Merge and reform private universities post-Covid-19 — Geoffrey Williams

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SEPT 20 — Private higher education institutions (PHEIs) have been hit hard by the Covid-19 pandemic with lockdowns affecting current students as well as enrolment of new students.

According to the National Association of Private Educational Institutions (NAPEI) as many as 60 PHEIs closed during 2020 alone, student numbers fell by 20-50 per cent and international enrolment fell by 20-30 per cent and might fall further by 50 per cent due to extended lockdowns in 2021.

As many as 200 out of 600 technical vocational education and training (TVET) centres had no new enrolments at all because they rely on face-to-face practical training and at least 16 have closed with losses of RM160 million according to NAPEI.

The Covid-19 lockdowns have had a significant impact on enrolment, finances and operations for PHEIs which has made the already chronic financial stress even worse.

A student attends an online class from home during movement control order (MCO) in Petaling Jaya on January 26, 2021. — Picture by Miera Zulyana
A student attends an online class from home during movement control order (MCO) in Petaling Jaya on January 26, 2021. — Picture by Miera Zulyana

Many switched to online learning with high-cost investments which they might struggle to recover as fees for online courses fall and students return to campus for traditional face-to-face classes.

Separately, scandals related to the revocation of accreditation of multiple programmes at a leading local PHEI leaving hundreds of students stranded without degrees and the sale of one foreign franchise at less than the cost of its establishment have signalled deeper and persistent issues in quality and viability across the sector which we have been highlighting for many years.

Civil society groups and politicians have made some suggestions, which although well-meaning, show how uninformed many people are about PHEIs.

For example, tax breaks for PHEIs have been proposed without noting that around 40 per cent of universities are tax-free foundations or owned by state-entities or GLCs and do not need tax breaks.

The remainder are making losses which can be carried forward and so they will not pay taxes now or in the next few years.

Cutting fees has also been proposed, not so much to help PHEIs but to help students paying full fees for online programmes. With falling revenues and enrolment, this will make financial stress worse and cost-cutting will further reduce quality to students and put pressure on the salaries of academics already in precarious jobs.

In fact the market itself is pushing fees down, with undergraduate fees now as low as RM24,900 and one household-name PHEI offering an entire portfolio of masters programmes for RM8,000.

These lower prices come at lower quality in the red ocean of the private degree market and it is students and staff who are suffering most.

As we look to the future, an optimistic business-as-usual approach post-Covid might say that the recent lockdown as an aberration and campus reopening will restore operations, growth and finances.

Some will also point to management changes and claim that they improved performance, pivoted to online learning and changed pedagogical approaches in a smooth transition to Education 4.0.

A more realistic assessment would recognise that the lockdowns have exacerbated persistent underperformance and raised the risk of the closure of many HEIs.

More likely, the poor outcome indicators and lower quality will become endemic. A lack of direction, cut-throat competition and a pivot to new degrees and online learning will further erode quality.

So we need some positive proposals to begin the debate on how we could respond. A blueprint, “Way forward for private higher education institutions: Education as an industry 2020-2025” was produced by the government in 2020 which contained some meaningful ideas but has been overtaken by events. It should be revived but is in need of significant revisions.

These should focus first on rationalising the sector through structured mergers, creating dedicated teaching and online offerings in some PHEIs and releasing others to focus on traditional knowledge creation.

If mergers of PHEIs are left to the market, they will be unstructured and based only on commercial factors. The interests of students and staff will certainly not be considered and the outcomes will be very uncertain. Disputes over valuations and ownership will also disrupt market-based mergers to the detriment of improved quality.

Structured mergers guided by a broader set of stakeholder concerns, including the interests of students, staff and the wider education system allows a more formal approach with more certain outcomes.

They would create larger, more viable institutions and save costs by reducing replication of management, programmes and facilities.

Shared admissions schemes would slash the wastage from marketing and recruitment departments.

Horizontal integration, merging business focussed HEIs with medical focussed HEIs for example, can be used to create comprehensive universities.

Vertical integration could merge universities with colleges and even private schools to provide student pathways. Public universities could acquire PHEIs to offer private commercial courses.

Second, reform must address the urgent collapse in the quality of the working and studying environment for staff and students which are closely connected to the pay and conditions for academics and staff which have eroded to de-professionalising levels.

Students are suffering because cost-cutting, which falls on staff salaries, dissolves quality. Students also have no redress even when their degree accreditation is revoked.

Malaysia should establish an independent Office for Students modelled on that of the United Kingdom to provide students with some source of help and support when PHEIs fail.

Of course at the root of these problems are the perennial issues of financing and the elephant in the room is the National Higher Education Fund Corporation (PTPTN).

We had been promised reform following the very honest assessment of the unsustainability of its model by PTPTN itself in 2019. The Strategic Plan 2021-2025 announced in July 2021 was disappointing window-dressing.

We need a full re-evaluation of the overall financing system of higher education involving both the public and private sector. This must reduce dependency on loans and enhance the role of PTPTN to become a strategic investment partner in the system as a whole.

We must look at new funding options perhaps using vouchers or other choice-based financing rather than loans.

We must also recognise the importance of dual-vocational education such as the German Dual Vocational Training Model which has been successfully piloted in PSDC (Penang Skills Development Centre) which takes an alternative view in which working is the primary aim and study compliments the process in a formal and structured way.

This offers a funding model shared between students, employers, the universities and the government.

* Professor Geoffrey Williams is an economist and specialist in higher education management and finance at the Malaysia University of Science and Technology based in Kuala Lumpur.

** This is the personal opinion of the writer and does not necessarily represent the views of Malay Mail.

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