There are few terminologies used in the higher education domain that are taboo for academicians and the public in general, and also, for policymakers in India. One such idea is education delivered by educational institutions that work on the principal of making a “profit”. The United States has been experimenting with multiple structures for educating American youth that include not-for-profit public universities, not-for-profit private universities and for-profit private universities. A report from a commission appointed by the US secretary of education, almost five years ago, says, “The entire financial aid system — including federal, state, institutional, and private programmes — is confusing, complex, inefficient, duplicative and frequently does not direct aid to students who truly need it. Need-based financial aid is not keeping pace with rising tuition.” For-profit universities in the US have been spreading like wildfire in the past few years, thanks to the growth in internet access, aggressive marketing and government subsidised student loans. Some of these “universities” are big, such as the University of Phoenix (part of Apollo Group), with over 400,000 students, and Kaplan University, one of the biggest for-profit universities. The US government has recently figured out that students at these universities are failing to repay their government subsidised loans at alarming rates, and it’s planning to impose stricter rules on these loans. The for-profit universities have been under criticism for many other reasons; the quality of education, and virtually, for the absence of academic standards. They accept anyone who can pay, and they seem to care primarily about the bottom line. They also haven’t addressed the fact that many online students are probably cheating to pass their courses, which aren’t very demanding in the first place. As a result, degrees from these universities are not highly regarded by employers, who are right to view them with suspicion. Thus, these universities have built their profits on the back of the federal government’s generous student loan programme. Almost a quarter of federal loan dollars go to their students, despite their woeful default rates. However, for-profit universities continue to operate in the US.
In a very recent article in Harvard Business School’s January-February 2012 issue, Parag Khanna and Karan Kemka, make a strong case for these universities, particularly in developing nations, saying that growth and wealth can be created by for-profit universities. They argue that “emerging economies do not require the sort of human capital that traditional western universities produce; instead of generalists, they need skilled graduates relevant to their developing industries. For-profit universities first and foremost offer courses that enable students to fill shortages in the market. They are the best recourse for emerging markets to build a skilled labour force, create more jobs, broaden consumer base, and ultimately sustain economic growth”. A big pressure game is being played both by for and not-for-profit universities and as a consequence, the US government has postponed “action on a proposal to regulate for-profit colleges and trade schools, granting the (education) industry a reprieve of a few months”.
The Indian higher education scenario also is witnessing an interesting challenge. We created, in addition to a public university system, 130 deemed-to-be-universities (DUs), and also, 102 state private universities (SPUs). Both these types of universities, in a legal sense, have adopted the trust-cum-society/Section 25 industries structure with a not-for profit motto. However, they are pseudo-for-profit entities extracting money from students by a very clever and innovative operational structure. What is interesting is that a majority of DUs have taken advantage of the government by getting subsidised land, water and power. The public university structure takes, and would continue to take, a major load of students. They are facing problems of reduced financial aid from the government and lack of academic, financial and governance freedom. It is unfortunate that reforms in public universities at both the central and state governmental levels are still taking a long time. These reforms also have links and implications for DUs and SPUs. But, our major challenge is to bring more private investments into the higher education domain. It is here that we need to look at the for-profit university idea for India’s needs and social-mixed-financial capacities. We should accept the concept of an educational company with clear and well-defined rules, regulations and operational structures. They should be made responsible for financial management and operational structure as any other private industry with the right to distribute surplus to shareholders or private investors. The only additional aspects that should become an integral part of the ‘Educational Company Act’ are checks and balances on quality, adherence to fair profit as defined by Gandhiji and greater transparency and accountability in operations. Indeed, we should bring all DUs and SPUs under the umbrella of the Educational Company Act. It would automatically curb all the malpractices in both these type of universities. Our gross enrolment ratio at present is around 17 today. We have to triple it over the coming 10 years. The government must, in addition to its own plan for investing more in education, think of an “out-of-box” approach for addressing our larger challenges that are emerging in a knowledge-linked economy.