regulatory framework for private higher educationprivate...
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Regulatory Framework for Private Higher EducationPrivate Higher Education
Transforming Tertiary Education for InnovationTransforming Tertiary Education for Innovation and Competitiveness
World Bank InstituteJune 6-9, 2011Bali, Indonesia
Norman LaRocqueS i Ed ti S i li tSenior Education SpecialistAsian Development Bank
AgendaAgendaAgendaAgenda
Review issues related to regulation of higher education
Identify typical weaknesses in regulation of private Identify typical weaknesses in regulation of private higher education
Outline good practice guidelines for regulating the Outline good practice guidelines for regulating the private higher education sector
Highlight specific examples of regulation of higher Highlight specific examples of regulation of higher
education
Regulatory Framework for Regulatory Framework for Higher EducationHigher Education
Regulatory institutions and overall sector governance
CurriculumCurriculum
D d iD d i Establishment and
registration rules and processes
Day to day operationDay to day operation
Information disclosure Information disclosure requirementsrequirementsprocesses
Funding levels and mechanisms
requirementsrequirements
Regulation of the teacher/ Regulation of the teacher/ academic labour academic labour marketmarket
Taxation and customs treatment
Quality assurance rules and Quality assurance rules and processesprocesses
Rules relating to governance and management
pp
TuitionTuition--fee fee settingsetting
Admission/enrollment rules Health and safetyHealth and safety
Typical Weaknesses in the Regulation of Typical Weaknesses in the Regulation of PrivatePrivate Higher EducationHigher EducationPrivate Private Higher EducationHigher Education
Unclear or hostile policy on private involvement in higher education Unclear or hostile policy on private involvement in higher education
Poorly designed institutional registration processes:Poorly designed institutional registration processes: Poorly designed institutional registration processes: Poorly designed institutional registration processes: –– Lack of rational, clear and objective registration criteria and processesLack of rational, clear and objective registration criteria and processes–– Lack of supporting legislation/regulationLack of supporting legislation/regulation
Cumbersome/complex registration processesCumbersome/complex registration processes–– Cumbersome/complex registration processesCumbersome/complex registration processes–– Differential criteria/processes for public and private higher education Differential criteria/processes for public and private higher education
institutions (HEIs) institutions (HEIs) –– Different/conflicting rules and criteria across different regulatoryDifferent/conflicting rules and criteria across different regulatoryDifferent/conflicting rules and criteria across different regulatory Different/conflicting rules and criteria across different regulatory
agenciesagencies
Outdated/unrealistic establishment and accreditation criteria:Outdated/unrealistic establishment and accreditation criteria:I t/ t l fI t/ t l f–– Input/control focusInput/control focus
–– Unrealistic minimum land and space requirementsUnrealistic minimum land and space requirements–– Unrealistic financial ‘guarantee’ requirementsUnrealistic financial ‘guarantee’ requirements
T h l i ll td t d it iT h l i ll td t d it i–– Technologically outdated criteriaTechnologically outdated criteria–– NonNon--existent or nonexistent or non--transparent review processestransparent review processes
Typical Weaknesses in the Regulation of Typical Weaknesses in the Regulation of PrivatePrivate Higher EducationHigher Education (Cont’d)(Cont’d)Private Private Higher Education Higher Education (Cont d)(Cont d)
Prohibition of foreignProhibition of foreign--owned private HEIs and barriers to owned private HEIs and barriers to repatriating surpluses and profitsrepatriating surpluses and profits –– limits on foreign investmentlimits on foreign investmentrepatriating surpluses and profits repatriating surpluses and profits –– limits on foreign investmentlimits on foreign investment
Limits on the ability of private HEIs to set tuition fees, and to Limits on the ability of private HEIs to set tuition fees, and to retain/allocate tuition fee and other revenuesretain/allocate tuition fee and other revenuesretain/allocate tuition fee and other revenuesretain/allocate tuition fee and other revenues
Limits on the ability of private HEIs to operate as forLimits on the ability of private HEIs to operate as for--profit profit entitiesentitiesentitiesentities
Admission/Enrollment Restrictions
− Geographical restrictions on admissions/enrollments− Student ‘freeship’ requirements
Enrollment quotas− Enrollment quotas
Typical Weaknesses in the Regulation of Typical Weaknesses in the Regulation of Private Private Higher Education Higher Education (Cont’d) (Cont’d) Regulation of curriculum:
– Restrictions on use of foreign curricula – Outdated and non-relevant curriculum/programs– Lengthy and non-transparent curriculum/program approval
processesp o– Political or religious requirements for HEI curriculum/
program content
• Public funding wholly or largely limited to public institutions or to not-for-profit HEIs:
– Capital funding– Tuition funding– Research fundingResearch funding– Limited to not-for-profits
Guidelines for RegulatorsGuidelines for Regulators
Provide a sound policy Provide a sound policy framework for the operation of framework for the operation of the private higher educationthe private higher education
Promote and facilitate foreign Promote and facilitate foreign direct investment in the direct investment in the education sectoreducation sectorthe private higher education the private higher education
sectorsector Introduce clear, objective and Introduce clear, objective and
streamlined criteria andstreamlined criteria and
Provide incentives and Provide incentives and support for the Private support for the Private SectorSector
ProvideProvide parentsparents andand studentsstudentsstreamlined criteria and streamlined criteria and processes for establishing and processes for establishing and regulating private HEIsregulating private HEIsAllow forAllow for profit HEIs toprofit HEIs to
Provide Provide parents parents and and students students with with information information to to help help tthem hem sselect elect qquality uality pprivate rivate eeducationducation
Allow forAllow for--profit HEIs to profit HEIs to operateoperate
Allow private HEIs to set their Allow private HEIs to set their own tuition feesown tuition fees
Establish Establish quality quality aassurancessurance/ / Monitoring Monitoring processesprocesses
DevelopDevelop governmentgovernmentown tuition feesown tuition fees Develop Develop government government rregulatory egulatory and and oversight oversight ccapacityapacity
I. Introduce Clear, Objective and Streamlined I. Introduce Clear, Objective and Streamlined Criteria and Processes for Establishing and Criteria and Processes for Establishing and
l i i d i i il i i d i i iRegulating Private Education InstitutionsRegulating Private Education Institutions
Objective and measurable criteria to minimize bureaucratic jdiscretion and limit the scope for corruption
Registration standards/criteria are openly available
Output-focused – allow flexible delivery approaches
Streamlined and time-bound registration process Streamlined and time-bound registration process
Support potential providers and regulators through guidebooks, standard contracts, toolkits, etcguidebooks, standard contracts, toolkits, etc
Scope for private sector involvement in registration process
II. Allow ForII. Allow For--Profit Schools and HEIs to Profit Schools and HEIs to OperateOperatepp
For-profits are a growing phenomenon in many countriescountries
Allow for-profits to operate –don’t fo on o ne hip odon’t focus on ownership or organizational form
P i l b fi Potential benefits –increasing access for poor and non-poor, spur innovation bring newinnovation, bring new management, pedagogical, and technical skills into the education sectoreducation sector
III. Allow Private Schools and TEIs to Set Tuition III. Allow Private Schools and TEIs to Set Tuition FeesFeesFeesFees
Allow schools and TEIs to set their own tuition fees
Tuition fee limits aim to make education affordable, but have downsides – reduce interest in private investment, reduce quality of educationquality of education
Even where tuition fee limits exist, but are not enforced, they may have adverse effects on investment intentions as they y ycreate investment uncertainty
Employ other policies to achieve policy goals of making education affordable: – Vouchers, scholarships, grants, student loans– Promote competition
S ibl l ti i i i t i d i d t– Sensible regulation – minimize cost-inducing mandates
IV. Provide a Sound Basis for the Establishment of IV. Provide a Sound Basis for the Establishment of the Private Education Sectorthe Private Education Sectort e ate ducat o Sectot e ate ducat o Secto
Promulgate a positive policy that welcomes private providers and makes it clearly known to p p yall those who might wish to establish new private institutions
Define the place of private providers in the national long-term education strategy – provide potential investors with the confidence to investpotential investors with the confidence to invest
Examples: – Senegal (Article 3 of Loi 91-22)Senegal (Article 3 of Loi 91 22)– Cote d’Ivoire (Loi 696)– Philippines (Republic Act 8545)
V. Provide Incentives/Financial Support for V. Provide Incentives/Financial Support for Private SectorPrivate SectorPrivate SectorPrivate Sector
Governments can provide investment incentives and/or ongoing support to the private education sector:ongoing support to the private education sector: – Provision of tuition subsidies, scholarships– Subsidies for research– Direct financial subsidies for educational infrastructure– Direct financial subsidies for educational infrastructure– Tax holidays, customs duty abatements– Provision of land for no charge or at discounted prices or rent– Facilitation of work visas for foreign staffFacilitation of work visas for foreign staff– Student loans
More flexible operating environment, more resources, significant provider network, targeting, managementsignificant provider network, targeting, management skills, accountability, etc
Avoid excessive regulation as ‘price’ of public financial supportsupport
VI. Promote and Facilitate Foreign Direct VI. Promote and Facilitate Foreign Direct Investment in the Education SectorInvestment in the Education SectorInvestment in the Education SectorInvestment in the Education Sector
FDI in education is small but growing (up from $401 Million in 2002 to $3.5 Billion in from $401 Million in 2002 to $3.5 Billion in 2005)
Many examples of cross-border private providers – Apollo Global, Laureateproviders Apollo Global, Laureate International Universities,
Promote FDI through liberal foreign investment laws, enabling policy framework,investment laws, enabling policy framework, investment incentives
Provide supportive and efficient investment process – information for potentialprocess information for potential investors, one-stop shop for investors, education as ‘target’ sector, educational fairs/conferences, proactively seek out partnerships
Good examples – Mauritius, Sri Lanka
VII. Provide Parents and Students with VII. Provide Parents and Students with Information to Help Them Select Quality Private Information to Help Them Select Quality Private p Q yp Q yEducationEducation
Well-informed consumers and regulators – important building bl k i bli l f kblock in a more enabling regulatory framework
Use information as a means of regulating education –disclosure requirements on education providers
Possible mechanisms: – Require information disclosure as a condition of registration– Publish performance indicators: quality of facilities, class sizes,
curriculum/qualifications, fees, teacher qualifications and exam scores
– Publish reports by independent review agencies focused on institutional performanceinstitutional performance
Private sector can provide information – testing services, university rankings, etc.
VIII. Establish VIII. Establish Quality Assurance Quality Assurance /Monitoring/Monitoring ProcessesProcesses/Monitoring /Monitoring ProcessesProcesses
Independent QA/monitoring function is essential to support a p Q / g ppsustainable private education sector
Many QA mechanisms used around the world in both the public and private sectors For example:public and private sectors. For example:– Higher education accreditation in Kenya, Ghana, Tanzania, Indonesia
and the Philippines – Various public and private organizations (eg Quality Assurance AgencyVarious public and private organizations (eg. Quality Assurance Agency
in the UK, regional accreditation associations in the USA) carry out institutional reviews
QA – focus on improving quality of Q p g q yeducation/outputs/outcomes, not on red-tape and enforcement of rules that add little to education quality
Competition as QA mechanism Competition as QA mechanism
VIII. Establish Quality Assurance/Monitoring VIII. Establish Quality Assurance/Monitoring P (C t’d)P (C t’d)Processes (Cont’d)Processes (Cont’d)
Much regulation is private, produced and enforced by i d d t ti d t d i tiindependent parties and trade associations
Scope for making greater use of the private sector in regulating a number of aspects of private education: g g p p
– Entry (eg. Cameroon)– Corporate accreditation (eg. Microsoft)– Evaluation/review (eg Seventh Day Adventists international– Evaluation/review (eg. Seventh Day Adventists, international
business schools, CfBT Education Trust, USA)– Private accreditation (eg. USA, Philippines, India proposed)
Independence important including foreign standard Independence important, including foreign standard setting/quality assurance:
– International seafarers – white listI i l b i h l d i h l di i– International business school and veterinary school accreditation
IX. Develop Government Regulatory and IX. Develop Government Regulatory and Oversight CapacityOversight CapacityOversight CapacityOversight Capacity
Ensure regulatory agency has information and skills to design, develop and manage functions such as institutionaldevelop and manage functions such as institutional accreditation/registration, QA, monitoring and incentives
Requires a range of skill sets such as educational and d i l kill t t t i dpedagogical skills, contract management, economics and
finance – often requires secondment of staff
Dedicated cross-sectoral units to implement private sector Dedicated, cross sectoral units to implement private sector initiatives (information, design and implementation roles)
Contract out monitoring/quality assurance to private sector g/q y pactors
Ensure good payment and fraud monitoring systems
Use of private university associations
X. Public Sector PoliciesX. Public Sector Policies
Performance of private sector depends on public sector policies, as well as policies relating to
i t tprivate sector:
Establishment of public universities
Funding/salary policies
Quality assurance
Institutional registration
Public sector tuition fee policies
Student assistance policies
Public sector enrolment capsPublic sector enrolment caps
Case Study: HE Reform, PakistanCase Study: HE Reform, PakistanCase Study: HE Reform, PakistanCase Study: HE Reform, Pakistan
• Broad HE reform program since 2002• Aim was to increase size/quality of private HE sector:
– QA system covering both public and private HEIs– Scholarships for students and staff in private sectorScholarships for students and staff in private sector – Revised establishment criteria for private HEIs– Incentives for private HEIs– Information to students – eg. rankings, advertising– Inclusion of private sector in national policy
discussionsdiscussions• Incentives limited to private HEIs that are not-for-profit
and meet various infrastructure and staffing quality it i
19
criteria• Private sector = 23% of enrolments in Pakistan
X. Case Study: PhilippinesX. Case Study: Philippines
Governed by Manual of Regulations for Private Higher Education (2008)( )
Recognition of the role of the private sector in education – world model, constitutional protection
Stock and non-stock corporations for private HEIs
Various mechanisms for QA: Accreditation Centers of Various mechanisms for QA: Accreditation, Centers of Excellence/Centers of Development, Autonomous/ Deregulated HEIs
Tuition fees – freedom to set tuition fees more or less (limits on allocation of tuition increases, political pressure to limit fee rises)
X. Case Study: Philippines (Cont’d)X. Case Study: Philippines (Cont’d)
Public sector policies – lack of level playing field -government recognition funding state universities andgovernment recognition, funding, state universities and colleges
Little direct or indirect Government funding of private g pHEIs – direct or indirect – tuition funding, research funding,
student loan/scholarship programs
Taxation/customs duties – exempt for non-stock, non-profit institutions
Profit – OK (though indirect limits)
Provider representative associations p
XI. Role XI. Role for International Organizationsfor International Organizations
Assist governments through loans and TA to improve regulation and funding and build capacity
Provide ‘early stage’ equity and loan capital to catalyze investments in the private education sectorprivate education sector
Raise private sector profile and sensitize private funders to increase
finvestment attractiveness of sector
Build private sector capacity to increase attractiveness as investmentincrease attractiveness as investment target
Work with private sector banks to pmitigate investment risks in the sector
ConclusionConclusion Role of government key basis for regulatory
frameworkframework
Not arguing for world with no regulation – regulation should be fit for purpose to avoid ‘contagion’ and s ou d be t o pu pose to a o d co tag o a d‘regulatory backlash’
Not about regulation/no regulation – how to regulateg / g g
Quality assurance a key challenge given rapid expansion of sector
Information and competition are important factors in quality assurance and accountability
We should not see private enterprise as a predatory tiger to be shot or as a cow p y gto be milked. Rather we should see it
as a healthy horse, pulling a sturdyas a healthy horse, pulling a sturdy wagon.
- Winston Churchill
