Leader: Concerns, public and private

"The for-profits have kicked our butts," a former university president from the Big Ten (a grouping of US college athletics and research giants) told The New York Times last week, in reference to the fact that, unlike their non-profit rivals, the moneymakers had responded swiftly and efficiently to change in demand for higher education.

It used to be simple: public universities were good, private profiteers were bad. But the lines have become so blurred that the old ideological battleground no longer exists. The for-profits meet a real need, as was noted last week by Alan Ryan, visiting Fellow in politics at Princeton University and former warden of New College, Oxford. They offer both face-to-face and online teaching, enable students to get a degree while working and pull in the non-traditional students that other institutions cannot reach. It is no surprise that David Willetts & Co are keenly interested in what they can do for a conservative and seemingly complacent UK higher education sector.

Worldwide, the latest Organisation for Economic Cooperation and Development figures reveal that the proportion of students enrolled at private institutions receiving less than 50 per cent of their funding from the state is as high as 80 per cent in Japan and South Korea, more than 60 per cent in Brazil and Chile, and 26 per cent in the US.

It is the US, however - where the for-profits have recently taken a deserved congressional kicking - that highlights the ironies that surround private operators. There, the for-profits have expanded their market share massively. But a huge percentage of their revenue comes from federal loans that thousands of students default on - which means that the government in effect funds these operators but cannot regulate them properly. The Obama administration wants to bring in a "gainful employment" law (which would tie courses' eligibility for financial aid to debt-repayment rates and graduate salaries) in an effort to regulate, but the jury is still out on its workability.

In the UK, meanwhile, where the for-profit sector is in its infancy, private providers want a level playing field with government-funded universities. But if there is huge expansion - and if students at for-profit institutions can get loans - there is a danger that the US problems could be replicated.

Whatever the system's flaws, Carl Lygo, the head of BPP, the first for-profit to gain degree-awarding powers in the UK, suggests that regulation works because otherwise there would be more for-profits but of poorer quality. BPP worked hard to win the coveted degree-awarding prize, and Mr Lygo is well aware that his organisation is under scrutiny. "We are carrying the torch for the whole of that sector," he says in our cover story.

It is absolutely right that BPP be watched closely and that the Quality Assurance Agency review its degree-awarding powers every six years. But is it right that public institutions keep their powers indefinitely? Equally, is it right that their student numbers are capped but private enrolments aren't? If institutions are in the same game, the same rules should apply.

The UK is at a pivotal point. Scrutiny of its budding private academy is necessary, but ensuring a fair regulatory process and placing increased emphasis on quality and value for money in the public sector could prevent a lot of British butts being kicked in future.

ann.mroz@tsleducation.com.