The future of universities, 2

Earlier this year, I wrote a post on this topic. Last week, while I was marking 300 first-year test papers, Robert Johnson sent me a link to a long review entitled “Sold out” by Stefan Collini in the London Review of Books. I have to return to the topic, as things are maybe more worrying than I suggested.

In my previous post I referred to a think tank report which suggested that universities have ten functions; these should be “unbundled” so that the private sector can cherry-pick the most profitable functions, and leave the rest to traditional universities. It was that bad, but there is worse. Some of the authors of the report were employees of an academic publishing company which would no doubt like to get a more secure grip of university business. But what if higher education was run by hedge funds? Not such an unreal idea given that one of the leading companies running “academies” in the school sector is best known for selling carpets and floor coverings.

Collini says,

Doubtless most investment companies and private equity groups are motivated by a concern for the public good, but the fact that at the moment the waters around higher education institutions are so full of eager predators may suggest, even to the most naive, that they have been aroused by the scent of profit.

To clear up a couple of things first: Private universities are exempt from academic regulation. As long as they can persuade the government that their students should be able to take out loans, their income stream is assured. And, as Collini makes very clear, the distinction between for-profit and not-for-profit is not as sharp as it might first appear. A private equity group can take over a charitable higher education institution, and still extract vast amounts of money from it by charging high prices for “professional services” such as management.

Student loans. Now there is another area where Collini’s analysis is deeply troubling. The government likes loans because, under the rules of accounting, loans are assets. Assets can be bundled up and sold on in very ingenious ways so as to make money. We know where that took us when the loans were “toxic” mortgage loans, but there are signs that the student loan may be the toxic mortgage of the future. Haven’t they learned anything?

First, the sums are vast. The Department for Business, Industry and Skills, which is in charge of universities (that fact alone tells you something) estimates that the outstanding student debt by 2046 (thirty years after the first cohort begin repayment) will be 191 billion pounds. That is serious money, even for a government. BIS also admits that the default rate could be around 35% to 40%. What happens? Well, according to Collini, the government were shaken by the strength of feeling in the student protests when the current fee regime was introduced in 2010, and don’t want to risk a repeat. So they have arranged it that even quite serious (and retrospective) changes to the loan conditions can be made by statutory instrument, in other words, without the need for Parliament to discuss them. So students taking out loans may find in future that the promises they were given are worthless: the salary level triggering repayment, the proportion of income taken in tax for the repayments, the interest rate, all can be changed on the say-so of a minister. Of course, the loan book can be sold to private enterprise, who may be less scrupulous about their collection methods.

Collini also suggests that this gives the government an additional lever to control what universities teach, something they have wanted to do for some time. Once repayments begin, lots of data will become available. The data may show that the default rate on students with degrees in X is higher than that for degrees in Y; then the government might suggest to universities that, in the national interest, they should close down their courses in X. He even envisages that tabloid newspapers might run campaigns against “loan scroungers” in the future.

If you, or your children, are going to be forced to take out a student loan in the near future, I think you should be very worried. I certainly am.

There is far, far more to ponder here. His comments on the REF are very close to things I have said, so I won’t rehearse them, except to say that he notes that the government changed the rules for funding distribution in 2008 after the RAE panels had announced their results; this also happened in 2001 and 1996. Governments feel themselves in no way bound by any undertakings they have given, whether to universities, RAE panels, or anyone else. And yet they wonder why we distrust them! (Not so long ago, Nick Clegg took Jeremy Paxman to task for appearing to suggest that all politicians were knaves and scoundrels. In view of the student loan position, Clegg’s broken promise on tuition fees may be one of the most disastrous mistakes ever by a British politician.)

Do read the review. Better still, read the books reviewed, which are

  • Roger Brown (with Helen Carasso), Everything for Sale? The Marketisation of UK Higher Education, Routledge
  • Andrew McGettigan, The Great University Gamble: Money, Markets and the Future of Higher Education, Pluto

(I am afraid I have been too busy to do this.)

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About Peter Cameron

I count all the things that need to be counted.
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3 Responses to The future of universities, 2

  1. Jon Awbrey says:

    The Days of Reckoning between Capitalism and Democracy are already upon us.
    Capitalism will never rest till the greatest goods are owned by the fewest number.

  2. How fast things move on!

    Today’s Guardian had a front-page story entitled “College course subsidy spirals out of control”. And in Aditya Chakraborty’s page in G2, a piece about the increasing use by universities of the police for dealing with legitimate student demonstrations. I am going to quote his closing paragraph in full:

    “Where universities were historically places of free expression, now they are having to sacrifice that role for the sake of the free market. For students, that comes in the form of a crack-down on dissent. Yet the twentysomethings at university now will end up running our politics, our businesses and our media. You might want these future leaders to be questioning and concerned about society. You might wonder whether sending in the police to arrest a woman chalking a wall is proportionate. Either way, you should be worried.”

  3. Jon Awbrey says:

    If critical thinking is outlawed —
    Only outlaws will be critical thinkers.

    Bumper Stickers Anonymous

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