A For-Profit College Is the First of Its Kind to Gain Special Government Status in Britain


Student interest in BPP University College of Professional Studies, which includes this law school in the Holborn area of London, has risen since the British government gave the for-profit institution special status.
August 22, 2010

Last month, David Willetts, the minister who oversees universities in Britain, conferred the title of university college, roughly equivalent to an American community college, on the BPP College of Professional Studies, the first British for-profit institution to be awarded that distinction. The impact was immediate.

On July 26, the day of the announcement creating the new BPP University College of Professional Studies, traffic to the institution's Web site nearly doubled from the daily average a year before. Before the news, BPP received about 25 phone inquiries a day from prospective students in the fields of business and law, the college's specialties. The figure has jumped to more than 200, and the institution has hired dozens of additional staff members and extended its weekend hours to deal with the increased demand.

BPP's new status is a sign of the growing profile of for-profit higher education in Britain and the new government's openness to such providers, several of which operate in the country, often in collaboration with local universities. Although several providers, such as Laureate, which has about a dozen campuses and several online outlets on the continent, also operate in Western Europe, the region is seen as less likely to embrace for-profits and has limited the expansion ambitions of some of the biggest providers.

Changes Widen Market

The flurry of interest from British students is being driven not just by BPP's transformation into a university college, but by broader trends in higher education in Britain, where the new government's drastic cuts in public financing have meant that universities are increasingly unable to meet demand.

Last week students across the country received their grades for the national A-level examinations that determine university admissions. More students than ever are scrambling for places during this year's clearing, the name for the period when students still without a spot for the forthcoming academic year are matched with institutions seeking to fill vacancies. Amid predictions that as many as 170,000 students will fail to secure a spot, a growing number are considering nontraditional alternatives, including the options offered by BPP and Britain's handful of other private higher-education institutions.

The creation of Britain's first for-profit college against that increasingly tumultuous higher-education backdrop is being closely watched, both at home and abroad, and not least by American providers looking to expand their international reach.

Jeffrey M. Silber, an analyst with BMO Capital Markets, says that heightened governmental scrutiny means that the American for-profit educational industry "is under a tremendous amount of pressure here," and that companies are seeking opportunities for expansion abroad. Troubles at home, however, mean that, "right now, they're trying to stop the hemorrhaging here," he says.

BPP was acquired last year by the Apollo Group, the American parent company of the for-profit behemoth University of Phoenix, which has made fitful attempts to branch into Europe. Two years ago the University of Phoenix closed its Rotterdam outpost, which a company spokesman described as both an online and a campus location, and moved the student services it had provided there to Dubai.

Kevin Kinser, an associate professor of educational administration and policy studies at the State University of New York at Albany, and a collaborating scholar in the university's Program for Research on Private Higher Education, says that the British decision is "almost like a beachhead," marking a milestone that American for-profits such as Phoenix have long sought and stoking expectations of expansion, not just in Britain but also on the continent.

But while circumstances in Britain have led to new opportunities for private providers, Europe presents an entirely different set of challenges. "Britain stands apart," Mr. Kinser says.

European Barriers

Although private higher education has boomed in recent years in much of the world, especially in parts of Asia, Latin America, and even in Central and Eastern Europe, Western Europe has resisted the trend. The global growth has been fueled by fast-growing demand, as higher education in many regions has made the transition from serving an elite population to the broader public.

But as Philip G. Altbach, director of the Center for International Higher Education at Boston College, puts it, in most countries, other than the United States and a few other exceptions, "private higher education is not quality higher education—it's access higher education, it's demand-absorbing."

In Western Europe, public universities are seen as the most prestigious and, for demographic reasons, the region has not seen the huge surge in demand that has fed the growth of private providers elsewhere. In many European countries the concept of tuition is still such a novelty that the very notion of private higher education, let alone for-profit private education, remains a unfathomable conceptual leap, says Mr. Kinser.

As in the rest of Europe, British higher education has long been dominated by the state. In recent years, however, the country has augmented public subsidies of higher education by raising tuition, which was introduced in 1998. In 2004, the government raised to £3,000, or $4,660, the limit for what universities in England, Northern Ireland, and Wales could charge domestic undergraduates and those from other European Union countries. An independent review of how higher education is financed is widely expected to recommend further increasing, or even removing, the cap on tuition when it is released this autumn. The report will be introduced against a backdrop of the most severe higher-education budget cuts in a generation. The new coalition government—and Mr. Willetts in particular, a Conservative—has made clear that change is in the air and that private institutions could soon be playing a much bigger role in Britain's higher-education landscape.

BPP is the first for-profit provider to be directly granted degree-awarding status, but several others, including the leading American companies, already operate in Britain. Kaplan, the subsidiary of the Washington Post Company, for example, owns Holborn College in London and offers programs validated by or affiliated with a host of universities—an arrangement that typifies how for-profits have managed to make inroads even without the independent power to grant degrees.

Models for Growth

There is little doubt that for-profit providers in Britain will continue to expand, says Steve Woodfield, a senior researcher at Kingston University and one of the authors of a recent report on the growth potential of British for-profit higher education. The "real issue," he says, is whether that expansion is driven by partnerships between private colleges and the universities, with universities providing validation and accreditation, or whether BPP's model, "where a new provider with a base in the U.K. starts to recruit large numbers of students and charges market-rate fees," wins out.

Carl Lygo, BPP's chief executive, says that "the time is right" for an institution such as his to take on a greater role. "The government can't afford to fund higher education in the U.K., and we're a high-quality private provider who can."

BPP developed as a test-preparation business, and most of the instruction it has provided has been in accounting and law, largely through programs developed in conjunction with employers. The company has 120,000 students in Britain and another 20,000 elsewhere in Europe, with degree programs in Ireland and the Netherlands.

In 2007 it became the first private company to be granted degree-awarding power in Britain, where last year it began offering undergraduate degrees in business law and law, Although only 200 undergraduate students enrolled, Mr. Lygo says that the company is hoping to increase that figure to about 1,000 this year.

BPP charges £3,225, or just over $5,000 a year in tuition, the same amount students at public-sector universities pay, although students enrolled in BPP's bachelor's of law and business law degree programs are not eligible for the same government-backed student loans. They can, however, apply for government loans that cover living costs. BPP runs its own tuition loan program in collaboration with National Westminster, one of Britain's leading banks, offering student loans at a commercial rate of interest.

Differences From U. of Phoenix

BPP's model is very different from its American corporate cousin, Mr. Lygo says. Where most for-profit institutions, such as the University of Phoenix, hire faculty members on a contract basis, 90 percent of BPP's teaching staff are permanent employees. "We've basically mimicked the public-sector model," he says, although the institution differs in many key ways from conventional universities.

Although BPP has physical campuses in several of the 14 British cities in which it operates, "we're efficient in the sense that we don't have a massive campus operation—we have libraries, classrooms, and breakout spaces, but we don't have green leafy spaces," Mr. Lygo says.

The courses it offers are developed centrally and then delivered in the institution's branches as a way to ensure uniformity of quality and content. The model is one that Mr. Willetts said in a recent speech he would like to see embraced by more higher-education institutions, some of which he proposed could cease teaching degree programs of their own design and instead form partnerships with other institutions to deliver courses devised elsewhere. BPP has recently begun moving into online provision, which Mr. Lygo says was already in the works before the company's acquisition by Apollo, although that development has speeded up the process.

For a student like Nina Hersson-Daniels, who has a young son and is embarking on a midcareer switch to law, the flexibility BPP's degree program offered was central to the institution's appeal. She also considered a law course offered by Kaplan in cooperation with Nottingham Trent University, which she says would have required her to spend more time in its classrooms. She chose BPP because its program will require her to spend just two days a week on campus, allowing her to do the rest of her course work from home.

Watchful Faculty Union

Others have not been as enthusiastic about BPP. The University and College Union, Britain's main faculty union, has led the opposition to for-profit institutions. A union spokesman says that its policy position is "that access to education should be free," meaning that it objects to for-profit universities "on principle." But as private institutions have gained a foothold, the union has reluctantly recognized that they are an increasingly significant part of the educational landscape. It is now focusing on campaigning to ensure that the sector remains strictly regulated "so we don't get the same abuses that are such an issue of national debate in the U.S.," the spokesman says.

Such staunch resistance has been fairly isolated, Mr. Woodfield says. As long as private providers are not allowed to tap in to the same public-financing streams that conventional universities have access to, "they are not seen as a great threat, and are instead seen as a support that can absorb demand," often in direct partnership with universities, he says.

For the union, even the growing number of public-private partnerships raises alarms, because the arrangements "inject structural imperatives to overrecruit and pile people in" the spokesman says, putting an "untenable strain on quality assurance, regardless of the intentions" of the universities.

For now, along with so much else in British higher education, for-profit providers "are at the cusp of change," says Mr. Woodfield, with much hinging on the long-awaited outcome of the review of the financing for universities. As it becomes clearer where the money will come from in the future, new opportunities are likely to open. If the cap on fees is raised significantly or lifted entirely, private providers stand to profit greatly, but societal and institutional barriers to their wider expansion in Europe look unlikely to fall anytime soon.