Seeking new insights on the ‘Evolving Regulatory Context for Private Education in Emerging Economies’

Discourses on private higher education, and the role of private higher education in spurring on the globalization of higher education process, are emerging in a variety of contexts: informal discussions, classrooms, workshops and conferences, publications, protests, websites, and structured and unstructured policy dialogues.

GlobalHigherEd
is designed to help shed light on where thinking about the construction of new knowledge spaces takes place, and when possible what the content of such thinking is.

ifcbrochureOn the former role, it is worth noting that there are some ongoing on-line deliberations between now and 14 November about the “Evolving Regulatory Context for Private Education in Emerging Economies”. The deliberations are being sponsored by the International Finance Corporation (IFC), and more specifically the IFC’s EdInvest. The IFC is an institution that is part of the World Bank Group. Our brief entry in October (‘”Frontier markets”, the International Finance Corporation, and development’) explains a little more about the IFC, and provides a variety of links to this increasingly important global higher ed institution.

An introduction to the forum can be found here. The general discussion thread can be accessed by following the link along the right margin to Private Education Forum, or by following this link.

Key questions in the discussion include, according to the IFC:

Week 1 – November 3 to 7: What are the major challenges in regulating private education and how might they be overcome?

Week 2 – November 10 to 14: Should government involve private providers in policy and decision making relating to the role of the private sector? If so, what are the most effective mechanisms for doing this? If not, why not?

The online discussion that is underway now is an outcome of an earlier (May 2008) international conference that was attended by a small group of government representatives, accreditation officials, private providers, and World Bank Group officials. According to Svava Bjarnason, Senior Education Specialist of the IFC, the purpose of the May event was to:

begin a dialogue between the various players concerning how the regulatory context is evolving in relation to private sector providers. At the close of that event we agreed to continue the dialogue and to host an online discussion to engage the wider community in the debate.

This two week long dialogue is underway until 14 November so check it out now if you want to contribute.

Apart from the content, it is worth noting that this IFC-sponsored event, like the broader (more ‘open’) national policy dialogues that have been occurring in Australia and the UK (see our entry ‘Higher education policy-making, stake-holder democracy and the economics of attention’), is an experiment in the use of digital technology to facilitate (it is hoped) debate, innovative thinking, and new insights.  Yet as we noted in our previous entry:

new technologies operate within an ‘economy of attention’ – a point well made by Richard Latham in his influential 2006 book The Economics of Attention: Style and Substance in the Age of Information.

Now the essential point Latham is making is that we live in an information economy, and information is not in short supply. In fact, argues Latham, we are “drowning in it”. What is in short supply is ‘attention’! To grab attention, we need stylistic devices and strategies so that what Latham calls ‘stuff’—like debating the future directions for higher education—moves from the periphery to the center of attention.

Thus the IFC’s on-line discussion is worth tuning into and contributing to for obvious content-specific reasons, while the nature of the forum (on-line, open, two weeks long) can also be assessed as a vehicle to enable geographically dispersed voices to engage. The IFC’s hope is, we are guessing, that the discussion enables the generation of some new insights on a topic (the “Evolving Regulatory Context for Private Education in Emerging Economies”) that clearly needs to be thought about, and with considerable care and attention.

Kris Olds & Susan Robertson

A new breed of Indian university: private institutions with student support structures

Editor’s note: today’s guest entry has been generously provided by Raj Chakrabarti and Augustine Bartning.

Dr. Chakrabarti (AB Harvard; MA, PhD Princeton) is a chemical physicist at the Department of Chemistry, Princeton University, and founding member of the Chakrabarti Foundation, a nonprofit that supports education in developing countries. He works with several leaders in the arena of international higher education to develop strategies for higher education reform in India. He also moderates an international forum on science education in developing countries in collaboration with the Infinity Foundation, Princeton, NJ.

Mr. Bartning (BS, Georgetown University) is Director of Institutional and International Strategies at Keeling and Associates, a higher education consulting firm located in New York City that specializes in student support infrastructures and institutional assessment strategies. He is currently involved in managing the International Center for Student Success and Institutional Accountability (ICSSIA), which aims to set international standards for quality assessment, with a particular focus on institutions of higher learning in developing nations. The issues they discuss below are examined more comprehensively in their article, ‘Developing Globally Compatible Institutional Infrastructures for Indian Higher Education’, submitted, Journal of Studies in International Education (Sage).

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Much has been written in recent months on the challenges facing India in her efforts to develop an expansive university system that is capable of educating a larger subsection of the growing population. We consider here a different, oft-overlooked challenge confronting institutions of higher learning in developing countries like India – namely, the cultivation of an academic environment that is focused on the holistic development of globally conversant students (Keeling, 2004). In North America and Europe, numerous studies have suggested that a dominant factor that contributes to the success of the most highly ranked universities is the attention afforded directly to the student and complementary support structures that exist for the primary goal of maximizing the productivity of the student experience (Schulz, Lee, Cantwell, McClellan, & Woodard, 2007). Most of these schools demonstrate a strong commitment to addressing student needs and issues that affect student learning and engagement.

As a general rule, Indian universities – especially publicly funded institutions – have not been held to any systemic level of accountability when it comes to student support structures. Attention to the individualized learning needs of students has historically been lacking in India, as well as in most other developing countries. However, within the past several years, a small group of Indian institutions have begun to prove themselves the exception to this norm. These institutions appreciate the benefits resulting from delivering comprehensive student services. They understand how these services can be integrated throughout every level of the institutional infrastructure. Moreover, they acknowledge that offering student services can provide them with competitive advantages they need for success in a rapidly evolving, increasingly global educational landscape.

Strikingly, these changes have not typically been made by traditional public universities, but rather among privately funded schools, which are trying to fulfil a national demand and distinguish themselves among the elite world institutions. Through their introduction of student affairs programs and services, these newly created, non-traditional institutions are fostering the development of a generation of socially, developmentally, and globally competent Indian graduates.

Here, we profile one such innovative private institution – Heritage Institute of Technology (Heritage) in Kolkata – to illustrate what is rapidly becoming a new trend in the Indian higher education landscape. Heritage is a premier privately funded educational institution, created and financed by the Kalyan Bharti Trust, which was established by a consortium of successful North Indian entrepreneurs and professionals. Heritage has only been in existence for seven years, but in that short time, it has become a model for the new generation of private Indian institutions of higher education, even pulling faculty away from prestigious government funded universities (Probir Roy, Vice Chancellor, Heritage & Pradip Agarwal, CEO, Kalyan Bharti Trust, personal communication, October 28, 2007). Heritage has focused on enhancing the overall student experience and creating structures and metrics that will accurately gauge student success. Some examples include the formation of a functional Alumni Association, creation of a Student’s Council consisting of committees like Cultural, Academic, Magazine, Games, and Sports, and approval of student chapters of the Computer Society of India (CSI), the Instrumentation, Systems, & Automation Society (ISA), the Indian Institute of Chemical Engineers (IIChE) and the Institute of Electrical & Electronics Engineers—which frequently organize seminars and workshops.

Heritage is also in pursuit of very progressive student support systems, which are modeled closely after the most popular student support models currently employed in the US and Canada—inclusive among these models are the best practices for primary health care and mental health services. The school provides medical insurance for all students (virtually nonexistent among Indian public universities), disseminates free textbooks and laptops, and operates a sophisticated information technology and communication infrastructure that is supported by private industry. Heritage maintains a strong relationship with students in advancing their academic standing in a global setting: students have received prestigious awards such as the World Wide Topper distinction, and won international engineering contests. Due increasingly to administrative efforts that promote civic engagement, Heritage students are encouraged to reach beyond the walls of the institution to partake in integrative and service learning programs, such as teaching computer software skills to underprivileged children in India.

Perhaps most importantly for the globalization of Indian higher education, progressive institutions like Heritage have a substantial advantage over public institutions in developing partnerships with Western schools, primarily because of their flexibility and willingness to adopt student support infrastructures aligned with Western models. Many foreign universities have begun to contact private Indian universities in search of collaborative student exchange programs. For example, the London School of Economics (LSE) and New Jersey Institute of Technology (NJIT) entered into negotiations with Heritage in 2007, and this year, Heritage is sending a consortium of students to take courses for a semester at NJIT. In turn, Heritage seeks to offer international students an academic experience on its own campus similar to that of Western institutions.

The accelerated development of such private Indian institutions – and their ability to outpace public institutions even in their relative youth – was recently underscored by the remarkable ascent of the Indian School of Business (ISB), located in Hyderabad. Like Heritage, ISB was founded by a consortium of Indian professionals. In February 2008, ISB was listed as one of the top 20 global business schools by the Financial Times (FT) annual MBA 2008 rankings—even above Northwestern’s Kellogg School of Business. Although it has only been in existence for 6 years, the ISB is the first Indian institution (public or private) to rank within the top 300 schools in its category at an international level. The FT ranking criteria include international mobility and career progression of alumni. In this regard, ISB has developed a career advancement service that supports students in career choices and works with employers to help make job placements.

While Indian institutions such as Presidency College, the University of Mumbai, and the University of Delhi are the analogues of top-tier western universities, they lack serious channels of horizontal communication across schools and departments (Keeling, 2007), and vertical communication between students and faculty. For example, students interviewed at Presidency College cited depression and career questions as commonly overlooked issues, and expressed frustration at the dearth of places to turn for advice or counselling. A small number of Indian public institutions – including the Indian Institutes of Technology (IITs) – have taken preliminary efforts to establish such communication channels. As of the time of this writing, these services are proving inadequate to deal with the rising stress at Indian universities. For example, between 2005 and 2008, five students at IIT Kanpur (often regarded as the nation’s top engineering school) committed suicide. Such incidents have focused international attention directly on the quality of the student experience at Indian public institutions.

As competition in the Indian higher education market grows, it will become increasingly difficult for top Indian institutions to globalize without student support services and internationally recognized methods for gauging student learning outcomes. Although in the West the value of a degree from a top traditional university holds a value with which for-profit institutions are unable to compete, institutions of higher education in India operate on an increasingly level playing field where integrative programs can make even the newest university an attractive candidate for international partnerships, exchange programs, and domestic demand. With minimal international standards for assessment and student support services*, such progressive institutions could witness a growth far exceeding that of similar institutions in the West, where the target audience is much smaller and more limited in scope.

* International consortiums, such as the recently founded International Center for Student Success and Institutional Accountability (ICSSIA), may play an important role in the development of such compatible infrastructures

References

Keeling, R.P., Underhile, R., and Wall, A.F. (2007). Horizontal and vertical structures: The dynamics of organization in higher education. Liberal Education. Washington, DC: Association of American Colleges and Universities.

Keeling, R.P., ed. (2004). Learning Reconsidered: A Campus-Wide Focus on the Student Experience. Washington, DC: National Association of Student Personnel Administrators and American College Personnel Association.

Schulz, S.A., Lee, J.J., Cantwell, B.J., McClellan, G. & Woodard, D. (2007). Moving Toward a Global Community: An Analysis of the Internationalization of Student Affairs Graduate Preparation Programs. NASPA Journal.

Raj Chakrabarti (rajchak@princeton.edu) and Augustine Bartning (augustine@keelingassociates.com)

Developments in the world of private for-profit global higher ed

The private for-profit global higher ed world generated three news items of note this morning.

First:

LAUREATE EDUCATION, INC. ACQUIRES LEADING UNIVERSITIES IN MEXICO AND COSTA RICA

Baltimore, Maryland, July 8, 2008 – Laureate Education, Inc. today announced it has acquired the Universidad Tecnológica de México (UNITEC), one of the largest private universities in Mexico, and the Universidad Latina and Universidad Americana (UAM) in Costa Rica.

UNITEC has eight campuses throughout Mexico, including six in Mexico City, one in Guadalajara and one in Monterrey. The university has a 40-year tradition of providing higher education throughout the country, and today serves more than 36,000 students….

Universidad Latina, the largest private university in Costa Rica, was founded in 1989 and has more than 16,000 students. The university is widely recognized for its health sciences programs, including medicine and dentistry. UAM, founded in 1997, has more than 4,000 students, and specializes in business education. Combined, the schools have 13 campuses throughout Costa Rica.

Continue reading here

Second:

APOLLO GROUP, INC. APPOINTS STRATEGIC AND FINANCIAL ADVISOR CHARLES B. EDELSTEIN AS NEW CHIEF EXECUTIVE OFFICER

PHOENIX–(BUSINESS WIRE)–July 7, 2008–Apollo Group, Inc. (Nasdaq:APOL) (“Apollo Group,” “Apollo” or “the Company”) today announced the appointment of Charles “Chas” B. Edelstein as Chief Executive Officer and Director, effective August 26, 2008. Apollo’s founder, Dr. John G. Sperling, continues to act as Executive Chairman of the Board of Directors….

Mr. Edelstein, 48, has more than 20 years of experience as a strategic and financial advisor. He joins Apollo Group from Credit Suisse, where he served as a Managing Director and headed the Global Services Group within the Investment Banking Division, as well as the Chicago investment banking office. Mr. Edelstein founded and oversaw Credit Suisse’s leading advisory practice in the education industry, where he served as advisor to many of the largest education companies, including Apollo Group.

Continue reading here

Finally, the Wall Street Journal noted, today, that Marcus Brauchli, the former managing editor of the Wall Street Journal (now owned by Rupert Murdoch) will become the Washington Post’s new executive editor. The formal press release is here.

Why profile this topic? Recall that the Washington Post, despite its iconic status, is effectively being bankrolled by private for-profit global higher ed (aka Kaplan), as we noted in an entry titled ‘Pulitzer Prizes and the global higher ed industry‘. This point is reinforced in the Wall Street Journal:

But the Post has been struggling with the same forces that have devastated the newspaper industry in recent years — defections of readers and advertisers to the Web. Over the past 24 months, the paper’s weekday circulation has dropped 7.1% to 673,180, according to the Audit Bureau of Circulations. Print-ad revenue fell 13% in 2007, according to the Post. While Washington Post Co. has been somewhat insulated from the impact of these changes by its profitable Kaplan education business, the paper has lately taken steps to cut costs. It eliminated more than 100 newsroom positions, bringing the total newsroom count to about 700 from its peak of more than 900 in 2003. Some staffers worry that further cuts are coming.

These three news items are lenses onto three related development patterns:

  • Diversification, dependency, and cross-subsidy via for-profit private higher ed (in the case of Kaplan).
  • The extension of private higher ed networks into new ’emerging market’ geographies via the acquisition of private universities (in the case of Laureate).
  • Financialization, with institutions of for-profit private higher ed reaching into the calculative networks that enable global higher ed value chains to be designed and brought to life (in the case of Apollo).

Given the scale of education services on offer via Laureate, Apollo, and Kaplan – over 2 million students being served right now – these news items and development patterns are worth taking note of.

Kris Olds

Pulitzer Prizes and the global higher ed industry

News that the Washington Post‘s excellent journalists just won six Pulitzer Prizes for journalism, including for Public Service, Breaking News Reporting, Investigative Reporting, National Reporting, International Reporting, Feature Writing, and Commentary, should serve to remind GlobalHigherEd‘s readers that the Washington Post Company is being bankrolled by Kaplan, by far the Post’s most profitable unit. Kaplan, for those of you who do not know, is a global education company, with approximately 50% of its revenue derived from the higher ed sector. It serves over 1,000,000 students per year in over 600 locations, and employs 27,000 staff according to Kaplan sources. The numbers below speak for themselves:

And in the Washington Post Company 2007 Annual Report, the company had this to say “to our shareholders”:

At The Washington Post Company, every single one of our businesses has dramatically changed over the past 15 years. In some cases, the changes were for the better.

Fifteen years ago we were accurately described as a media company. Over that time Kaplan has grown into a powerhouse, a multidisciplinary and increasingly international education business unlike any other education company in the world. For the last six months of the year, Kaplan’s revenue was almost half of the company’s, at 49%. Kaplan will continue to grow stronger in 2008. The Washington Post Company is now an education and media company (this isn’t “re-branding”; it’s reality), and the accent on education could get a lot stronger in the future.

On the media side, the financial and operational results at Cable ONE have been exceptional. Profits have bounded up during years when not all cable companies have performed as well. Customer service is at an all-time high in an industry not known for that quality.

Elsewhere in the company, the news is not as good.

This is a further sign of the increasingly significant role of private for-profit education at a global scale, and how higher education companies are perceived to be partial counter-cyclical mediators for revenue and profitability. However such trends cannot help but lead to the reallocation of capital away from the media (even despite such prestigious prizes), and towards education, at an intra-firm level.

Kris Olds

Private Canadian education firm buys community college and expands existing links with China

yvr.jpgAs recently reported in the Vancouver Sun, a large Vancouver-based private company called CIBT Education Group has bought Sprott Shaw Community College – the oldest and largest private community college in Western Canada. Established in 1994, CIBT Education Group runs a number of post-secondary schools in China, providing both academic programmes and vocational training.

Sprott Shaw Community College, originating in Vancouver, has grown over the last years to include 20 locations across the province of British Columbia, training 4, 500 students each year with the aim of preparing them for successful employment. CIBT Education Group intends to export Sprott Shaw Community College’s vocational programmes to China. According to Toby Chu, Vice Chairman, President and CEO of CIBT, “over 250 million workers from rural China are gradually migrating to the coastal and urban cities of China in search of better paying jobs to improve their standard of living. These workers will require extensive vocational re-training or career enhancing skills in order to secure better paying jobs in China’s modern and rapidly advancing economy. With 104 years of operating experience and over 140 additional career, vocational and degree granting programs available to us, this expansive network of supporting infrastructure, teaching resources, knowledge and experience provided in this transaction with Sprott-Shaw Community College adds tremendous value to CIBT Schools in China and our overall business.” CIBT managers based in China will ‘repackage’ Sprott Shaw’s programmes for a specifically Chinese market.

cibtsumm.jpgAs has been observed before on GlobalHigherEd, China offers a huge potential market in higher and further education. CIBT Education Groups notes in a recent Executive Summary that with 320 million students in 1.35 million schools China has the largest education system in the world. However, it is unable to meet the demand in higher education (with only 1.3% of the population currently enrolled in university compared to 5.4% of the population in the US). According to CIBT, an additional 20 million people are seeking vocational training.

At the same time as providing educational places in China, the programmes proposed by CIBT will also initiate flows of Chinese students into the Canadian education system. CIBT runs four-year courses, of which students spend two years ‘overseas’. This new initiative will direct students to British Columbia for two years of their four-year course. The practice of sending Chinese students to overseas institutions is already established by CIBT. The company has ‘credit transfer agreements’ with universities in the US, Canada, Australia, New Zealand, Malaysia and the UK, which enable Chinese students to transfer credits earned at CIBT institutions in China to these overseas ‘academic partners’ – thereby receiving a valuable overseas degree at the end of their course.

This is a further example of Canadian firms seeking to ‘do business’ in China. In 2007, CIBT was named in a report by the Asia Pacific Foundation of Canada as a case study of Canadian companies that have developed successful ‘Asian strategies’. CIBT has also established partnerships with large private education providers in the US, such as Western International University and WyoTech. In the next two years, the Group plans to build 40 new Education Centres in 40 different Chinese cities located within existing colleges or universities. It also has plans to acquire other state-owned colleges and to transform them into ‘private business colleges’.

Johanna Waters

Apollo Group and the Carlyle Group form $1 billion joint venture to make investments in the international education services sector

GlobalHigherEd was established on 1 September 2007. Since then we have been profiling (often through the “graphic feed” mechanism) some of the broader structural forces, trends and outcomes that are emerging in the context of the globalization of higher education services.

These transformations are also evident in the form of news releases. On Monday 22 October these news releases (link to Apollo and Carlyle) were circulated at a global scale, extracts of which are pasted in below. This development highlights the nature of unmet demand for higher education services in select regions and countries, as well as the role of the private sector in providing (or planning to provide) higher education services when state capacity to provide said services is limited, by accident or design. See these links for further media and blog coverage regarding this significant development. Carlyle is the (in)famous private equity firm associated with numerous Washington DC political power-brokers. See Tegenlicht’s 48 minute long Dutch/English video The Iron Triangle – The Carlyle Group Exposed (2004), though also be sure to examine this February 2007 BusinessWeek analysis of how the Carlyle Group is now seeking to diversify its activities (and in the process become less of a political flashpoint).

apolloshares.jpg

Apollo, a listed firm (see its share history above), operates the US’ largest university – private for-profit University of Phoenix, with approx. 250,000 students. This news release comes one week after the Financial Times noted that US-based Bridgepoint Education is planning to enter the UK’s higher education scene, spurred on by the “level playing field” dynamic generated by top-up fees in the UK, and the relatively large proportion of foreign students who continue to be drawn to the UK (see this link for an interview with Bridgepoint’s CEO, and the OECD’s Education at a Glance 2007 for data on foreign student mobility patterns).

The press release about the formation of “Apollo Global” states:

Apollo Group and the Carlyle Group Form $1 Billion Joint Venture to Make Investments in the International Education Services Sector

PHOENIX & WASHINGTON–(BUSINESS WIRE)–Oct. 22, 2007–Apollo Group, Inc. (Nasdaq:APOL) (“Apollo Group” or the “Company”), and private equity firm The Carlyle Group (“Carlyle”), today announced that they have formed a $1 billion joint venture, Apollo Global, Inc. (“Apollo Global”). Apollo Global intends to make a range of investments in the international education services sector. Apollo Global will target investments and partnerships primarily in countries outside the U.S. with attractive demographic and economic growth characteristics. Apollo Group has committed up to $801 million and will own 80.1% of the joint venture. Carlyle has committed up to $199 million and will own 19.9% of Apollo Global. Investments and funding will be subject to approval by the respective investment committees of both Apollo Group and Carlyle. Apollo Global will be a consolidated subsidiary of Apollo Group and Greg Cappelli, Apollo Group’s Executive Vice President and Director will be Chairman of the subsidiary.

Commenting on the new venture, Greg Cappelli said, “We are very excited about this new joint venture and our partner, The Carlyle Group. Our core competencies in the education space, combined with Carlyle’s industry relationships and strategic assets across the global education sector, will allow us to successfully capitalize on the tremendous global opportunity that exists in the marketplace.”

Brian Mueller added, “We will continue to invest capital in our high return core domestic business, and through Apollo Global, we will also explore strategic and value creating global acquisition opportunities. Importantly, we reiterate that any investment must meet our disciplined investment criteria as we remain committed to creating long-term value for our shareholders.”

Brooke B. Coburn, Managing Director and Co-head of Carlyle Venture Partners III, L.P., said, “Global demand for higher education is strong. Apollo Group’s operational expertise coupled with Carlyle’s global network make this a powerful partnership.”

About Apollo Group, Inc.

Apollo Group, Inc. has been an education provider for more than 30 years, operating the University of Phoenix, the Institute for Professional Development, the College for Financial Planning, Western International University and Insight Schools. The Company offers innovative and distinctive educational programs and services at high school, college and graduate levels at 259 locations in 40 states and the District of Columbia; Puerto Rico; Alberta and British Columbia, Canada; Mexico and the Netherlands, as well as online, throughout the world.

About The Carlyle Group

The Carlyle Group is a global private equity firm with $75.6 billion under management committed to 55 funds. Carlyle invests in buyouts, venture & growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, technology & business services and telecommunications & media. Since 1987, the firm has invested $32.3 billion of equity in 686 transactions for a total purchase price of $157.7 billion. The Carlyle Group employs more than 900 people in 21 countries. In the aggregate, Carlyle portfolio companies have more than $87 billion in revenue and employ more than 286,000 people around the world. http://www.carlyle.com.

Also see 23 September Inside Higher Ed and Chronicle of Higher Education stories on this development.

Kris Olds