that will be most open for international collaboration in teaching and research. Earlier British Council studies found that the number of students seeking to study overseas depends heavily on family income and the number of students enrolled in domestic higher education. It now depends more on trade links, cost of living and tuition, and exchange rates between the respective countries. The Global Education Opportunities Index maps the economic growth projections and demographic indicators across countries, along with global trade links, to highlight the areas where most opportunities will emerge for international collaboration and student mobility. Dr Janet Ilieva provides an overview of the approach taken and the research methodology, and presents the main findings. The expert panel from UNESCO Institute for Statistics and the OECD then debate the relevance of the opportunities and the implications of this research.

Janet Ilieva delivered an excellent presentation setting out the details of the combination of demographic and economic drivers which will re-shape the global higher education landscape – the data, evidence and forecasts which will be needed by institutions to enable them to address opportunities for student mobility, TNE and collaborative research.

The presentation covered

• Globally mobile students
• The internationalisation of research
• Business collaboration
• Opportunities for global engagement

Chiao-Ling Chien of the UNESCO Institute for Statistics and Richard Yelland from the OECD responded with some important additional comments too with the latter noting that we also need to pay proper attention to the other 98% of non-mobile students.

Whilst the content delivered represented significant progress and valuable information, the concerns from the audience largely related to the quality, consistency and timeliness of data.

The video of Janet’s presentation and her slides can be found here. Do have a look. Overall, it was fascinating stuff and a real honour to participate.

The report from which the data was drawn will be published soon. In the meantime University World News carried some of the information contained in it and in Janet’s presentation with the headlines being the slowdown in the growth of higher education enrolments and the impact of economic changes on the HE landscape. First the demographics:

The largest higher education systems are likely to be China with some 37 million students, India with 28 million, the US with 20 million and Brazil with nine million.

However higher education, currently one of the fastest growing sectors globally, is predicted to experience a significant slowdown in the rate of growth in enrolments in the coming decades.

This is according to the report The Shape of Things to Come: Higher education global trends and emerging opportunities to 2020, drawn up for the British Council by Oxford Economics. It is to be published officially next month, but a preview was released ahead of the British Council’s “Going Global” conference being held in London from 13-15 March.

The study forecasts enrolments to grow by 21 million students by 2020 – a huge rise in overall numbers and an average growth rate of 1.4% per year across 50 selected countries that account for almost 90% of higher education enrolments globally.

But this represents a considerable slowdown compared to the 5% a year global enrolment growth typical of the previous two decades, and record enrolment growth of almost 6% between 2002 and 2009.

Tertiary enrolments have grown by 160% globally since 1990, or by some 170 million new students.

This slowing in growth “should be expected with the sector maturing or slowing in some markets, and demographic trends no longer as favourable as a result of declining birth rates over the last 20 to 30 years,” says the report.

rowth in enrolments in China are predicted to fall from a 17 million increase to five million, according to the report’s projections. India’s tertiary enrolment growth overall is forecast to outpace China’s during the period.

“This does not take into account the political ambitions and aspirations of these countries,” said Janet Illieva, the British Council’s head of research, who will be presenting some of the research findings at the “Going Global” conference this week.

“If India manages to double participation rates in the next five years, this will be a phenomenal increase,” she said, referring to Indian government plans to increase gross enrolments from 17% of the cohort now to around 30% in the next decade.

Economic growth fuels enrolments

Over the last 20 years, growth in global higher education enrolments and internationally mobile students has closely followed world trade growth and has far outpaced world economic growth.

“What is changing is GDP (economic wealth), and economic growth which has a very significant impact on tertiary enrolment,” Illieva told University World News.

A country’s average wealth is seen as a clear driver of future tertiary education demand. “Not only is the relationship positive and statistically significant, but perhaps more importantly, at low GDP per capita levels, gross tertiary enrolment ratios tend to increase quickly for relatively small increases in GDP per capita,” the report says.

Around half the 50 countries studied currently have GDP per capita levels below US$10,000 a year. “Provided these economies grow strongly over the next decade, as many are forecast to, there is significant scope for their tertiary enrolment ratios to increase.”

But despite strong economic growth, many of the shortlisted economies are forecast to still have GDP per capita (adjusted for purchasing power parity) below US$10,000 in 2020 – including Nepal, Bangladesh, Pakistan, Nigeria, India, Morocco, Indonesia and Sri Lanka.

This is likely to constrain how quickly these countries close the gap in enrolment rates compared to advanced economies. But it also means continued rises in enrolment ratios and strong growth in tertiary education demand beyond 2020.

“Where income is below US$10,000 a year, a proportional increase in income results in a much higher rise in the rate of enrolments than you would expect,” said Illieva.

Things really are changing. Look forward to seeing the full report when it is published.

Quality of Swedish universities ‘too low’

Sweden’s Education Minister has some harsh words for the country’s universities

Echoing the views of the Ugandan President on his country’s higher education system, Sweden’s Education Minister, Jan Björklund, has been speaking out:

“The quality of the knowledge that Swedish students have when they leave university is not enough to prepare them for adult life,” Björklund told Sverige Radio (SR), adding that too often, the quality of Swedish universities is often “too low”.

“We need a much tougher and more stringent government inspection of Sweden’s higher education.”

The piece in The Local goes on to suggest that the government intends to restructure the regulatory machinery in Sweden “to get rid of all courses that are not up to scratch”

Are Sweden's universities flagging?

The plan involves merging three agencies into two:

The three current authorities are the Swedish National Agency for Higher Education (Högskoleverket), the Swedish Agency for Higher Education Services (Verket för högskoleservice – VHS) and the International Programme Office for Education and Training (Internationella programkontoret för utbildningsområdet – IPK). Following the reshuffle, the responsibilities of the three will be divided over two agencies, with the one being the only agency responsible for quality control of the higher education system.

The Minister’s view is that the current Swedish National Agency for Higher Education, is “plagued by being required to both give development advice and review courses at the same time.” There is an argument for separating inspection from improvement in quality assurance but I’m not sure it will really make the kind of difference hoped for here. The benefit of development advice is unlikely to be greatly enhanced or make a real impact because of these changes. And it could be argued that Sweden already has some rather good universities with at least two universities normally in the QS Top 100; what might help is perhaps reducing the government interference in their academic activities.

Finding the good stuff

Social media can be overwhelming…

And this can make finding the really good stuff really rather difficult. The Schumpeter column in The Economist has an interesting take on this.

Most commentary on social media ignores an obvious truth—that the value of things is largely determined by their rarity. The more people tweet, the less attention people will pay to any individual tweet. The more people “friend” even passing acquaintances, the less meaning such connections have. As communication grows ever easier, the important thing is detecting whispers of useful information in a howling hurricane of noise. For speakers, the new world will be expensive. Companies will have to invest in ever more channels to capture the same number of ears. For listeners, it will be baffling. Everyone will need better filters—editors, analysts, middle managers and so on—to help them extract meaning from the blizzard of buzz.

It’s not a wholly original point but it is well made. It’s a challenge for individuals as well as for universities and other organisations. The problem is, I think, the more you fret about it, the worse it seems. Moreover, by the time you have analysed the position, the entire world has moved on. So, don’t worry, just go with it is my lightweight solution to this particular challenge. Hey, it’s Friday.

Tilburg University Economics Ranking

Another University Ranking You Didn’t Know You Needed

Bit of a one for the anoraks this, and certainly one of which I was, until very recently, unaware. It is, as the title suggests, a ranking of Economics departments, namely the Tilburg University Economics Ranking. It’s a pretty straightforward methodology too – they have identified a list of 36 leading journals in the fields of Econometrics, Economics and Finance and have ranked economics schools based on publications in these journals for the last five-year time period. And the results are as follows (with changes to rankings in brackets):

1. HARVARD UNIVERSITY

2. UNIVERSITY OF CHICAGO

3. NEW YORK UNIVERSITY

4. UNIVERSITY OF CALIFORNIA, BERKELEY

5. COLUMBIA UNIVERSITY

6. [+1]STANFORD UNIVERSITY

7. [-1] MASSACHUSETTS INSTITUTE OF TECHNOLOGY

8. [+2] YALE UNIVERSITY

9. [-1] NORTHWESTERN UNIVERSITY

10. [-1] UNIVERSITY OF PENNSYLVANIA

11. [-1] LSE

12. [+2] UNIVERSITY OF MICHIGAN

13. UNIVERSITY OF CALIFORNIA, LOS ANGELES

14. PRINCETON UNIVERSITY

15. DUKE UNIVERSITY

16. [+3] UNIVERSITY OF TORONTO

17. [+1] UNIVERSITY OF OXFORD

18. [-2] UNIVERSITY OF MARYLAND

19. [-2] CORNELL UNIVERSITY

20. [+6] UNIVERSITY OF BRITISH COLUMBIA

And just for domestic interest the other UK placings in the Top 50 are:

22. [+3] UNIVERSITY COLLEGE LONDON

32. [+3] UNIVERSITY OF NOTTINGHAM

36. [+9] UNIVERSITY OF WARWICK

41. LONDON BUSINESS SCHOOL

48. [-2] UNIVERSITY OF CAMBRIDGE

Fascinating, huh?

“For-Profits Eye the British Market”

New opportunities for private providers

The Chronicle of Higher Education has a good piece on the interest for-profit providers are taking in the UK market. Robert Lytle of the Parthenon Group, management consultants with an interest in education, seems a bit sceptical:

“It’s a very expensive market to operate in, and the profitability is not there,” says Mr. Lytle, noting that, along with the rest of Europe, Britain is “relatively stagnant” and “just not as attractive” as countries like Malaysia and Singapore, which are experiencing rapid growth. Britain and continental Europe also lag in the development of an online higher-education market, which has been a major growth area for American for-profit companies.

I don’t think this was quite the response the authors of the White Paper were expecting to the bold reforms proposed. Stagnant? Us?

There is also an interesting comment on the value or otherwise of degree awarding powers:

Mr. Lytle, of Parthenon, says there are differing views about how important degree-awarding powers will prove to be for companies seeking to expand their presence in Britain. “One school of thought says they are very overvalued,” he says, while others contend that having such autonomy is “terrifically important because it means you can’t be held hostage by the degree-awarding university.”

Ms. Noone, of Kaplan, says that once tuition at public universities is allowed to rise next year to as much as £9,000, or $14,700, from its current cap of about £3,000, pricing pressure from universities may prove to be the greatest barrier to entry into the marketplace for private providers. Most universities “won’t want a partner who is offering the same degree at a lower price,” she says. Now that students at for-profit institutions will have access to government-backed loans, universities will be facing the prospect of direct competition with partners offering the university’s own degrees at potentially significant discounts.

I’m not at all certain that degree awarding powers are over-valued. They are rightly prized and should be extremely difficult to secure. The White Paper is likely to change that though. Unfortunately.

Certainly whether or not American for-profits seek new markets in Britain will be influenced by their struggles at home. The Apollo Group, parent company of the for-profit giant University of Phoenix, saw its U.S. enrollments decline more than 16 percent in the past year, while Kaplan saw U.S. enrollments plummet 30 percent.

Whatever the eventual new contours of the higher-education landscape, opportunities are likely to be created, not just for the for-profit sector but for mainstream American universities seeking new avenues of expansion, says Mr. Lytle. “You could imagine someone like a Johns Hopkins saying, ‘We have a terrific brand of health care, there are lots of smart students in the U.K. Let’s go get them.’”

This final point is a particularly interesting one. The idea of leading US universities setting up in the UK, whilst intriguing, is perhaps though unlikely to take off in a major way given that all of the opportunities are likely to be at the discount end of the market.

Following the money: paying out for AAB

“Universities cut fees for top students”

According to The Sunday Times that is. However, the headline doesn quite match the story which is a bit more complicated than that. The BBC presents it a little differently as “Universities to offer A grade students cash”.

All of this seems to be sparked by comments from Steve Smith as he hands over the Presidency of UUK but presumably the details are buried in institutions’ access agreements. The Sunday Times notes:

Kent and Essex universities are among the first to offer special deals. They will give £2,000 scholarships to any recruit for 2012 who gains three As in their A-levels, regardless of their family income.

Kent’s scholarship will be available for every year of the degree course, although the Essex version is a one-off for the first year.

Goldsmiths College will waive its £9,000 annual fees for the brightest 10 students it admits from its south London borough.

Essex and Goldsmiths are both members of the 1994 Group of research-based universities, conventionally seen as an elite grouping. At Essex, however, only 8% of 2009 entrants gained at least two As and a B, while at Goldsmiths the figure was 16%. At Durham, by contrast, another 1994 Group member, the figure was 85%.

Other institutions that have already decided on new deals for 2012 include De Montfort University in Leicester, which will give £1,000 a year to any student with AAB or above.

West London is offering 45 scholarships to students who score at least AA B at A-level, paying 50% of first-year tuition fees, which will average £7,498. South Bank in London will waive its £8,450-a-year fees for up to 85 highly qualified students.

It is possible to envisage this turning into a crazed bidding war with AAB students being offered ever more lucrative details to sign up with one university or another (and is this what was really envisaged in the White Paper?). More likely though is that most students will continue to focus on the courses and institutions which most closely meet their needs. Some may chase the money but most surely will base their decisions on other criteria. Or perhaps we are entering the mercenary period for university admissions?