Yesterday saw BPP University College announced their 2012 fees are set at £5,000. This could be a game changer. It is the first announcement from the David Willetts-endorsed ‘new wave’ of private providers, putting BPP under a considerable amount of scrutiny.
From my own experience of working in the private HE sector, even the idea that ‘university’ title could possibly be granted to private institutions such as this one fills me with dread. However, private colleges are rarely set up by people who purposely set out to fleece students.
But for the private college I worked for, money became the prime motive for existence, but not due to greed. It was through the sheer incompetence, lack of business intelligence and a refusal to understand or adapt to the expectations of the higher education sector that revenue generation became the number one necessity. In my time I bore witness to every cliché and horror story about private HE, both in my college and others. But never at BPP. BPP always had a healthier attitude, and since a career shift, I have seen this further borne out. BPP’s Principle, Carl Lygo, does like ruffling feathers, but does so in a way which is challenging the sector to improve.
They focus on controlled processes for administration and marketing so that students are given similar consideration as traditional universities, and they don’t miss-sell or pre-market non-existent courses. Most importantly though, they may have chosen to provoke serious questions about the higher education sector with their pricing, rather than take advantage of the increased fees to drive up their own revenues like their competitors have. It is a gamble, but one that could pay-off in the long term if this price-point appeals to more students.
The questions raised by BPP’s pricing could have great ramifications not only on the longevity of the sector’s current pricing structures, but also how we look at fees. One could ask why some universities feel that it’s right to charge £9,000 for a course that BPP can charge for £5,000. In February, David Kernohan wrote an article about game theory dictating pricing. He said some universities would charge higher than they need, so they didn’t look like a lower quality institution. He exposed the greatest flaw in making higher education a ‘free’ market: markets are driven by value.
People have long-argued that you cannot charge less for the humanities and social sciences as it diminishes their value to society. But why shouldn’t universities turn the idea of the market on its head and price on cost, not perceived value? The idea of pricing for perceived value seems ludicrous. Value is the increase over time a graduate receives in salary compared to non-graduates. There is no way that under a market system you can accurately reflect this as an individual fee price; there are far too many variables between individuals.
A far more accurate method of pricing would be to charge how much these courses cost to run. If certain courses cost over the £9,000 threshold to run then fees from other courses should be used to supplement those costing the institution more to deliver. Do teaching-focussed universities really need to charge £9,000 to run a business degree on cost alone?
I cannot help but wonder if some of these universities, running courses similar to BPP’s, are diverting some of the money received from fees in to research or other activities. Furthermore, cost-based pricing can be easily justified with transparency. Make clear where the costs come from and how the fees will pay these costs and this could prevent any value-based decisions.
Some have accused BPP of charging £5,000 as part of a sell ‘em cheap, stack ‘em high strategy. But such a cynical strategy would make little sense for them right now. If BPP wants to show it is equal to universities and a legitimate, or even important part of the HE sector, then it would not be in their interests to behave in this way, particularly with the level of scrutiny on them at the moment.
Ultimately though, I am not convinced that more private providers are a good thing for the sector and from what I can see, BPP are the exception, not the rule. But, if they are challenging the fledgling ‘market’ with a competitive and risky fee structure, I wish them well.
It is practically impossible to use price to work out value at times like these. You get situations such as the recent decision at Edinburgh to set a yearly fee of £9,000 on a four-year course. Suddenly, the total debt is £9k higher than three-year degrees at other top-whack institutions; but is that relevant or not? Value comes from choosing one thing over another. If a student’s main consideration is price, it will possibly take years for a student to assess whether the choice was reasonable compared to a more expensive institution’s course. In many ways, comparison would be impossible,… Read more »
In order to use cost as an ‘accurate’ guide to what price ought to be, you’d also have to have an accurate understanding of your costs. In most cases, we have anything but a clear understanding of what our costs are. Even if you do understand your current costs, what is to say that these are the ‘right’ costs? You could always spend more and deliver more service, or spend less and deliver less, and without some concept of what provides ‘value’ to the student how would you determine which to do? Finally, from the student perspective, why should I… Read more »
I am an educationalist, I have spent all my adult life teaching and managing in higher education in both the “public” and private sector. I am lucky enough to have risen from the rank of lecturer to now be the Principal and CEO of the UK’s largest private proprietary degree awarding body, BPP University College. I joined BPP in 1996 because I was impressed with the investment that was being directed to the front line of teaching and facilities directly suporting students. I believe that my colleagues and I at BPP all share the predominant goal of providing the very… Read more »
The effect of the WP proposals will be to hollow out the ‘public’ HE sector on which private providers’ business model and fee levels rely.