{"text":[[{"start":8.36,"text":"In a nondescript building just off the A40 highway in the outer suburbs of London lies the centre of the fastest growing, and most profitable, part of Britain’s university sector."}],[{"start":19,"text":"Though few have heard of it, Global Banking School is now the biggest teacher of full-time undergraduates in the country having more than doubled in size in just three years."}],[{"start":28.12,"text":"Yet GBS is not formally a university but a private company contracted by universities around England to teach students who may never set foot on their own campuses."}],[{"start":38.2,"text":"A decade after the country’s formal cap on student numbers was removed in order to encourage a market in higher education, one in 10 full-time undergraduates in England is now taught by for-profit franchise companies such as GBS, according to FT analysis of data from the Office for Students, the university regulator."}],[{"start":null,"text":"

"}],[{"start":56.88,"text":"Advocates say franchise providers have brought private-sector innovation and spread educational opportunity to demographic groups ignored by traditional high-cost universities."}],[{"start":66.76,"text":"Critics accuse the companies of cashing in by enticing ill-prepared people, often with few qualifications, to sign up for courses of variable quality and uncertain long-term benefit."}],[{"start":77.84,"text":"They predict that in many cases taxpayers will end up footing the bill because the students will never earn enough to repay the tuition fees and maintenance loans they take out under England’s student finance system."}],[{"start":88.96,"text":"According to senior university figures, franchised providers take between 75 per cent and 90 per cent of the annual tuition fee, currently capped at £9,535, for doing the actual teaching. Their sponsoring universities get the rest for accrediting degrees. Some 160,000 full-time undergraduates were taught in this way in 2024-25, up 73 per cent in three years, according to data from the Office for Students."}],[{"start":116.68,"text":"Big international players such as Global University Systems are expanding rapidly, with its London College of Contemporary Arts going from 1,700 to more than 9,000 students in three years. GBS, by far the largest such operator, is owned by UK-based GEDU Global Education, which operates in 16 countries."}],[{"start":136.64,"text":"Private equity companies such as CVC Partners, whose QA group is responsible for more than 9,000 franchised students, are getting involved, while other franchise companies are owned by local entrepreneurs with interests that range from retail to day care. Operating profit margins in the big providers are typically over 20 per cent, according to company filings."}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":158.96,"text":"At GBS headquarters in Greenford, west London, most students are grateful for a chance at higher education they might never have got elsewhere. “When I was young I didn’t take education seriously,” says Rokaya Abouelfath, 26, who left school with no qualifications and is now studying towards a degree in health, wellbeing and social care that is due to be awarded by Oxford Brookes University."}],[{"start":183.84,"text":"“Not many universities accept you when you don’t have GCSEs,” she adds, referring to the exams taken at age 16 by students in the UK outside Scotland."}],[{"start":null,"text":""}],[{"start":194.24,"text":"Franchise providers have driven a surge in the proportion of students starting courses without formal qualifications. At GBS, English language tests are required “but after that we are trying to enable opportunity”, says chief executive James Kennedy."}],[{"start":209.68,"text":"“The key thing then is, in our view, does this programme fit you and do you have the motivation to do it?”"}],[{"start":215.84,"text":"GBS typically gets high scores in student satisfaction surveys and Kennedy argues that he gives students things they value by cutting costs elsewhere."}],[{"start":224.96,"text":"He describes courses that offer few options as “no-frills” and readily accepts the comparison with budget airlines or discount supermarkets. “Aldi’s a phenomenal business model,” he says. “It’s a very thoughtful and targeted model and we do the same. We organise ourselves around our students.”"}],[{"start":242.2,"text":"For Abouelfath, who works in a school for children with special needs and has three children under 10, being able to fit study around other commitments is vital."}],[{"start":251.44,"text":"Classes at GBS run seven days a week until 9pm to maximise the usage of office space at its 10 campuses across London, Birmingham, Leeds and Manchester."}],[{"start":261.6,"text":"“We don’t have big signature buildings with huge spaces,” says Kennedy, who criticises the lack of cost control in traditional universities compared to his own company’s “very strong private-sector ethos”."}],[{"start":273.48,"text":"The majority of GBS students come originally from outside the UK and are looking to move beyond the low-skilled jobs they do in Britain."}],[{"start":281.84,"text":"Lewis Debor, originally from Nigeria, says he feels “stagnant” in his job as a delivery driver and wants to develop his skills “and see what I can find”."}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":291.72,"text":"Like most GBS students, Debor and Abouelfath found courses online, where the company promotes itself through agents who earn commission based on how many students they sign up."}],[{"start":302.56,"text":"Adverts on Facebook promise “fully funded” or “government-funded” degrees, a reference to the system under which the cost of tuition is advanced by the state and recouped from future earnings."}],[{"start":313.76,"text":"Inducements such as Amazon vouchers and laptops are commonplace. In advertisements issued by several agencies that refer students to GBS, claims included “fully funded UK degrees”, “get a free laptop”, “simple interview only” and “you could access up to £25,000 in UK student funding”."}],[{"start":333.64,"text":"GBS said it was reviewing its relations with several of the agencies after adverts were flagged by the FT and terminated one contract as a result. But Kennedy says the marketing channel is a key part of its business model. “Without those agents we would not be able to reach the communities that we serve,” he says. Apart from agents, “there are no mechanisms to enable those people to understand what the opportunities available to them are,” he argues."}],[{"start":360.08,"text":"Beyond the recruitment campaigns, there are also concerns about the quality of franchise education after a series of scandals."}],[{"start":367.2,"text":"Last year the government withdrew student loan funding from Oxford Business College, which at its peak had more than 8,000 students, after allegations that its students were taking out loans but not attending. The decision was quashed at judicial review."}],[{"start":381.72,"text":"Kennedy is at pains to distinguish GBS from concerns about “rubbish teaching” and loan fraud, stressing that all classes are taught in person and that students who do not turn up get phone calls asking where they are. About 10 per cent of students deemed unlikely to finish the course are kicked out within two weeks of enrolment, he adds."}],[{"start":401,"text":"Former staff at GBS tell the FT they knew of some overseas students who arrived on campus, received their maintenance loans and then returned to their home country."}],[{"start":410.36,"text":"But Kennedy insists the majority “don’t come here because somehow it’s free money. They’re making a substantial commitment of time and effort, and we’ve got 40,000 students because there are 40,000 students out there who want what we offer.”"}],[{"start":424.36,"text":"That has not stopped the Office for Students from opening an investigation into GBS’s partnership with Oxford Brookes, citing concerns about quality and governance."}],[{"start":434.24,"text":"A similar assessment last year into GBS’s courses for Canterbury Christ Church University found it was “not consistently providing a high quality academic experience to students”, offered learning materials that were “not adequate” and used assessment methods that were not “valid, reliable or credible”, according to documents seen by the FT."}],[{"start":454.6,"text":"The OfS found that students were being made to watch “multiple” YouTube videos during classroom time and that academic misconduct, such as generative AI usage, was “unacceptably commonplace”."}],[{"start":465.8,"text":"Some courses were criticised for being insufficiently challenging. In one classroom task, students were asked which of the following acts with more professionalism: “Jane dresses according to the employee handbook and participates actively in group conversations presenting herself with integrity. John wears shorts and ball caps to work, speaks with sarcasm, and does not take his job seriously.”"}],[{"start":null,"text":""}],[{"start":487.96,"text":"Kennedy acknowledges “concerns” about some courses and says he is “not happy” with dropout rates. But he also voices “frustration” with regulators, saying “they have a habit of only announcing investigations into franchise providers”."}],[{"start":501.72,"text":"He describes GBS courses as “fundamentally sound”, adding that “we have a really strong belief in quality so if they do find something . . . we will fix it before they’ve written their report”."}],[{"start":512.16,"text":"Of the former staff who have complained about conditions at GBS, he says that “if you’ve spent your entire career working in traditional higher education, that’s a much more sedate, less demanding environment . . . [GBS] just doesn’t fit for some people, they find it really difficult.”"}],[{"start":525.4,"text":"All teaching is in person, while staff get no paid research time and are offered only statutory sick pay and pension entitlements. That allows GBS to make big savings on the costly defined-benefit pension schemes at traditional universities."}],[{"start":541.28,"text":"Yet large-scale job cuts and fixed-term contracting across higher education mean GBS does not struggle to recruit, he says."}],[{"start":549.68,"text":"“We’ve definitely become more attractive when recruiting academics because it’s so difficult to pursue a career and so many are being let go.”"}],[{"start":558.28,"text":"The relative newness of franchised teaching means it is hard to measure how well it is working for students."}],[{"start":563.8,"text":"Dropout rates tend to be high; more than 20 per cent of students do not make it to a second year. Information on student destinations after graduation is patchy, but for some providers under half are recorded as going to good jobs or further study."}],[{"start":577.88,"text":"Whether degrees will boost their future earning power is even harder to tell. Recent work by the Institute for Fiscal Studies think-tank concluded that on average graduates still earn more than non-graduates, but its findings were based on the wage data of a very different type of student who attended university 20 years ago."}],[{"start":596.2,"text":"“Because [franchise students] are a group that didn’t go to university before, it’s quite tricky to predict their outcomes because we can’t see what outcomes similar students had,” says Kate Ogden, the author of the research. Those with few prior qualifications tend to do worse, her research found."}],[{"start":613.44,"text":"“These policy questions are still open and it’s an important thing to look at — we don’t have good answers.”"}],[{"start":null,"text":""}],[{"start":619.4,"text":"But the experience of for-profit colleges in the US is not encouraging. Loan default rates are high and there is little evidence that their degrees enhance earnings power."}],[{"start":628.76,"text":"“For-profits largely enrol older students who have previous earnings records, so you can look at whether their pay went up. And the answer is no,” says Susan Dynarski, professor of education at Harvard University. “These students are taking on loan debt and they are wasting their time, so you are harming the students and you also have employers being deceived.”"}],[{"start":649.12,"text":"“It looks like you have a similar disaster looming in the UK,” Dynarski adds."}],[{"start":652.72,"text":"In England, student loans meet the upfront cost of tuition and contribute to living costs, with repayments over 30 or 40 years contingent on income. On average, graduates are contributing more of the costs of their education, but the lowest earners can still end up repaying relatively little before their outstanding balances are written off — in effect, a subsidy from the public purse."}],[{"start":675.16,"text":"How big this subsidy is for franchise courses will not become clear for decades. In the worst case, where students do not manage to boost their earnings above minimum wage, they would never repay any of their debt, which averages almost £50,000 for new graduates. If the Treasury is forced to write down the value of their loans, that will deal an immediate hit to the public finances."}],[{"start":697.12,"text":"Professor Geoff Smith, vice-chancellor of the for-profit Regent’s University, criticises the sector’s “extractive” reliance on the student loans system and thinks franchising is too focused on short-term returns. “It’s not helping the reputation of UK higher education,” he says. Another senior leader at a traditional university says the profits made by big players make them “queasy”."}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":717.72,"text":"Iain Mansfield, director of research at the right-leaning Policy Exchange think-tank, says the rise of franchising is “a classic market failure” within the wider student loan system."}],[{"start":728.24,"text":"“While in general I support the use of private sector in public sector delivery, in this case I think it poses an unacceptably high level of risk to taxpayers, given the upfront payment of the fees by government and almost total lack of oversight on quality or standards,” he adds."}],[{"start":743.96,"text":"But Lord David Willetts, who lifted the cap on student numbers as universities minister in the coalition government, insists there is a place for for-profit providers."}],[{"start":752.48,"text":"“Just banning for-profit providers would be a mistake,” he says, although he suggests reforming the loan system so that university incomes are partly contingent on how much their graduates earn."}],[{"start":762.8,"text":"“It should be possible, with a higher education regulator, to hold companies to account for their results,” he adds."}],[{"start":768.8,"text":"The OfS insists it is closely watching franchise providers, and has recently required those with more than 300 students to register in order to increase its oversight."}],[{"start":777.68,"text":"Ruth Hannant and Polly Payne, joint chief executives of the OfS, said in a statement they had “concerns about the risks some franchising activity poses to students”. They also said that while for-profit teaching had “an important role to play . . . institutions should never sacrifice course quality or students’ prospects after graduation in pursuit of profit” and that “we can and do take action” when standards fall short."}],[{"start":804.92,"text":"For Kennedy at GBS, the answer to problems in the sector is more market, not less. He argues that “public-sector mentality” universities have no incentive to offer innovations such as seven-day-a-week teaching and three student intakes a year. Criticising profit “doesn’t drive and support innovation, it doesn’t drive change”."}],[{"start":827.28,"text":"With traditional universities cutting jobs and struggling with deficits, Kennedy argues institutions like GBS are the future: “The existing very, very high-cost boutique or bespoke approach is too expensive — so either government has to pay more money, or the sector has to change.”"}],[{"start":851.16,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1784985944_8041.mp3"}