UK university reputation at risk from sub-prime 'for-profit' colleges government warned

The report*, published without fanfare in February, says that:

• for-profits' short and long-term goals may not match the national interest and could lead, as in the case of Australia, to international reputational damage        
• for-profits are subject to much lighter regulation than mainstream universities and provide less public information about the service they provide to students
• for-profits and private providers offer qualifications which may not be widely recognised
• for-profits may cherry-pick profitable courses and put public universities in financial danger.

UCU said the report's warnings are backed up by the experience of for-profits in America. Scandals around the selling of courses to students have prompted an investigation by the US Senate into companies such as Apollo and have seen for-profits described as 'sub-prime education'.^

Apollo, which is subject to numerous US complaints about its course quality and unethical marketing, already owns the UK-based for-profit institution BPP.

Following the report's revelations, UCU said it will be writing to the universities secretary, David Willetts, and called for government to set out what steps it is taking to address the report's concerns and protect the reputation of UK higher education.

This Tuesday (24 May), the business innovation and skills select committee will be quizzing for-profit higher education providers, including BPP chief executive Carl Lygo.

More on the USA scandals can be read in Over-reliance on private enterprise threatens standards in universities, warns UCU and Privatising our universities, Feb 10 [162kb]  

UCU general secretary, Sally Hunt, said: 'Student loan debt in the USA now outstrips credit card debt, with millions of vulnerable people mis-sold poor quality, inappropriate qualifications using federal money.

'Yet the proposed expansion of the for-profits by the government seems to be like a runaway train with ministers unable or unwilling to stop the same happening here. As the experience of Australia and the USA show, allowing the expansion of for-profit providers will only undermine the hard won reputation we have built. In the interests of students, parents and our universities, I urge the government to pause and reconsider their privatisation programme before it is too late.'

Notes

* Find full report at: Diverse provision in higher education: options and challenges (pdf). Pages 40-42 look at private providers in higher education and points 169 and 170 deal specifically with the risks associated with for-profits.

^ In an article for Times Higher Education on Thursday, Alan Ryan, visiting fellow in politics at Princeton University, highlighted the fact that higher education debt has overtaken credit card debt in America and that for-profit colleges' income is overwhelmingly provided through federally supported loans.

He quotes Steve Eisman - the short-selling investor who predicted the collapse of the sub-prime mortgage industry and a lot of money, who said: 'Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the sub-prime mortgage industry. I was wrong. The for-profit education industry has proven equal to the task.'