Merge and reform private varsities post-Covid

PRIVATE higher education institutions (PHEI) have been hit hard by the Covid-19 pandemic with lockdowns affecting current students as well as the enrolment of new students.

According to the National Association of Private Educational Institutions (Napei), as many as 60 PHEI closed last year alone, student numbers fell by 20-50% and international enrolment declined by 20-30% and might fall further by 50% due to extended lockdowns this year.

As many as 200 out of 600 technical vocational education and training 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 lockdowns have had a significant impact on enrolment, finances and operations for PHEI, making the already chronic financial stress even worse.

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 PHEI.

For example, tax breaks for PHEI have been proposed without noting that around 40% of universities are tax-free foundations or owned by state-entities or government-linked companies 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 PHEI but to help students paying full fees for online programmes.

With falling revenues and enrolment, this will make the 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 master’s 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-19 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 the closure of many PHEI.

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 last year, 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 PHEI and releasing others to focus on traditional knowledge creation.

If mergers of PHEI 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, allow 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-focused HEI with medical-focused HEI, 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 PHEI 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 PHEI fail.

Of course, the root of these problems is 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 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 at the 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, universities and the government. – September 20, 2021.

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

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight.

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  • I have another suggestion ..................

    As we are aware, there is a current ongoing crackdown on the education industry in China, exacerbating the already limited spaces and huge cost.

    The higher quality and reputed PHEI should go on roadshows and try to attract more of the middle class mainland chinese to study in Malaysia who otherwise may have nowhere to turn to.

    Of course the government should play its part by toning down the onerous conditions of MM2H to make it
    easier and cheaper to stay and study here.

    Covid-19 is not a problem. We inoculate with the same vaccines.

    Posted 4 weeks ago by Malaysian First · Reply

    • Your suggestion may help the PHEIs but where is your concern for local students and staff?

      Posted 4 weeks ago by Simple Sulaiman · Reply

  • A very frank overview of the state of PHEIs in Malaysia today. The government should pay heed to the many valid points raised by the writer and act accordingly. Perhaps a face-to-face meeting with Prof. Williams would be of great help.

    Posted 4 weeks ago by Simple Sulaiman · Reply