FASTEST GROWING SECTOR OF HIGHER EDUCATION

Across the Pacific region, in Indonesia, Japan, Korea and the Philippines, over 70 per cent of students are in private universities. In Latin America, 45 per cent of students are in private institutions. Worldwide, they account for one-third of all students.

The private sector is the fastest growing sector of higher education and will likely account for most of the enrolment growth in developing countries in the coming years. Sometime in this century, the majority of all students in higher education worldwide may well be in private institutions, with most of them operating for profit.

This may come as a shock to those who believe that because higher education is a public good it must be a public-sector monopoly. But that is a misguided view. Most countries will never achieve the expansion of higher education that they desire without encouraging the growth of the private sector. Just as importantly, private institutions offer particular advantages to students.

First, in order to be a successful business – and to stay in business – a for-profit university has to be efficient. This is not to say that public universities are inefficient. The majority can be proud of their performance. However, private universities can be more tightly focussed on success in a narrower mission.

Second, the core mission of for-profit universities is overwhelmingly concerned with teaching students rather than on conducting research. This means that they relate their programmes more closely to what they perceive as market demand. It is, of course, easy to misjudge market demand. For example, a Hong Kong accounting firm recently announced that it would no longer hire people who had studied accounting at university but would look instead for physicists and arts graduates.

Nevertheless, an institution that makes the market demand for its graduates a key element in programme design is more likely to assess this demand correctly than one which determines its programmes on the basis of what subjects its faculty like to teach.

Third, private universities tend to be more determined to see their students succeed since this is a key performance indicator for both the institutions and their regulators. This leads them to invest in making teaching effective rather than in fancy infrastructure.
There are, of course, bad private institutions as well as good ones, just as there are good and bad public institutions. We must judge each institution on its merits and recognise that for-profit universities can operate very successfully and offer students particular advantages.