Would Pearson and Kaplan Remake British Higher Education?

The Higher Education community in Britain is up in arms as they found out how many times David Willetts, the Universities and Sciences Minister, met representatives from two large 'American' Education companies, Pearson and Kaplan, before the White Paper outlining the new funding regime for British Higher Education was published. The conspiracy theorists are indeed claiming that the white paper is a naked attempt to introduce American style Private Higher Education in Britain, and these meetings 'prove' that. Indeed, there is nothing surprising about the Government's intent to create an organized private education sector - that is the easiest way to squeeze cost efficiencies and reduce the burden on exchequer - but the existence of the Americans in the equation was the real issue in this debate.

Outside the circles where Private Higher Education is considered blasphemous, there is quite a buzz about these meetings as well. There are more players in the market than just Pearson and Kaplan. Quite a few American Private Education companies have recently engaged in Britain. Indeed, Apollo Group has taken over BPP, Britain's largest Private Sector education company, last year, for over $600 million, and since then, BPP University College has become a privately funded degree granting institution, the first in over thirty years. Laureate Inc. has a franchise arrangement with University of Liverpool and run their MBA programme online: They have engaged many British For-Profit colleges in take-over discussions over the last few years. DeVry Inc. has made forays into British Professional Education market through their subsidiary, Becker Professional Education, and has taken over ATC, a specialist content provider for hugely popular British Accounting qualifications. And, Capella Education has taken over RDI, a British Distance learning provider, which has applied for independent degree granting privileges.

However, despite all this, Pearson, a billion dollar company deeply entrenched in Education Publishing and owner of such great British media properties such as the FT and The Economist (not to mention the much-loved brands like Penguin), deservedly generate fear and respect. It is their size, the strength of the brand, the deep engagement in British education system through their subsidiary, Edexcel, and their presence and recognition across the world, makes them the nearest thing to the proverbial elephant in the China shop. They have already announced their ambitions to set up a Pearson University publicly and entered into an arrangement with Royal Holloway College, a constituent college of University of London, to offer degree programmes in the interim. Also, leveraging their long standing relationship with the Higher Education sector, they have created progression routes from their various vocational qualifications, Higher National Diplomas, to University degrees at various universities across the country. And, their efforts are backed up by a clear technology strategy, where they have re-branded their not so successful e-college project in the United States into a freely available hosted learning platform called OpenClass, and partnered with Google Apps to create a platform for Higher Education institutions to offer integrated student services. Seen in its entirety, Pearson's seems to be wanting to become the Microsoft of the Higher Education industry, a dominant, almost monopolistic player at the commanding heights of the industry.

In comparison, Kaplan, which had a more established presence in Britain through Professional Education in Accounting and also for various pre-university courses, looks weaker. Their weakness in America and their track record of regulatory trouble there puts them somewhat in backfoot. In fact, their regulatory problems were cited as the main reason why the Ministers should not be hobnobbing the American private education companies. However, Kaplan has many strengths - its international presence and strong records in Professional Accountancy training, possibly the most profitable sector for British Private education - and this may translate into a quicker accreditation for independent degree granting powers, with or without the ministerial blessings.

In a way, there is little point questioning the justification of opening up British Higher education to American 'invaders': It has already happened. The question one has to deal with is how this changes the game, and what impact this will happen in the Higher Education market overall. I shall argue that what we are seeing here is the early stages of creation of education MNCs. While private higher education is a common thing, it is nationally regulated and very much fragmented. So far, the national education systems ruled supreme, and even the companies like Laureate and Apollo, which has a widely dispersed presence, followed a loose federal structure and allowed the component brands, various national universities and business schools, to operate more or less independently. However, Pearson and Kaplan have the potential, and the plans, to combine the world's most respected degrees with huge international markets. Consider Pearson, for example: It has created a deep engagement in India through Edexcel and its vocational training JV, IndiaCan. The British colonialists created a world-leading empire by combining Indian demand and British manufacturing: Pearson, less imperialistic but no less commercial, seems to be creating a similar model in the education space. Kaplan, on the other hand, is combining China, where they are strong, with British and American professional education, and potentially Higher Education, all with the same global brand. At a time when national education systems are facing direct challenge from globalization (and one keeps talking how few of India's graduates, for example, are employable in global companies like Microsoft), rise of Education Multinationals are inevitable. Bringing American private education companies to Britain may just be the first step in a transformation of transnational education business model.

Apart from the global implications, companies like Pearson and Kaplan will also change the British Higher Education industry. Indeed, they will challenge directly the mid-tier British universities and will wean away students and funding from them. But, it will also wipe away the unorganized, largely inefficient, low quality private colleges, which offer collaborative degree programmes through university partnerships at this time. They would undermine the cost advantages these colleges enjoy through their economies of scale and superior access to technology, people and content, and offer better recognition and employer connections alongside their programmes. This will be a three to five year transformation of the sector - let's call it 'Corporatization' if there is such a word - and one would hope that this would happen for the better for the students.

Does this mean that there would be no space for smaller colleges in the sector anymore? While that seems to be the policy drift of this government - the scale requirements forced by Border Agency and Quality Assurance Agency requirements have already started a scramble for mergers and private equity buyouts - the large integrated entities will still be unsuited for specialist sectors. While one can see these large multinational entities taking over Accountancy, Law and Computing, the sectors which attract maximum number of fee-paying students, the narrower segments like Entrepreneurship, Interactive Media, Product Design, which may be profitable at a small scale, will remain the preserve for smaller independent colleges. Pearson and Kaplan may have enormous strengths in these areas too, but they may find it uneconomical, in the pure relative sense, to invest in these segments. That's indeed good - no one wants one or two companies dominate an entire industry - and this is the hope the current players in the British For-Profit education industry is living with. It will not be far from truth that this may be the route to go even for mid-tier public universities, as the competition transition from reputation hungry red-brick counterparts to these mammoth private players who are not expansion-shy, to focus on specialist segments. That will indeed transform what these universities are for: From their original mission of serving local communities, they have to change into being a player in the global education ecosystem. That will indeed be the change we are heading towards.


Popular posts from this blog

Lord Macaulay's Speech on Indian Education: The Hoax & Some Truths

Abdicating to Taliban

The Morality of Profit

A Conversation About Kolkata in the 21st Century

‘A World Without The Jews’: Nazi Ideology, German Imagination and The Holocaust[1]

A Future for Kolkata

The Curious Case of Helen Goddard

The Road to Macaulay: Warren Hastings and Education in India

When Does Business Gift Become A Bribe: A Marketing Policy Perspective

The Road of Macaulay: The Development of Indian Education under British Rule

Creative Commons License