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For-profit growth predicted if US giant buys UK's BPP

14 May 2009

Acquisition could spark expansion of private providers, writes Melanie Newman

The owner of the largest for-profit university in the US is eyeing a London institution in a move described as highly significant to the future of UK higher education.

The Apollo Group, which owns the University of Phoenix and is backed by a Washington-based private equity firm, has approached the parent company of legal and accountancy education provider BPP, Britain's only for-profit provider with UK degree-awarding powers.

David Willetts, the Conservative Shadow Universities Secretary, said the development could be the shape of things to come. "Potentially this marks a very significant change for British higher education. It will be fascinating if Apollo expands the BPP model," he said.

As a "believer in supply-side reform", Mr Willetts said if the Conservatives came to power next year, they would look to remove barriers to new entrants to the sector.

His comments came as Nigel Thrift, vice-chancellor of the University of Warwick, predicted "more encroachment" by for-profit institutions, in a speech to the Royal Society of Arts on 13 May (see box below).

"Companies like BPP are likely to forge ahead," he predicted. "Certainly, the touch of the private sector will become an increasing reality, at least for low-overhead vocational teaching." He added it was "not impossible" that private companies could take over "discommoded" universities and turn them into "vocational teaching machines".

Anna Fazackerley, head of education at think-tank Policy Exchange, said Apollo's interest was "a reminder that big private education providers are watching the British higher education marketplace very carefully".

Apollo and its private equity partner The Carlyle Group reportedly valued BPP at £303 million in their preliminary approach. Last year, they bought Meritus University in Canada and the private Universidad de Artes, Ciencias y Comunicacion in Chile, and acquired a majority stake in Universidad Latinoamericana, a private university in Mexico.

Perhaps the most significant institution in Apollo's portfolio is the University of Phoenix. With almost 400,000 students, it is the largest for-profit higher education institution in the US. Phoenix has led the way for other for-profit institutions, offering vocational courses taught in after-work classes at roadside campuses or online by part-time "practitioner faculty".

However, the approach has led to claims that it offers low-quality mass programmes, and in 2008 it was found to have misled investors by not disclosing a government report criticising its recruitment practices.

Ms Fazackerley said: "There have been criticisms about the quality of education that is offered, which should not be ignored, but (Phoenix) has achieved extraordinary things when it comes to broadening access."

James Tooley, professor of education policy at Newcastle University, said: "To bring the disciplines of that market-oriented company (Apollo) into higher education in the UK would be a great step forward to creating a competitive market here."

melanie.newman@tsleducation.com

Editor's note

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A representative of the Apollo Group has asked us to clarify that Apollo Group, Inc. is not "backed" by The Carlyle Group. "Rather, Apollo and Carlyle are partners in joint venture Apollo Global, which is 80.1 percent owned by Apollo and 19.9 percent owned by Carlyle," a spokesman said. "Apollo Global was formed with the intention of making a range of investments in the international education services sector."

He also said that Apollo did not buy Meritus University in Canada. "Rather, Apollo established the new Canadian institution, which was awarded degree-granting status by the New Brunswick department of Post-Secondary Education, Training and Labour in May 2008."

Times Higher Education reported that "in 2008 [Apollo] was found to have misled investors by not disclosing a government report criticising its recruitment practices". The spokesman points out that the Jury verdict in this case was overturned on August 4, 2008, "when District Court Judge James A. Teilborg ruled in favor of Apollo on its post-trial motion for judgment as a matter of law". The court's order is available at: www.apollolegal.com/securitiesDocuments/Apollo_JMOL_Order_080508.pdf

Readers' comments

  • Automatons we will become 14 May, 2009

    Very ugly. No, very very ugly. The slow death of liberal education just moved from first to second gear. In what way will it be 'fascinating if Apollo expands the BPP model'? What could possibly be 'fascinating' about watching institutions that people have strived to build over lifetimes be undermined by pure commercial avarice. David Willets is exactly the wrong person to be next in line at DIUS if this is his approach. My god what a mess if these are the priorities of our politicians.

  • The usuak UCU rant... 17 May, 2009

    Nothing wrong in this as long as some good control is exercised. Indeed all universities particularly new ones and the outfits like these should be monitored carefully by replacing HEFCE and QAA with a single organisation with proactive clout.

  • James Stanfield 18 May, 2009

    The slow death of liberal education? Since when has the training of business managers and lawyers been associated with a liberal education? The BPP model is fascinating because like Buckingham University they have scrapped the outdated academic calender which allows them to deliver a three year course in two years which many students will find very attractive. The BPP model also maximises the use of small group sessions, workshops, tutorials etc instead of depending more on mass lectures. Finally they also place a muchg greater emphasis on providing a professional careers service for each individual student to help them find and prepare for work. If 'pure commercial avarice' is associated with institutions being cost effective, efficient, entrepreneurial, innovative and driven by the needs of students (and not politicians) then this can only have a positive impact on our existing non-profit institutions which continue to depdend on governemnt handouts for survival.

  • Nicholas Singleton 18 May, 2009

    I have to agree with James, firstly on the academic calander which delivers an experience which I sometimes consider to be 'under powered'. The BPP model offers the benefit of more personal attention, furthermore it . The model should not be criticised for being aspirational, efficient and realistically offering quality, self sustaining education.

  • Automatons we will become 18 May, 2009

    Oh dear - I'm afraid you've all been rather seduced by fashionable talk of 'student experience' and 'student centredness', haven't you? Education should surely be more than just a consumer-provider relationship. Students and educators should be working collaboratively within institutional , knowledge and cultural traditions developed over hundreds/thousands of years. Without this approach, students become unimaginative drones, expecting (and getting) packages of valueless knowledge of purely instrumental time-limited use. Teachers become mere technicians, 'delivering' to meet 'learning outcomes'. Private providers will make this MUCH MUCH worse, although it is already rife throughout the UK education system.

  • Nicholas Singleton 19 May, 2009

    I do have to agree with you on that, there should be a collaborative, symbiotic development and relationship between students and educators, in a way that is true to the long standing spirit and ethos of certain institutions. However, Private providers mean the imperative lies with efficency and effective strategies as apposed to the complacency, inefficiency and drive to meet, as you said 'learning outcomes' within current state schools. That is to say that the involvement of some Private provision will have the opposite effect to what you say, with better use of resources, funding and development, providing a genuinely engaging education; as it stands I feel the education is delivered to enable students to 'jump through hoops', and tick the boxes of the education providers.

  • Terry Dixon 19 May, 2009

    There is a place for the for-profit sector of higher education. As has been stated indirectly through the comments in response to this article,if traditional institutions are concerned about the "threat" to "liberal education" perhaps they should review their traditional programs to view the reality of the new world and incorporate those values which continue to be important and dimiss those that seem inappropriate for the new world. Many government (State)institutions no longer serve the mission on which they were originally founded (i.e. to serve the career/professional needs of the state) as they retreat to looking more and more like the private institutions who solicit funds for their support and creating programs more for the "profitibility" (operating funds) of the institution, looking more like for profit institutions,rather than the needs for which they were founded, serving the career needs of the state. This is expecially true concerning the recruiting of international students under the premise of bringing diversity to campus (how many institutions would be recruiting international students if the tuition and fees paid were the same as instate?). The sad note on the current environment is that forces outside of the university, whether non-profit or for profit, are determining everything from who attends to what the curriculum should contain. You would think as experieinced as higher education is, it would have a greater level of maturity and learned from its past experience. In addition, many of the traditional programs which are of great interest and from which graduates are sought by the corporate sector, prepare students for careers that will no longer exist to support the number of graduates universities are generating. Statistics show that over 50% of those graduating from doctoral programs enter jobs that are not university centered. In addition, most doctoral programs today, do not accomplish a successful job of preparing graduates to teach at the university level. As for undergraduate programs, a wake up call needs to be sent out. These programs are much better at providing an excellnt base or general education for the career changes we know students will see in their career life, but also prepare graduates for the skills, understandings and values needed to succeed today. Look at the fields of study on which the non-profits are focusing. How many for-profits offer programs in Chemistry? English? How about Physics? I dare say it is not likley in the near future you will see such programs in the for profit sector as the student populations are not there. The fact is, if for profit graduates are successful, and their is much data to show that for profit students do as well, if not better, as the not for profit sector, then what is the issue? As a matter of fact, if the success of graduates from both sectors is identical, then what does it say about the cost of traditional programs and structures that support them? Even regional accrediting agencies have evolved from a focus on quality at any cost (that is to say, some institutions just don't have the finances/resources to provide a quality higher education degree to its students)to a focus on twiddling on their internal methods of assessment of operation which typically focus upon things easily measured and that are required by the Federal Governement in order to authorize the awarding of financial aid. Do the regional accrediting agencies adopt the Federal guidelines because they add quality to programs? I think not. Much like the banking industry,where institutions have grown too large to control, accrediting agencies do not have the financial resources in those cases where they should deny accreditation to for profits because of the size and finances available to for profit or some of the larger not for profit state or private institutions. Challenges pit institutions to the expenditure of unbelievable resources to overcome or defeat accredititing agencies. Therefore behind the scene compromises occur within the accrediting agencies that void any thought of true assessment of quality. These actions and thoughts are not reflective of the quality of leaders today, but more a result of responding to external threats, with out getting ahead of the curve and devising wholistic methods a nd philosphies that can prevent or manage such situations. It is time for planned significant change concerning how higher education should "operate" bringin in the best practices from all sectors, whetehr for profit or not for profit, to better the education and success of students and graduates. England has a window of opportunity to improve all of higher education. As is usually the case, the question is whether politics will trump the expertise in the development and ex-ansion of higher education in the United Kingdom.

  • Automatons we will become 20 May, 2009

    Terry, you have painted a highly depressing picture of the grim and pointless competitive world of contemporary educational administration in the anglo-saxon world. You have successfully identified some of the principles causes of the malaise, and the circumstances in which institutions find themselves. However, I cannot understand why you think any kind of for-profit education is in any way good for anybody. Your notions of 'success' and 'improvement' are undefined, but I guess you are referring to completion rates, high 'achievement' and finding suitable employment. What use are any of these things if the end product is generations of brilliant accountants, financiers, lawyers (or even engineers and biotechnologists) whose concepts of 'value' or 'quality' are so debased, a-historical and a-cultural that they can happily work 80 hours a week contributing to greater inequality, environmental destruction and the wiping away of history, tradition and indigenous culture while patting themselves on the back, stuffing their faces with starbucks, tapping on their blackberries and congratulating themselves on their 'successful' selfish existences. Education is nothing without perspective. Education is nothing without history and a commitment to truth. Education is nothing without values derived from generations of human experience. We are losing all of this, slowly but surely, and you fools who can't see the importance of this should think about it. And that goes for John Denham, DIUS, the LSC, Labour, Conservative, the Lib Dems and most 'successful' people in the U.K!

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14 May, 2009

 

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