Trends, insights and research to inform growth and innovation strategies in international higher education.

June 25, 2010

Guest Entry: Tim Gore on Foreign Universities Bill

This is the guest entry by Tim Gore, Director of the Centre for Indian Business at The University of Greenwich. He shares his perspectives on the Foreign Universities Bill 2010. Also see his earlier interview on this blog.

The progress of this Bill has been regarded with great interest over the last few years as it could significantly affect the dynamic between India and her foreign educational partners. The recent impetus and direction given to the development of the Bill by the current HRD Minister Shri Kapil Sibal is laudable. Although the bill was opposed by one member of Parliament when it was tabled for Parliament there is evidence of substantial shifts in perceptions since the last time it was introduced. Part of this is an increasing sense of purpose in Indian Higher Education with the stated ambition of increasing the gross enrolment ration to 30% by 2020 as well as increasing the quantity and quality of higher education institutions in parallel. There is a recognition that this cannot be done on public funds alone and therefore there is interest in a developing private sector provision as well as foreign education providers playing a role. In online discussions with various stakeholders most have been very positive about the development and look forward to an increasingly vitalised and globally connected higher education sector in India.

The Bill (Foreign Education Bill 2010) is more positive than its predecessor avoiding emotive terminology on ‘fraud and cheating’ and ‘commercialisation’ as well as ‘fly-by-night operators’ (Lawton 2010). It is clear that the spirit of the Bill is to attract genuine higher education institutions to work in partnership with India. Over and above this positive tone, there are many changes that have been made that I see as very welcome developments. Firstly, there is a commitment to transparent and time-bound processes for the regulatory processes. Secondly quality is to be ‘comparable’ with similar programmes taught in the home institution rather than the old requirement of being ‘identical’. This allows for ‘foreign’ programmes to be enriched with local context and contributions from Indian partners or academics.

However, there are still aspects that foreign institutions will want to see clarified before they make the type of long-term investments and commitments needed to establish sustainable partnerships in India. The main ones of these are the financial requirements. The Bill is positive in establishing mechanisms to repatriate appropriate expenses to the home institution: 5.3 No part of the surplus in revenue generated in India by such Foreign Education Provider, after meeting all expenditure in regard to its operations in India, shall be invested for any purpose other than for the growth and development of the educational institutions established by it in India.
Institutions will want to know if the 'all expenditure' is to be expenditure at full costs (FEC in the UK) and will want to feel confident that there will not be tax complications. Then there is the issue of the 50 Crore (£7 million) corpus fund that needs to be deposited. Apparently, the intention is to levy this only on full campuses rather than on other types of partnership. My Centre's research indicates that there are currently a few hundred small scale collaborative programmes in India where programmes are taught that end with a foreign or dual qualification. These normally register a small number of students - a few hundred at the most. A 50 Crorecorpus fund imposed on these would immediately lead to the vast majority of these programmes withdrawing from India. Many universities use these small scale collaborations to gain experience and would be happy to scale up over the longer term but this investment would be a powerful disincentive to follow this route. Finally, if the corpus fund is to be imposed on campuses but can be waived for institutions of 'reputation and international standing' by the Advisory Board set up by the Government, what then are the conditions under which this requirement will be waived? Indeed, all reputable higher education institutions already have mechanisms in place to protect their students wherever they may be so if the Bill only allows reputable institutions to enter India then they will have their own mechanisms for student protection which will render the corpus unnecessary.

Tim Gore
25th June 2010

(Foreign Education Bill 2010). The Indian Foreign Educational Institutions (Regulation of Entry and Operation) Bill 2010. Government of India
Lawton, W. (2010). The FEP Bill: a brief analysis International Focus. London. 58.
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June 19, 2010

Is India ready for "for-profit" higher education?

Current policy requirements in general, including foreign universities bill, expect that education should continue to be a not-for-profit activity. Kapil Sibal had also clarified along these lines. On the other hand, corporate houses, education consulting firms and industry associations like FICCI and CII have been advocating for opening up education sector for for-profit channel.

The big question remains--is India ready for for-profit higher education? I believe yes it is, but with a cautiously optimistic note. The reasons are:

- India needs huge investments to achieve its goal of achieving GER of 30% by 2020. This could not be achieved by philanthropy or government investment alone. This means, private capital is required to expand the higher education sector.

- The menace of pseudo not-for-profit: The stipulations of not-for-profit character in higher education have resulted in many private institutions to fudge their accounting books to siphon off profits. Few others have created innovate structure where a for-profit education services arm provides auxiliary services to the not-for-profit college. Overall, this has created a unprofessional, unaccountable and corrupt system.

- Not-for-profit status does not implies quality: There are many "not-for-profit" institutions which provide poor quality of education. This is evident from the high rate of unemployability among students from these institutions.

However, we also need to be cautious on how for-profit players engage with higher education sector. For-profit does not ensures efficiency, as for-profit businesses fail too. The opportunity cost for a student enrolled in a failing institution or the one who is misled by the information provided by an institution, is very high. Even in the US, where nearly 1.3 million students are enrolled in more than 3,000 for-profit postsecondary institutions, the model is under government scrutiny. Recently, PBS ran an excellent, detailed story on the state of for-profit education in the US.

Overall, for-profit higher education in India is a necessity, which has to operate in a policy framework enabling innovation and expansion without the dilution of the quality of education or risk to students' interests.

What are your thoughts/comments?

Dr. Rahul Choudaha
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June 13, 2010

International Mobility Trends of Indian Students - 2

Based on the last week's posting of mobility trends of Indian students, I received several comments and questions. Thank you readers. Here is my response to a couple of overarching themes of the questions:

Q. Does that mean that Indian students who are planning to go abroad will not be academically prepared and will be graduates of poor institutions only?
Rahul- No. There are three important aspects to understand. First, demand for international education will also come from graduates of top-tier institutions, however, since the number of graduates from these institutions is relatively small as compared to graduates from poor quality, the direction of overall demand for international education will be driven by students from poor quality institutions. Second, graduates from better quality institutions find more options for employment after college as compared to graduates from poor quality institutions, who try to seek out further graduate education abroad. Third, I am referring to the poor quality of institutions and not necessarily quality and academic potential of students from these institutions. Hence many students from the bottom of the pyramid of institutions may still have high potential to be recruited by many foreign institutions.

Q. How does mobility of Indian students affects larger Indian society? Is it harmful to India because of the effects of "brain drain"?
Rahul- International student mobility has overall positive impact for India. Given the changing nature of the economy ("flattening of the world") and emergence of new sectors and improved quality of life in bigger cities, talent which used to emigrate from India with no intention of returning is becoming open to experiment and return to India. This is the concept of brain circulation and suggests that the talent is now globally mobile and many are returning and contributing in an even more impactful manner. In addition, the foreign remittances received from Indians who emigrate abroad has a positive influence on the investments and development of Indian economy. According to the World Bank, India was the top recipient of remittances of US$52 billion in 2008.  Thus, while direct opportunities to study abroad remain limited to select few (less than 1% of Indian students are enrolled in foreign universities--150,000 Indian students enrolled abroad/15million total enrollment in Indian universities), the overall impact of brain circulation and remittances is creates a larger positive impact.

- Dr. Rahul Choudaha
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June 07, 2010

Why Indian Students Will Continue to Study Abroad?

There has been recent report suggesting that "Foreign university campuses to help India save $7.5 billion outflow." Even if the bill passes and becomes attractive to foreign universities, I believe that number of Indian students going abroad will not decrease at least for next five years. Here I am not factoring in decrease which is caused by unfortunate external factors like attacks on Indian students in Australia or impact of 9/11. So, two primary factors supporting outward mobility are:

1. Expansion at the expense of quality: Number of students graduating from poor and average quality institutions is growing at a much faster rate than the capacity of the industry to provide for jobs. Even if the jobs are available the number of students graduating from these institutions is quite high which restricts their employability. For many educated unemployed youth, higher education serves as a channel to get a second chance for employment and social prestige. Thus, this segment will continue to fuel demand for international education.

2. Increasing prosperity and aspirations: At the other end of the spectrum, Indian middle class is expanding and getting richer. In the last 10-15 years, growth of new sectors like IT, telecom, insurance and mutual funds have created many new high paying jobs. These upper-middle class families will be spending on high quality education for their children as it is evident from the increasing demand for International Baccalaureate schools in India. This increasing prosperity will create demand for even undergraduate programs abroad. Currently, 70% of all Indian students in the US enroll at graduate level (master's and PhD).

This is not to discount the influence of foreign universities in India. There will be a segment of students who would be willing to pay for foreign credential at a lesser price in India. However, there will a segment which would continue to go abroad for several reasons including ability to pay, quality of education, social prestige or experience. Given the scale and pace of expansion of the system, without the emphasis on quality, the number of students going abroad will not be swayed by the entry of foreign universities in next five years. 

Dr. Rahul Choudaha
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June 05, 2010

NAFSA conference 2010: Quoted in InsideHigherEd

This week more than 7,000 international education professionals attended one of the largest professional conferences in higher education--NAFSA: Association of International Educators in Kansas City. Tracks for sessions included international education leadership; teaching, learning and scholarship in international education; and recruitment and admissions.

I presented four separate sessions at NAFSA conference:

- "Shifting Trends in Global Student Mobility: Who’s Going Where" with Jen Nielsen, Australian Education International (AEI); Robert Guttierez, Institute of International Education and Thomas M. Buntru, Universidad de Monterrey.
I was also quoted in the InsideHigherEd article from this session.

- "Measuring Return on Investment in International Student Recruitment" with Cheryl Darrup-Boychuck, U.S. Journal of Academics and Randall W. Martin, British Columbia Council for International Education.

- "International Recruitment: Bridging Research and Practice" with Pamela Barrett, I-Graduate; Uwe Brandenburg, CHE Consult and Dan Chatham, Keck Graduate Institute of Applied Life Sciences.

- ‘India: The Talent, Immigration and Competition’, Annual ICG Thought Leader Session  with Prof. Eva Åkesson, Lund University Sweden; Jean-Philippe Tachdjian, Department of Foreign Affairs and Trade Canada and Daniel J. Guhr, ICG (Private event hosted by Illuminate Consulting Group).
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