Universities Inc

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Outbursts of anger from students and academics greeted the plans of philosopher AC Grayling to establish the New College of the Humanities (NCH) - a new for-profit private university with fees of £18,000.

Peter Hall, a financier who has donated more than £450,000 to the Tory party, has provided the money to promote his vision of a market-driven education. To dismiss the NCH merely as a finishing school for the super-rich (which it will be) fails to capture its significance.

First, it signals that the study of arts and humanities is to become the preserve of a small elite. At the same time as the founders of the NCH sing the praises of liberal education, the carpet is being pulled from under the feet of thousands of students as the teaching subsidy is completely removed for these subjects. At London Metropolitan University 70 percent of courses are being slashed, with the death knell for everything but vocational courses. London Met has more students from ethnic minority backgrounds than the whole of the elite Russell Group universities put together. But second, this (ad)venture of the NCH is at the forefront of the coalition government's agenda to privatise higher education.

I went to a fringe meeting at the University and College Union (UCU) conference in May this year, which showed a short film by the US Public Broadcasting Service called Colleges Inc. In a packed room the documentary about private universities and big business in the US was punctuated by nervous laughter at the buffoons running these firms who had creamed off millions of dollars of profit and gasps of incredulity as they compared "selling" education to selling cosmetics. Unfortunately there is little to laugh at and the threat of big business being at the core of the university sector is very credible.

One of the first things that David Willetts did as minister for universities and science was to grant university status to BPP University College of Professional Studies. This made it only the second private provider in the UK to be able to award degrees. This is just one of a cluster of for-profit private universities providers such as Kaplan and Apollo, not just waiting in the wings, but lobbying for the deregulation of the sector. The experience of these predatory firms in the US is very scary.

The big business boom in US universities started in the wake of the economic crisis of 2008. Large numbers of unemployed and unqualified people wanted to get diplomas to get on the job market. These firms preyed on the most vulnerable and impoverished sections of society. Instead of spending money on teaching or resources, 25 percent of their total budget was spent on marketing. The Apollo Group spent $1 billion on marketing and student recruitment. The documentary showed how hard selling by recruiters got students to sign up and incur huge debts. Some students spent years studying for qualifications that were not even accredited. Three students talked about how they had got a diploma in nursing without even seeing the inside of a hospital. The drop-out rate from courses is astounding. At the University of Phoenix only 16 percent of students finished their course!

These firms are big business. A UCU report "Subprime Education?", said, "Wall Street Money Manager Steven Eisman told the committee that many for-profit colleges are 'marketing machines masquerading as universities.' Their rapid access is driven by easy access to federal student loans, guaranteed by the government."

They have made masses of profits for shareholders and have been quoted on Wall Street and indeed been dependent on it for finance. But just as the US government has been forced to better regulate the for-profit sector because of a series of public scandals the British government is preparing to go down this route.

Willetts is being lobbied hard by private providers to remove "barriers to expansion". According to the Times Higher Education magazine, "Mr Willetts has faced intense lobbying by BPP, and other private providers that would help them compete on a level playing field". This means "light regulation" making it easier for them to call themselves universities and to obtain large-scale public subsidies.

It would also mean no statement of academic freedom, no public accountability, even more precarious contracts for the people that work in them and poor quality education for students.

By leeching off public funds they would siphon profits directly into the pockets of shareholders. This represents a step change in the commodification of universities. The stakes are very high. The fight to defend jobs, courses and pensions and against student fees is linked to a much wider fight for publicly funded education, academic freedom and access for all.