Private University Myths
Author: Mrs. Regina Ip (Member of Legislative Council, Chairperson of Savantas Policy Institute)
Can education services be “commercialized” and turned into a self-sustaining money-spinner? Our Chief Executive and some of our city’s top educators apparently think so, or they would not have pushed education as one of the six new “industries” slated to function as a new locomotive of growth.
The level of education attainment and skills of a territory is no doubt a decisive factor determining its economic future. That is why governments worldwide feel duty-bound to provide education services, to various extents, at public expense. But examples of truly successful education service as unabashed, unsubsidized commercial enterprises are few and far between. In Hong Kong, the only such examples are the tutorial schools, which package their tutors like rock stars and pin their business appeal wholly on examination scores. They have been so successful in finding a market niche that without any government subsidies, they are raking in obscene profits.
In comparison, none of our universities qualify as such as they are dependent on the government for land and annual financial grants. As for their professional and continuing education arms, the extent of any hidden subsidies is not clear. Even if they are entirely separate profit and cost centers, their business appeal derives to a large extent from their being part of prestigious public universities. Much of that will wear off if their parents are seen to be spreading their brands too thin and striking too many deals. In the commercial world, a brand risks degrading itself if it is seen by its supporters as over-extending and letting standards slip. Such reckless, rent-seeking expansion would be even more fatal in the world of higher education, where standards are supposed to come first.
If the promoters of “private” universities as a viable commercial enterprise persist in indulging in such fancy by pointing to prestigious private universities overseas, they need to look at the numbers in a much more cool-headed, no-nonsense manner. In the US, private universities receive massive federal funding in support of their research. Stanford University, for example, which stands on over 8,000 acres of its own land, in 2009-10 derives only 17% of its revenue from tuition and fees, but 70% from government, foundation and corporate support for sponsored research. And that’s a university which charges American and foreign students a whopping US$35,000 and US$50,000 on tuition and fees alone! Can our “private” universities aspire to be a true commercial success if, shorn of recurrent government subsidies, they charge market-level fees?
The US does offer a good example of a successful and truly “private” university in the form of the San Francisco-based Academy of Art University which owns its own premises. This University specializes in art and design and has grown over 80 years. It did not receive the California Bureau for Private Post-secondary and Vocational Education’s approval for conferring bachelor degrees until 1996, and for conferring graduate degrees until 1977. Given Hong Kong’s status as an international financial, business and commercial center, it could take a leaf from this San Franciscan example and establish private colleges specializing in professional and continuing education in business, finance and related skills, but not kid itself by claiming to be building world-class research universities.
That would be a much more honest and down-to-earth approach. But there remains a catch: if land and interest-free loans are to be provided, as the Education Bureau is proposing, any such universities would not be “private” in the true sense of the word. On the basis of the information available, the government will be providing land worth potentially $3 billions, and interest-free loans amounting to another $2 billions.
The immediate beneficiaries will likely be the faculty and staff to be recruited, who would likely enjoy a jump in salaries as a spike in demand spurs increase. Certainly not the 6,000 odd high school students who qualify for university admission but denied places because of shortfalls in the public sector, if the fees are to be set at commercial rates. Not even the Mainland undergrads whom our planners hope to target. Mr. Tang Jie, a Vice Mayor of Shenzhen, had said in a public forum recently that Mainland students would into come if the tuition were to be set at HK$100,000 per annum. Welcome to fools’ paradise if you believe that Hong Kong will strike gold by tapping into the mainland’s market.
Post on 2009-12-13 South China Morning Post
