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.