It has been a bizarre year in higher education, with most of the attention focused on our public universities and their woes in the absence of international student income. Independent higher education though is about 10% of the system and growing, so it deserves some attention.
Unlike the monochrome public universities, independent higher education is pretty diverse. Some institutions heavily dependent on international students have been hugely hit, but others like my institution Alphacrucis College, with less reliance on international students, are faring better. It is interesting to observe the pain in public universities despite the huge public subsidies they receive and the privileged access to the international student market – most independent higher education institutions have had to survive for many years without the benefit of either.
As well as COVID19 it has been a year in which the sector has been dealing with recommendations of the Coaldrake review of higher education provider category standards, and the job-ready graduate reforms currently before parliament. The Coaldrake review opened the way somewhat for new universities, with Avondale College and Alphacrucis College likely to shake up the public university cartel in the years to come.
If we think about the telecommunications industry where there was for many years a comfortable public monopoly provider Telecom, the benefits of market entry for consumers came from the pressure that the new entrants exerted on price and quality standards of the incumbent monopolist. So even though independent higher education remains a small proportion of the market, and institutions like Avondale and Alphacrucis are tiny compared to public universities, they can set a new price and quality benchmark. Economic theory tells us that it is this benchmark set by a new entrant that is important for the efficiency of the sector rather than the size of the new entrant. QILT data on student satisfaction and employment outcomes for independent providers regularly outperforms public universities, and research performance controlling for size of institutions like Avondale and Alphacrucis compares very well with the public universities. I’d love to see the Research and Education Efficiency Frontier index (REEF analysis of changes in university productivity calculated by the private Higher Education Research Group) calculated for independent higher education institutions. All this with no or limited access to government funding for their undergraduate student load, no or limited government funding for their PhD programs, nor access to the ARC or other government research funding schemes. As well as these grievous violations of competitive neutrality, students at independent higher education institutions cop a 25% surcharge on their FEE-HELP debts. No wonder the public universities resist the granting of university status and government funding to potentially transformative independent higher education institutions. No wonder they are keen to elevate the requirements for new entrants into the market and seek to stack higher education advisory committees with public university people - if Telecom had been able to do that in the telecommunications industry Australians would still be paying high prices for terrible service from a monopoly provider.
This year of COVID19 has highlighted some of the structural issues in the system, and would be a pity if the government wasted the opportunity provided by a good crisis to address some of them. Business leaders have for many years been complaining about the high cost and poor quality of graduates, and some of the newer independent institutions are offering an alternative. From my own experience as inaugural Dean of Business at Alphacrucis, the small class sizes, emphasis on character formation, and willingness to address the larger questions of the purpose of business produce very different graduates to the mass higher education model of the public universities. All at a fraction of the cost to students and taxpayers.
This article has also been published here on The Australian Financial Review.