Higher education is embracing private suppliers—but timidly

The first batch of 60 undergraduates at the New College of the Humanities in Bloomsbury, London’s main university quarter, occupy a spacious Georgian house. Opening doors on the way up a grand staircase, your reporter eavesdropped on tutorials on ancient Greece, Romantic poets and economic theory. It feels like a dinky version of an august academic institution. Yet it is a for-profit organisation with a chief executive huddled over spreadsheets downstairs.

This kind of disruptive innovation earns a mixed reception. The coalition government welcomes it. But Terry Eagleton, an outspoken Marxist academic, describes the venture as “odious” and divisive. Other critics have pointed out that courses at Mr Grayling’s New College closely resemble what is on offer, more cheaply, at the existing London university colleges. Two-thirds of the first intake of students come from private schools and just 22% from state schools (the rest are foreigners and mature students). Mr Grayling hopes to counter the “too posh” charge with outreach initiatives and generous bursaries for poorer students.

The newcomer epitomizes a broadening of higher education, aided by a rise in maximum fees to 9,000 pounds that makes students (and their parents) look around for value for money. The government has also eased rules on what qualifies as a university. The newly named University of Law, an outfit with several regional centres, is backed by a private-equity firm and offers two-year degree courses for highly motivated or cash-strapped students. Its hard sell stands out among more conventional university branding: the college’s website touts a graduate legal qualification as if it were a soap powder—“Now with Masters included”.Other institutions such as BPP University College, which bestows professional qualifications from accountancy to chiropractic, were given degree-awarding powers by the last Labour government, but now want full university status.

And the line between private and state-funded higher education is blurring in other ways. Established institutions including Imperial College, London and University College are also thriving businesses, cross-subsidising studies and research which do not make money. Oxfordhas initiated a joint Master’s course in law and finance, crammed into nine months and costing a hefty 21,000 pounds.

Much has changed since the independent University of Buckingham (a non-profit operator) launched 30 years ago, teaching mainly business and economics. Today it has more British undergraduates than foreign ones and offers a range of subjects, including medicine. But the revolution is unfinished. One anomaly that makes life harder for independent providers is that students can take out government-backed student loans at a favourable rate for only the first 6,000 pounds of their fees. At subsidised top universities, they can borrow the full yearly fee of 9,000 pounds .

The level playing field promised when the coalition came to power in 2010 remains a work in progress. David Willetts, the universities minister, failed in a bid to allow for-profit education firms equal access to state funding. Many senior academics opposed the move, citing “derisory graduation rates, crushing levels of debts and degrees of dubious value” from some for-profit American companies. The issue has been shelved until 2015 at the earliest. When it comes to changing higher education, even small innovations can provoke a noisy backlash.