“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.