Profiteering in a not for profit sector - Education

 Sent this to the Hindu, Indian Express, and Outlook one after the over 3-4 months. No one was willing to publish it hence I thought of my own blog!

Profiteering in a non-profit sector – Education

India has chosen for education to always be not for profit. The new education policy also reiterates this. In the introduction to the new education policy, one of the principles of the policy listed is ‘education is a public service’. Whether this is a good approach or not is not the subject of this article, though it deserves a lot more debate in our country rather than being brushed under the carpet like it is. This is about how successive governments have been hand in glove with ‘education for profit’ entities paying (unnecessarily in my view) lip service to the ‘not for profit’ principle. Everyone knows that most ‘for profit’ institutions are owned, benami most times, by politicians of all hues, big business owners, civil contractors and builders, in fact those parts of the economy where large amounts of black money is available.  Can India get out from the clutches of rapacious Edu-entrepreneurs, self-styled as social workers?

Most of this article is surely based on opinions and anecdotal evidence, however, readers who are connected with education will know a lot of these as facts. 

The new education policy 2020(NEP) has this to say on the topic 

“18.12. Multiple mechanisms with checks and balances will combat and stop the commercialization of higher education. This will be a key priority of the regulatory system. All education institutions will be held to similar standards of audit and disclosure as a ‘not for profit’ entity. Surpluses, if any, will be reinvested in the educational sector. There will be transparent public disclosure of all these financial matters with recourse to grievance-handling mechanisms to the general public. The accreditation system developed by NAC will provide a complementary check on this system, and NHERC will consider this as one of the key dimensions of its regulatory objective.

18.13. All HEIs - public and private - shall be treated on par within this regulatory regime. The regulatory regime shall encourage private philanthropic efforts in education. There will be common national guidelines for all legislative Acts that will form private HEIs. These common minimal guidelines will enable all such Acts to establish private HEIs, thus enabling common standards for private and public HEIs. These common guidelines will cover Good Governance, Financial Stability & Security, Educational Outcomes, and Transparency of Disclosures.

18.14. Private HEIs having a philanthropic and public-spirited intent will be encouraged through a progressive regime of fees determination. Transparent mechanisms for fixing of fees with an upper limit, for different types of institutions depending on their accreditation, will be developed so that individual institutions are not adversely affected. This will empower private HEIs to set fees for their programmes independently, though within the laid-out norms and the broad applicable regulatory mechanism. Private HEIs will be encouraged to offer freeships and scholarships in significant numbers to their students. All fees and charges set by private HEIs will be transparently and fully disclosed, and there shall be no arbitrary increases in these fees/charges during the period of enrolment of any student. This fee determining mechanism will ensure reasonable recovery of cost while ensuring that HEIs discharge their social obligations” National Education Policy – 2020, Ministry of Human resource development, Govt of India.

With regard to school education also the policy has a similar approach though it does not detail it as in the case of higher education. The excerpts are from a chapter titled “Curbing Commercialization of Education”

As one can see from the small print and reading between the lines, there are many areas that will offer loopholes that can be built into the legislations that will bring this policy to life. As the states and central government are still drawing up implementation plans and no supporting legislation has been made, it may be a good time to reflect on the various ways the corporate sector is involved in education and list the well-known mechanisms of profiteering in this domain. The high fees charged to students and incomes from consultancy by some of the IIM’s  which are independent, yet founded by the government, is another interesting area not covered in this article!

There are third party corporate entities which take on the managing of a college, department or a program. This means the not for profit trust or society only runs the program on paper whereas the corporate gets in the students, conducts the classes, finds placements etc using the institutions infrastructure and affiliating or private university for award of the degree. This is usually run on profit sharing or fee sharing basis with minimal faculty on the roles of the institution.

Another model is for a corporate to spew one or many private universities. In this case the university is a not for profit and remains so, however all incomes and expenditures happen through the company thereby the company remains profitable by providing all services to the university and its customers. 

Corporates withdraw monies from educational institutions providing many core educational functions. 

Many institutions of national prominence included offer programs similar to the one for which they have the approval. For example if there is an AICTE approved PGDM program with an intake of 120, the institute take in another 120 or 240 students to whom it offers PGDMM/PGD – E Com, or similar. Many times if it is a deemed university, no approval is taken for the MBA program (am not sure why universities are exempt from this requirement) and some private universities have admissions in thousands for the MBA program. 

The PhD program has been another area where commerce controls education. A few years ago PhD’s were being offered by a large number of universities for a high fee. There has been some reduction in this fraud, however, there are many deemed universities whose PhD programs need to be evaluated for minimum quality. There are universities which have set up off campus research centres to offer PhD in areas such as commerce and management which have nothing to do with a unique domain of expertise or great relevance to the university. 

The term ‘deemed to be a university’ means it is an institution of higher education not a regular university. According to UGC (Institutions Deemed to be Universities) Regulations, 2019 Published vide Notification No. F. 1-2/2018 (CPP-1/DU), dated 20.2.2019 “3.0. Objectives of an Institution Deemed to be University. - The objectives for which an institution is declared by the Government as an Institution Deemed to be University shall be:

3.01 To provide for higher education leading to excellence and innovations in such branches of knowledge as may be deemed fit, primarily at undergraduate, at post-graduate and research degree levels, fully conforming to the concept of University as defined herein.

3.02 To engage in areas of specialization with proven ability to make distinctive contributions to the objectives of the higher education system in diverse disciplines.

3.03 To provide for high quality teaching and research recognized nationally and globally” The reality is that many private colleges flush with funds got the ‘deemed university’ status and have called themselves ‘University’ with the words ‘under sec 3 of UGC Act’ in smallest of letters, and the first time graduates, unsuspecting parents have bought into this on a large scale. It is only after 2017 there was some attempts to curb this practice. 

The TMA Pai judgement gives freedom to the institutions in charging fees.  In the T.M.A Pai v. State of Karnataka, 2002: The Court directed that educational institutions could make a “reasonable surplus” but disallowed profiteering and charging capitation fees. It argued that “reasonable surplus” to meet the cost of expansion and augmentation of facilities did not amount to profiteering. The UGC Act does not specifically have provisions about profits by educational institutions, while most of the school regulators have provisions to affiliate societies, trusts or Sec25 companies which are not for profit. There has not been any comprehensive legislation of fee fixation in both government and private institutions which includes aspects like donations, admission fees, hostels etc. even as we want education to be a public service with no profit motive. On the other hand, large corporates who want to start educational institutions which are genuinely part of their CSR have no way to go about it. 

Charging donations for admissions, high fee for academics and if that is limited then charging exorbitantly for other services, commissions on everything from text books to uniforms are the obvious methods of increasing revenue.  A survey on ‘parking charges’ or ‘compulsory bus fee’ levied by institutions in Bangalore for example would be very revealing.  Using mostly adjunct faculty or junior faculty, not paying reasonable salaries, not maintaining the buildings or providing sufficient safety, are some ways of reducing costs. 

The environment is stifling those who genuinely want to run really ‘not for profit’ institutions and with the tacit support to ‘for lots of profit’ institutions, wonder why the lip service. Hypocrisy only creates problems, in this case, of expectations which cannot be met. Much better to have a debate on the types of institutions, their role and target market. The role of the private sector is inevitable in India, and public sector universities have generally been job creation factories. On the demand side, we have a very large number of students and their parents who are easy prey as they value the degree without understanding the underbelly of the unprincipled part of the education industry. 

The new education policy is now in the planning for implementation stage, how will the legislation, rules and regulations view this elephant in the room? Will the income tax, companies act, societies act, and those connected with education take a common and all-encompassing view or continue to watch this from the side lines and maybe concentrate on correcting history and making changes in curriculum which are also important.