Oxford City University – an interesting history

Always on the look-out for a case study, I was intrigued by a story in February 2014 in the Oxford Mail about a ‘university’ being set up with the name ‘Oxford City University’. Thomas Guerriero, part-owner of Oxford City Football Club, had established this university and was lending the name of the club to it.  It is clear that the University of Oxford has to keep an eye out for infringements of its trade-mark, and the story focused on that.  A month later, the Oxford Times reported that Guerriero had accepted that he couldn’t call it that.

OXFC2

The regulation of higher education is complex in US and there are challenges to the robustness of regulation of colleges in several states.  Florida is an interesting example. There is a Commission For Independent Education which has oversight of colleges. The Commission’s remit excludes religious colleges.  It allows that colleges can run as religious colleges if they meet the following criteria.

1. The name of the institution includes a religious modifier or the name of a religious patriarch, saint, person, or symbol of the church.

2. The institution offers only educational programs that prepare students for religious vocations as ministers, professionals, or laypersons in the categories of ministry, counseling, theology, education, administration, music, fine arts, media communications, or social work.

3. The titles of degrees issued by the institution cannot be confused with secular degree titles. …

Now, it turned out that Oxford City University was claiming to be a religious college:

OXFC2 (1)

That sentence about accreditation could be misconstrued.  What Oxford City University had was an exemption from having to be accredited – and furthermore it was known to Florida’s Education Department as Oxford City University – a Christian Institution.   Back in February 2014, however, there was no mention of Christianity on its website.  I know, I checked…

OXFC1

Although it changed its name to CIT University, it was still a university where innovation met opportunity. In April 2015 it was announced that it was ready to launch its masters degree in sports management.  The press release said:

… with a tuition of only $9,900 per year for the Masters Degree program, the company hopes to take on approximately 10,000 students in the first year. There is no assurance, however, that the company will be able to meet that projection. However, with 10,000 students at a tuition of $9,900 USD, the company could realize approximately $99 Million in revenue. We are anticipating to have operational and partnership costs of approximately 50% of the tuition. So, if the plan works out, this would put the company in a position to potentially have $45 Million in net profit from tuition only.

For those of us plodding along in traditional universities, it is clear that we are simply not ambitious enough – a single masters course with $99 million in revenue.  That’s good news for investors – but there was good news for the students too:

The company also plans to create a unique capstone model where students will share in a 50% split of the net profit of their capstone project. All students will need to show competency of the coursework by applying it in a project and will successfully graduate upon executing a plan with one of Oxford City’s 5 professional sports teams to generate a minimum net profit of $20,000. Some students, therefore, may leave the program debt free. For those students that show a level of innovation that generates a significant and sustainable revenue stream they may earn a position with the company straight out of school to lead that project as a Director with the company.

Immediately the share price in the company jumped 10 fold (to $0.10).  It needed some good news, the Company had reported it had incurred some losses since inception and now had a ‘cumulative retained deficit of $17,468,089 as of March 31, 2015′.  A proportion of that had gone on ‘officer compensation’ which was $7,067,337 in that year.

But it came as a bit of a shock in December to discover that Thomas Guerriero had been arrested. He was held in jail over Christmas, charged by the Securities and Exchange Commission for investor fraud.

The SEC set out the allegations in detail, including the tactics to ‘persuade’ investors to join up, but this is the section relating to the university from their complaint:

Defendants also misled investors about the success and profitability of Oxford City University, the purported online college in the U.S. and the cornerstone of OXFC’S Academic Portfolio. OXFC Business Plans that were sent to investors over the relevant period projected profits from its universities of $495 million in profit over a five-year span.

In an email to one investor, Guerriero elaborated: We anticipate in 5 years to get to over 15,000 students. This would bring our revenue to over $ 150 Million. We anticipate operating at a 90% profit, which is $135 million per year. So by Year 5 we anticipate generating over $500 million in net profit.

OXFC has no track record of profits from any academic programs during its existence. In fact, over the relevant period, OXFC’s public filings never reported any revenue from any academic institution. Yet Defendants were projecting profits that would have made it one of the largest, if not the largest, for-profit university in the United States.

The allegation here is that the people being ripped off were not students, as there were no students, but investors.  Clearly the evidence presented by the SEC appears to be an extreme case, and one more for financial regulators than academic ones, but it is an interesting sign of the vigilance that will be needed around for-profit education.

Update:

In May 2016  Guerriero was jailed for 12 years – see Oxford Mail report

 

New Providers, New Analogy

One aspect of the Green Paper is the continuation of support for alternative, or new, providers of higher education.  Since 2010 we have had a focus on them, described as challenger institutions, disruptive innovators who will remake the market in higher education.   What we’ve also had is the repeated failure of new providers to live up to these expectations.  Now the UK government wants to go further – removing ‘barriers’ and anti-competitive measures.

Helpfully, HEPI have included a chapter in their response publication about new providers – written by Roxanne Stockwell who sits right at the heart of things with senior roles in both Pearson HE awards and Pearson College.   Pearson are just the kind of company that you imagine the Government wants involved – combining the reach and resources of a multinational focused on education.  Also, a company that owns the examining body that provides the easiest route to enter the sector.

Stockwell is keen on the Government’s plans to make it easier for new providers to start, and to gain degree awarding powers quicker.   She also supports a new validation service to support new courses, to avoid the problem that new providers have to get existing universities to validate their degrees.  This, she says.

… is the equivalent of Apple having to ask Google for permission to release a new iPad. Even more, Apple would have to provide the full specs of the new design and ask Google (who would form a panel with, for example, HP and IBM) for their approval of the design. There is no consumer redress for Apple if Google decides to reject the design for ‘strategic reasons’ – including the reason that it would be too competitive – even though Apple will have paid a validation fee and will have invested many months in the process. (Stockwell, 2016)

We’ve had a version of this analogy before, of course, from Jo Johnson at UUK:

I know some validation relationships work well, but the requirement for new providers to seek out a suitable validating body from amongst the pool of incumbents is quite frankly anti-competitive. It’s akin to Byron Burger having to ask permission of McDonald’s to open up a new restaurant. (Johnson 2015)

Why is this requirement such a problem?  It means that a degree should come from a place that subscribes to the HE Quality Code, that is subject to Higher Education Review and by having obtained those powers is likely to be financially sustainable?

A new national validator could follow one of our historical models, none of which would quite get around the anti-competitive problem.

The external degree model

In this model, a committee establishes a set curriculum for a number of degree courses and recognises providers who may deliver that curriculum. The curriculum is assessed by the committee.

The University of London worked to variations of this.   It was seen as inflexible by new providers (places like Nottingham, Leicester, Southampton) who had no say in the curriculum or its assessment

The license model

Here a committee establishes  a set curriculum for a number of courses and recognises providers who may deliver that curriculum through a light touch process of licensing. The curriculum is assessed by the provider, with oversight from a verifier who is an employee  of the committee.

This is the Edexcel model of HN awards – run by Pearsons.  HN awards were on the way out as universities replaced them with foundation degrees, but they saw a resurgence after 2010 as they were the easiest recognised HE qualification for new providers to offer.  However, oversight by Edexcel was criticised, not least by the NAO, and BIS has acted to constrain student numbers on HN programmes.

The validation  model

Here a committee works with providers, which it recognises through an accreditation process, to approve specific courses.  Subject committees have oversight of an area to maintain standards, and each individual course is validated against the committee’s expectations.

This was the CNAA model.  Roger King writes about it in the same HEPI publication.  It was held in high regard, a function of both the quality of the institutions that participated in it (getting in was not easy) and its commitment to standards.

Competition

The problem appears to be two-fold.  One, that a validating university has too much sway over the product design – the McDonalds/Byron issue.  Here the notion is that a university won’t let a new provider exceed the quality of the original product.  This seems unlikely – but we know that the New College of Humanities has been to see ministers, and might have complained that they were impeded in validating courses of a higher cost (twice that of its validating university).  Perhaps more likely is the notion that a franchising company, like McDonalds, demands too much control to allow innovation because it is protecting its brand and the fee for a franchise is too high.

The other issue is direct competition.  Despite the notion that Apple and Google or McDonalds and Byron might be in different segments of a market, there is a concern that a university would not allow a new provider access to degrees as these would be competition.  Certainly universities don’t want to have other providers come and get their students, but that’s rare.  A long time ago I experienced that when I worked at a then small HE college, whose degrees were validated by the nearby Russell Group university.  We were astonished that staff at the university were concerned that the same students might go to us, rather than them.  Later, as student number constraints tightened, there was a different pressure as universities pulled numbers back from FE colleges. Most universities I know have held that unhelpful competition should be avoided (including the new universities at the start of the 20th century).

The new validation body will have to deal with a different sector – CNAA had neither funding nor planning powers, and you’d imagine a new body would have to deal with similar courses at nearby providers (especially an issue as the vast bulk of new providers are in London).

Growth and speed

Although the topic of these new providers could easily fill a book-length treatise, I do want to touch on a point that Stockwell makes about growth. Recently BIS has imposed a student number cap on alternative providers – effectively at the same time as we have seen it come off the rest of the sector.  BIS will allow a starting number, and then 20% growth per year – which she notes means it would take eight years to reach 1000 students.

Pearson College is an example of a smaller college, which (as Andrew McGettigan tweeted), seems to have had plenty of scope to grow.  However, Pearson in its Edexcel guise knows all about rapid growth – having seen much of the growth of the alternative sector through their qualifications. The NAO noted  between  2010/11 and 2013/14 students claiming student support for courses at alternative providers rose from 7,000 to 53,000 (NAO 2014).

Rapid growth has come with issues for some prominent providers. Concerns were raised about the growth of LSBF, for example.  It was unclear whether its courses had been designated for 2014/15 (only emerging in December 2015 its student numbers had been capped at 1306 by BIS). It had 4979 students on HN programmes when the QAA visited in March 2015 but it was found to not meet the expectations for these programmes. It then lost its tier 4 licence.  In September 2015 its parent company announced that LSBF would be ‘withdrawing from designated and UKVI-licensed provision’.

Personally, I think the barriers to new providers have not been sufficient. We have seen a diminution of the controlled reputational range of UK HE as a result.  The mess that BIS has made of their regulation in the period 2010-2015 was foreseeable (and was foreseen).  The Government would like to move to a situation where a new provider can move to get degree awarding powers faster than a student on a three year programme can get to finals – how can it possibly assess the aptitude (and integrity) of that provider?  BIS has written itself some new powers: it should hand these over to a regulator.  Then it would be free to promote and support these ‘challengers’ while someone else looks after both the students’ and taxpayers’ interests.

 

References

King, R, 2016, ‘Regulation’ in HEPI Response to the higher education green paper, HEPI Report 81
Stockwell, R, 2016, ‘New Providers’, in HEPI Response to the higher education green paper, HEPI Report 81
NAO 2014 Investigation into financial support for students at alternative higher education providers HC 861

 

 

A Picture of Higher Education

There is an iconography connected with Higher Education (don’t worry, this isn’t another piece about Cecil Rhodes).  We have a sense of what a university looks like – that’s been conditioned by hundreds of years of tradition, whereby people have tended to build universities to look like universities.  In England, images of two particular universities dominate, and picture editors have long used them alongside stories.

Something has changed though.  Every news story now has an online version that needs an image.  I have no data on this, but I also think that in general the bulk of higher education stories have a clear focus on students. One way you can be clear you have a picture of students is to have them in academic dress – and stock photos of gowns and caps have always been used. Often these are taken from a US agency – sometimes clearly done as a photo shoot (tip – if the gown is zipped up – it’s almost certainly an American photo).

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But in the last year, one image has come to dominate, now almost to the point of ubiquity.

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Here it is illustrating a story about Australian graduates in the Guardian.

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Here it’s linked to the Green paper in the Telegraph

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Here it was used for the Autumn Statement in the Independent

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It was used for the Times‘ splash on plagiarism (paywall)

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And it was used to illustrate a BBC story on UCAS data in Northern Ireland.

I’m sure that you get the picture.  Once you notice this, you keep seeing it everywhere.  I asked the Press Association about it.  The photos are from Portsmouth University’s graduation – the red alongside the purple in the hood showing a science degree.  The success of the photo is clearly because the students are anonymous, their gender assumed but at the same time it doesn’t suffer from the problems that beset the pictures that grace stories about A level results.   I wonder whether the three graduates know how widespread this picture of the back of their heads is?

Although we haven’t seen the end of the use of photos of the Radcliffe Camera standing for all of UK Higher Education, it’s pleasing that an aspect of the diversity of the sector is now represented in so many stories.

More photos from the Portsmouth shoot can be seen here