The value of investment funds for higher education

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Higher education takes a lot of money. Whether it’s for salaries, in buildings, labs, research work or student services, the costs add up quickly for faculties. So they are constantly looking for ways to bail themselves out. While tuition fees are a guaranteed source of revenue each semester, they are not enough to meet all obligations. Public investment, meanwhile, is dwindling due to ideological issues or deficits.

The idea of private funding is gaining traction. Already, there is research being commissioned by various think tanks. This libertarian site proposes that students be evaluated on their academic performance and thus, upon graduation, a percentage of their salary be withheld and redirected to the university. However, we can see problems emerging with this type of system. Indeed, what happens to students who cannot find a job in the field and pay 10% of their earnings to their school? Not to mention that nowhere in this system does it say that tuition disappears.

Investment funds as saviors?

Private groups are becoming increasingly interested in higher education. Investment funds are offering financing for French private schools, particularly business schools. After all, since the late 1990s, enrollment has risen sharply in this sector. We’re talking about 4 billion euros in revenue. In some cases, groups have literally bought institutions.

For the funds, this is stable revenue, which does not require so much investment and will be good for them. Indeed, how many students will come directly out of these schools to work at home? The calculation is still beneficial for them. This phenomenon does not only occur in France. African business institutions are seeing more and more funds invest in and acquire schools in Francophone Africa.

What about the higher education model?

Of course, this raises important questions. While even traditional business schools are interested and allied with investors, they are trying to maintain a decision-making position. For example, EM Lyon has kept a blocking minority as they wonder if the investor will indeed maintain the funds to develop the academic part. Or will they rather want to increase profitability by increasing the number of students and lowering the number of professors?

Because these funds are not philanthropic. The idea is to get a return on investment. By the way, there is a reason why they are only interested in business schools and not in humanities, education or health faculties. Nor do they seem to have any interest in funding adult education, which nonetheless allows many people to enter the job market and keep the economy going.

Some see this as signs of the decline and even the end of the French higher education model. Thus, private schools in France will live off the funds of these investment groups, which will then be able to dictate approaches so that the institutions are more profitable. A reality closer to that experienced in the Anglo-Saxon world, particularly in the United States. In itself, it is not a bad thing that private funds are interested in higher education. However, it would have been more constructive to help universities, no matter what faculties they have, than simply potential employees.

Illustration: Mohamed Hassan – Pixabay

References

Benhaddou, Aroun. “Private Higher Education Turns Funds’ Heads.” Capital Finance. Last updated November 21, 2018.
https://capitalfinance.lesechos.fr/deals/nos-exclus/lenseignement-superieur-prive-fait-tourner-la-tete-des-fonds-149339

“Private Financing Of Higher Education.” Counterpoints. Last updated November 1, 2018.
https://www.contrepoints.org/2018/11/01/329232-le-financement-prive-de-lenseignement-superieur

Ouadia, Dahvia. “Private Investment Funds, Future Of Business Schools?” L’Etudiant. Last updated on September 25, 2019.
https://www.letudiant.fr/educpros/actualite/les-fonds-prives-avenir-des-ecoles-de-commerce.html

“A Blade Of ‘Funds’ Shakes Up Higher Education.” Sydology. Last updated on January 29, 2019.
http://sydologie.com/2019/01/une-lame-de-fonds-secoue-lenseignement-superieur/

Velluet, Quentin. “African Business Schools: Why Are Investment Funds Interested?” JeuneAfrique.com. Last updated on May 9, 2019.
https://www.jeuneafrique.com/emploi-formation/771700/business-schools-africaines-pourquoi-les-fonds-dinvestissement-sy-interessent/


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