Educators and venture capitalists who circulate in the ever-expanding for-profit education circles set their sights broadly Wednesday on an emerging market -- the world, the whole world.
Well, that’s a bit of an exaggeration – because, as panelists at a Washington-based summit on the education industry pointed out, some countries offer richer opportunities for investment than others, and while the projected growth in student enrollments internationally is staggering, significant regulatory, cultural and political challenges abound.
“There are enormous opportunities for the for-profit sector, but we need to realize there are enormous obstacles,” said Gerald A. Heeger, president of Whitney International University System, a for-profit venture seeking to expand educational capacity abroad. While some of the biggest players in for-profit education already have presences overseas -- including the biggest, the Apollo Group, which runs the University of Phoenix -- Heeger described the eagerness to explore expanding opportunities worldwide as a new focal point for the industry.
Restrictions on student visas in a post-September 11 world, combined with a high international demand for American degrees, the expanded reach of technology, international trade liberalization, the spread of English and the general growth of the global education market – valued at around $2.5 trillion in 2005, according to Heeger -- all make educational investment abroad enticing, said Richard T. Hezel, president of Hezel Associates, a research company focused on e-learning.
Declining per-student state support for public institutions in developing countries has also paved the way for private institutions to step in, resulting in “surging opportunities for the for-profit sector,” said Heeger.
Yet, at the same time, a complicated regulatory landscape, sometimes meant to discourage foreign interlopers, other times simply archaic, can pose challenges to institutions eyeing international expansion, Heeger said, even in the distance learning segment. While an American institution wouldn’t necessarily have to gain approval in a country in which it operates solely online, without a bricks and mortar presence, in-country regulatory approval might still be necessary to ensure that an institution’s degrees carry weight in helping their graduates access career opportunities.
In addition, for-profit education exists in a sort of legal limbo in some countries, “neither legal, nor illegal” -- and it’s not always clear how the question will be resolved, Heeger said.
In short, there’s no one-size-fits-all business model for investors to latch onto: “The complexity of the regulatory environment has tended to make every investment very much a customized solution,” said Heeger.
The legal and regulatory challenges overlay those created by political instability, cultural differences, language barriers, disparities in the quality of basic education and socioeconomic structures. Particularly in the developing world, for-profit institutions are typically taking aim at a very small slice of a country’s populace -- that segment able to afford American-style prices for that American-style education, said Hezel. India and China, for instance, have a growing middle class capable of affording the higher sticker price, while South Korea has had a vibrant middle class for 25 years.
South Korea in fact tops Hezel’s list for good places to invest in education abroad. The list, based on research in three areas of the world -- Latin America, Asia and Europe -- was calculated based on a consideration of demographic and economic characteristics, education rates, technological capacity, English language knowledge and the demand for American higher education in each respective nation. Behind South Korea, others in Hezel’s top 10 are Japan, Germany, the United Kingdom, China, Taiwan, the Netherlands, Malaysia, Mexico and Switzerland. In the bottom ten are Romania, Indonesia, Chile, Colombia, Vietnam, Ukraine, Peru, Sri Lanka, Venezuela and, at number 42, Kazakhstan.
The biggest growth area worldwide, Heeger projected, will be in vocational education.
Although numerous nonprofit colleges and universities have opened campuses abroad in the last year or two, particularly in countries like Qatar, Hezel said he believed the for-profit education sector is generally poised to move more quickly than its nonprofit counterparts to capitalize on opportunities abroad. He added that he does not think there is a real perception difference between for-profit and not-for-profit American institutions abroad, with the exception of the near-universal allure of the not-for-profit Ivies. At the same time, Hezel said, non-profits might have greater flexibility to stick with a commitment abroad for the long haul, to wait a little longer to break even on the enterprise.
The 2006 Education Industry Finance & Investment Summit continues through Friday in Washington.
Read more by
Today’s News from Inside Higher Ed
What Others Are Reading