Modernising higher education: How to do it?

Well, here I am in Budapest, probably my favourite city, as a guest of the Budapest Corvinus University. My visit is paid for by the EU, through some funding to promote academic links and mobility between EU universities, and the deal involves me giving a lecture in the University, which for my present visit takes place this afternoon. My lecture will be on the theme of institutions and transition (to a market economy), something that has occupied much of my research time in recent years.

As has often been the case when I have visited Hungary, there is a lot of talk in the universities about reforming curricula and course structures, improving the teaching materials provided to students, and all that sort of thing. More worryingly, I think, there are strong centralising tendencies in Hungary just now, with the present government thinking that it can best control economic life - and, as it turns out, educational life, too - through controlling appointments to key positions. This seems to me quite an unhealthy and undesirable tendency, more about asserting political control and not much to do with improving quality, either in the economy or in the universities.

So how can we improve quality in the universities, either in Hungary or back home in the UK? And what, indeed, do we mean by quality?

My thoughts about this were stimulated at the beginning of September by an article written by John Kay for the Financial Times, in which he was discussing the disruptive aspects of significant innovations, and hence  the tendency for established firms to resist them. Let me simply quote his final paragraph:

'Economic growth is held back by industries where established interests are so powerful that disruptive innovation can be staved off for ever. Financial services is probably one. And education another. I often think of the contrast between the power of information technology to transform the process of learning, and the little progress that has been made towards actually doing so.'

On this view, new ideas, new approaches to teaching may not even originate in the established universities, because vested interests - used to old ways of doing things, and thinking they know best - will firmly resist major innovations, and will even complain loudly about the rise of upstart institutions trying to organise teaching differently. The traditional universities will protest about falling quality, when what they might really be resisting is the rise of wholly new types of educational 'product'. We don't know yet, but the next decade or so will undoubtedly reveal a rapidly changing market structure in the world of higher education, pointing in all sorts of new directions. Some of these will do well, some will, naturally, fail, as is quite normal.

For myself, I have spent my entire career in traditional universities, I am used to the models and methods of teaching that we employ, and have even accepted a few minor changes now and again, as systems evolve. But the way we teach now is not really vastly different from the way it was 30-40 years ago, aside from some bigger classes, larger seminar groups, and a bit more classwork and continuous assessment than we used to have. But all this does little more than scratch the surface of the traditional model, and how sure can we be that what we do is really the 'best' model for most of our students?

Moreover, even the quality assessments that are carried out now are based on the presumption that this model is indeed the right way to do things. So anyone offering something quite different, would have a hard time getting a good quality rating, I suspect. In this sense, the traditional model of the teaching function in universities is very much self-reinforcing, and resistant to change. Naturally, we regulate the system by controlling who has the power to award degrees and other qualifications, and such privileges are jealously guarded.

But nowadays there are many pressures that might open up higher education to disruptive innovation, and I'll write more about these in my next posting.

Too busy....

The last few weeks have been a bit crazy, far too much going on and too much work to do! Retirement wasn't supposed to be like this, was it?

Hence the lack of entries on this blog, but I hope to catch up in the next week or two as there's lots of interesting stuff going on in the university world. I've been reading lots, but have had no time to write anything for a while.

So what's my 'excuse', what's been keeping me so busy?

The problem really is that I like being retired not because I want to sit around doing nothing very much, but because it gives me the freedom to do what I want without worrying about teaching schedules, university bureaucracy, and the like. However, the world is such an interesting place that there seems to be an endless stream of potential projects and activities - some purely academic (and hence unpaid), and some taking the form of consultancy projects (and hence paid) - involving a variety of countries. And my main weakness is that when interesting things come along, I'm still not very good at saying 'no'.

Recent projects have been on North Korea (paper written and already published), study of investment in Kuwait (completed and approved), the Falkland Islands (on going), and on the UK's experience of the Private Finance Initiative (on going). Next week, however, I'll be a guest of the Budapest Corvinus University in Hungary, with only one lecture to deliver and otherwise a fairly light schedule. So I plan to use some of my time there catching up with University Life.

Incentives and University Finances

Now that the London Olympic Games are over, apparently judged by most to have been a resounding success, it's time to get back to business and think about our universities and how they operate.

Focusing on the reforms to university financing shortly coming through in England, with most universities set to charge much higher fees (mostly at or close to the legally set upper limit of £9000 per year per student), it is quite striking how little the government seems to have understood about incentives, both for institutions and for students.

Institutions
Universities naturally want to pull in student numbers, as that is where the bulk of their funding will be coming from, via the tuition fees. For home and EU students, the fees will either be paid up front, in cash, if the student's family so decides and has the necessary wherewithal; or a student loan will be taken out covering both the fee itself, and often the bulk of living costs. Where student loans are used, the university gets the full fee right away, and so has no need to worry about so called 'non-performing loans'.

But what about repayment of these loans? As noted, individual universities don't need to be concerned, but the Student Loans Company certainly does. For graduates who remain in the UK and work, repayments are collected by HMRC through their income tax returns, with any outstanding debt written off after 30 years. No repayments are made until a graduate is earning at least £21,000 per annum. Even with pretty decent administrative arrangements in place to collect these repayments, it is estimated that about 30% or so of outstanding student debt will never be repaid - due to low earnings, spells outside the labour market, and default. In the end, this shortfall will need to be picked up by the taxpayer, via the government's budget.

Now, this outlines the situation for UK students who continue to work in the UK after graduation. For UK students who work abroad, they still formally have an obligation to repay their loans (and this would catch up with them if they returned to work in the UK at some point), but it's not clear that there is any sort of enforcement mechanism in place to make that happen. Likewise for students from other EU member states. They, too, have an obligation to repay, but how can they be compelled to do so short of expensive and complicated court action in various countries? So the more pragmatic of these students might well conclude their their education at an English university is essentially free. Again, our taxpayers end up footing the bill.

The effect of all this has already been twofold:

(1) Universities have mostly felt free to set their fees at or near the maximum level, contrary to the government's stated expectations.

(2) The government has felt obliged to cap some elements of student numbers to constrain the possible public spending costs of the new student funding system.

I'm not convinced that the new funding model will prove to be viable for very long, so in a few years' time we can expect another round of re-thinking, one that will, I would hope, pay a bit more attention to institutional incentives.

Interestingly, the way in which universities deal with non-EU overseas students, at either undergraduate or postgraduate level, is totally different, and far more sustainable. For with students in these categories, we have had high fees for some years already and student loans are generally not available from the UK's Student Loans Company. Hence not only is there no contingent liability for the taxpayer to pick up, but institutions have to take great care to make sure they get their money. Normally, for instance, we don't even allow such students to register and start their courses until all or most of the fee is safely 'in the bank', and in the few cases of default students are unable to graduate (we don't allow anyone to graduate while in debt to the university), and their debts are pursued through the courts to the extent possible.

Students
Aside from deciding to pursue their higher education at an English university, young people have several other options:

(1) They can choose to get a job, either in the hope of getting training through work and possibly going to university later, or simply because they judge it to be a more suitable option for them than university.

(2) They can take a university course in another EU member state, benefiting from much lower fees. Increasingly, European universities are offering many courses taught in English, the academic quality is often high, and such overseas experience can often look very good on someone's CV (especially if another language is learned along the way).

(3) They can go to the USA for their higher education, which has the advantage of a common language (more or less). Fees are high, especially at the really good institutions, but the new high fees being charged in England might well push some students in that direction (if their families can pay).

(4) They can consider the rapidly expanding range of distance learning and online options to take their education forward. This is a huge topic in itself, and I'll return to it at a later date.

For now, the main point is that potential students have lots of options, and their choices are going to be influenced by the incentives they face, including both the fee levels, and their perceptions of the likely wages different types of course might lead to (though I must admit I hadn't a clue about that when I was a student myself!). Hence in designing policy, some attention ought surely to be paid to student incentives, too.