Privatizing the University and the GERM

February 15, 2016 Stephen Murgatroyd

The Government of the UK is consulting widely on the future of higher education. They have issued a green paper (a discussion document reflecting what they are “minded” to do) and are gathering feedback. You can read the green paper online here.


One feature of this is to make it easier for a new entrant to become a degree granting institution. This is what Universities UK says about this:


The Green Paper signals a strong desire to create more competition, particularly through new market entrants and to streamline or speed up processes. The proposals cover what is a complex set of mechanisms around Degree Awarding Powers, University Title and designation processes.  The main objective is to create a single route which has clear steps, is appropriately risk based and can ‘manage’ new providers into the system in an effective way (and indeed manage providers out through market exit if they are failing). The system is clearly complex and needs to be looked at, and the proposed competition and diversity these changes could bring is good for students and institutions. These proposals will, however, require extremely careful scrutiny so that they don’t inadvertently lead to a lowering of the necessary high entry requirements to higher education. Streamlining and speeding up processes where possible yes, but let’s not undermine public and student confidence. Recent experience suggests that the risks of getting this wrong can be significant.


There is a helpful summary of reactions to the Green Paper here.


The growth of private players in education in the UK is a clear part of the neo-liberal agenda. Its based on an idea that the quality of education will improve if there is market based competition for students, programs and outcomes.  The divestment of public education to the private sector, with an interim move into non-profits before rent-seeking and profit corporations become legal, has occurred in the K-12 system in the UK. The development of academies and free schools represents a sign that the neo-liberal agenda – what my colleague Pasi Sahlberg at Harvard calls the Global Education Reform Movement (GERM) – is alive and well. What this green paper seeks to do is to infect higher education with this GERM.


There is no convincing evidence anyone can show that the marketization and privatization of education produces either improved learning outcomes, innovation or higher levels of student engagement. Indeed, Diane Ravitch was able to demonstrate that the opposite occurs, at least in school systems.


Private online higher education providers, such as the University of Phoenix (owned by the Apollo Group), are experiencing difficulties. The largest U.S. for-profit educator has lost more than half of its students during the past five years, ending its fiscal first quarter with 227,400 enrolled students compared with 458,600 in early 2010. Its operating loss in this forst quarter was $45.2 million. There is then the case of Corinthian Colleges, a for-profit rival of University of Phoenix, which collapsed in 2014 amid lawsuits and slumping enrollment.

Moody’s Investors Service, which rates over 500 universities in the U.S., including 230 four-year public schools and close to 275 private colleges and universities, found that public institutions have a total of $125 billion in outstanding debt. Private college/university debt stands at $85 billion. Moody’s is also forecasting that operating revenue growth will slow below 3 percent, at the same time that expenses are expected to increase at around 7%. Although state government funding is growing modestly, it is still below pre-recession levels and now comes with a lot of strings attached.


Pearson Corporation, another major player in private education, just laid off some 4,000 staff in addition to the 4,000 in laid off in 2014. It is not securing the kind of revenues it expected from a strategy of being the largest private education “player” in the world.  Pearson is everywhere in education, both in terms of all levels of education and all regions of the world. While they may be struggling to deliver shareholder value at this time, there can be no doubt that the company has a significant influence in shaping thinking about the future of education and its current practice. Pearson suggests that the social impact of their strategy is about making quality learning available at low costs – whether it is essential skills or advanced learning – globally in an effective and efficient way. We will see. So far they are not doing well with textbook sales, sales of their assessment services or other developments.


Higher education students are a seductive prize for new providers, but the quality assurance regimes, regulatory hurdles and competition is tough. Rather than adopt this neo-liberal agenda, would it not be better to invest in public higher education, increase collaboration and co-operation and enable and encourage innovation in public provision?









Written by Stephen Murgatroyd - contact stephen.murgatroyd@shaw.ca for permissions.

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