This article about higher education (HE) in the UK is entirely ‘speculative’ and is based on a humorous and thought-provoking proposal delivered under the pseudonym ‘Dave’ to a ‘Dragons' Den’1 session at the JISC Innovations Forum held at Royal Holloway in June 2010. However, nothing proposed is technically impossible – indeed all of the constituent parts already exist and are being used today. For example, initiatives such as Open University's OpenLearn are already making content freely available to the independent learner. In the schools sector this is already happening too, as demonstrated by Pearson's recent acquisition of a stake in TutorVista, which supplies digital content and technology platforms to private and government schools in India and provides online tutoring services to approximately 10,000 students per month. By bringing all the various parts together, the author presents a series of possible business models for the delivery and funding of HE that would have a dramatic impact on HE in the UK world we know and love.

The context

First, let us consider the challenges facing the UK and its higher education system. It is clear that we need to drive growth through building intellectual capital and enabling innovation to thrive. Doing so will require a highly skilled workforce which constantly re-skills and updates itself in response to change. As well as challenging HE, driving growth through building intellectual capital and a highly skilled workforce will also challenge employers and the way that they and HE work together. This will be particularly true in the disciplines of science, technology, engineering and medicine (STEM), but will apply to all fields, as I would suggest that real innovation hinges on synthesis across disciplines.

David Willetts, UK Minister of State for Universities and Science, has said: “Our higher education system has many strengths, but also faces challenges – the need for more focus on the student experience, the need to widen access, and the need for sustained funding.”;1

In the current political environment2,3,4, there are a number of fairly widely shared ‘principles’ that need to be considered:

  • funding should follow student choices
  • part-time students need better consideration
  • those who benefit from HE most should contribute appropriately
  • access to HE needs to be fair and inclusive
  • payment for HE should not have to be ‘up front’.

I would like to suggest that we take these principles a step further in the development of a funding model for HE: those who consume more should pay more and those who benefit more should pay more (but not ‘up front’), and will return to this idea later.

What does HE sell?

In this article I am focusing on the ‘teaching and learning’ aspects of HE and not on areas like research, consultancy and knowledge transfer.

I posit that the main thing that universities sell is accreditation – and the branding of that accreditation – and the assessment that this entails. Higher education institutions also sell ‘value added’ products such as advice and guidance, tutoring, access to expertise and feedback.

What universities do NOT sell is content – content is increasingly freely available and initiatives like Open Educational Resources5 are making free access to content ever more true. Indeed, given that the overwhelming majority of university teaching resources have been produced using taxpayers' money, a government could mandate that, in order to offer a course for accreditation, sufficient content must be identified or made available as open educational resources to cover the course's requirements.

So, what sort of business models are we looking at? Here are three that have occurred to me, but there will be more, I am certain:

Model 1: self-learn and independent study with optional extras

Self-learn could take two paths as regards its link with HE. One way could be that someone might study something entirely independently from interest or personal need (true autodidacticism) and then look for a means of gaining academic credit; alternatively, someone might look for an accredited course to study for independently (essentially self-regulated learning). To aid this process of independent study, HE institutions would need to publish the required learning outcomes and assessment methods for courses. The learner could therefore select a course which meets the outcomes of their self-learning, or select a course and then study towards it on their own. When ready, the learner could register (and pay) for assessment.

One suspects that the pay-for-assessment approach would appeal to the true self-learner most; for others, paid-for ‘extras’ could be offered. These extras might include: learning plans for standard courses, negotiated awards and associated personalized learning plans and assessments, participation in tutor-led online or on-campus delivery and communities (this could be done as true ‘pay as you go’ (PAYG) – see later), and PAYG personal tutoring (including additional charges for personalized feedback for formative and summative assessments).

This model therefore covers everything from ‘do your own learning then gain credit’ to what is basically a standard course, delivered part-time or full-time.

Model 2: employee-focused work-based learning (WBL) and APEL

The accreditation of prior experiential learning (APEL) is a process that enables people of all ages and backgrounds to receive recognition. Important factors for work-based learners are: ensuring where possible that the learning really IS work-based and carried out in the employment context, ensuring that credit is gained for learning acquired as part of employment (APEL), and ensuring that learning is tailored to the individual's needs.

In order to offer this approach, there would need to be two initial ‘paid-for’ components:

  • firstly, a technology-enabled, rapid, APEL process involving the learner and their employer working with an HE institution to agree what credit can be awarded for experiential learning and what additional work is required to gain the targeted academic standing. It is important that the APEL approach is rapid and responsive – current portfolio-based approaches are frequently so onerous as to act as a major barrier to APEL6: by the time the learner has gathered the relevant evidence to ‘APEL’ a module, they might as well have completed the module! They lose interest and fall through the net.
  • secondly, the negotiation and structuring of a programme of work-based study and assessment to meet the required outcomes.

Payment could be by the employer, employee, or a contribution from both, using the PAYG model.

Model 3: employer-focused WBL and APEL

Whereas Model 2 probably best suits the smaller employer that will pay for modules designed and delivered by HE institutions, employer-focused WBL and APEL (Model 3) is likely to suit medium-to-large companies, public sector organizations and corporates. The employer negotiates with the institutions and pays for a mapping of the skills/ competencies it needs against a suite of awards, or negotiates new awards to meet these. The employer's human resources department then identifies individual employee requirements against the skills and competencies required by the company or department. (This type of relationship and development is already taking place7, but the use of the PAYG approach opens new possibilities.) The individual learner then receives rapid APEL and an individualized WBL plan to achieve targeted award outcomes, with the employer paying as the learner progresses. In addition, the employer and institution will provide mentor- and tutor-led, focused learning communities (normally online).

The pattern of individual learning can then largely follow Models 1 and 2.

Payment by consumption – ‘The Learnster Card’

Recent government pronouncements included the following two phrases:

“to reduce public expenditure and to improve the quality of university teaching by increasing student choice.”;8

“the indicators that students and their parents value: contact hours, teaching patterns and employment outcomes.”;9

To take a ‘market forces’ view of the above, funding should follow quality and value for money. If a student feels their time is wasted by attending (for example) a boring lecture in a room with 200 other learners, they tend not to repeat the experience – especially if the same resources obtained are available in good quality online. Also, ‘contact hours’ can be a loaded term – five hours watching PowerPoint presentations is unlikely to be as effective or valued as a single hour one-to-one with a subject authority.

Every learning opportunity and activity could be treated as a ‘consumer purchase’. HE institutions could provide each learner with a card that records his/her educational ‘consumption’. The use of this card could be both large in scale (student buys a personalized programme) and highly granular (student attends a lecture or has a tutorial). Sponsored learners could use a ‘Company Learnster Card’. The individual's card number could stay with them for life, which would facilitate part-time learning. Indeed, the distinction between part-time and full-time learning would be identifiable only by maintenance costs ‘drawn’ and the need for the country to have a workforce of ‘lifelong learners’. This system would ensure that the money followed quality; poor courses and tutors would attract low attendance and engagement and hence low funding, students could use their cards to attend special lectures by ‘star performers’ or visit other institutions for tutorials with leading experts.

Making the funding and contributions fair

The Learnster Cards, both individual and corporate, could be charged (and topped up) with ‘points’ which could be interpreted and used in different ways.

For the learner, the PAYG approach would fit well with a variety of funding/loan models. An extreme version might work like this: the points accrued by learners would be translated into student loans (educational maintenance loans could also be charged to the Learnster Card) – in this way, the size of loan would be relative to the ‘consumption’ of the learner and either repaid under the current system or, radically, used to calculate the rate at which graduate tax would be applied. Those who benefited most from HE would pay most, but those who had been ‘efficient’ in their use of HE would be rewarded with a lower rate of loan than would otherwise have been the case. The points system would allow changes in funding systems to be coped with at reduced cost for governments. It would allow learners the flexibility to cope with issues such as inclusion, where students from less advantaged backgrounds could have their points translated at a lower rate, and would also make the provision of scholarships and bursaries simpler to administer.

For employers, the attraction would be that they would know exactly what they were paying for and could assess cost/benefit more accurately. Governments could then provide assistance to chosen employment sectors based on the actual use that employers made of higher education offerings. This would allow quite fine granularity of assistance, such as favourable terms for companies needing development in STEM areas.

Whilst it is envisaged that HE institutions would receive their teaching-related funding via the ‘accrued customer points’ route, this system could also be used by government to promote provision of particular courses by providing points to universities which could be used to target learners and organizations. For institutions and staff, it would mean that funding would follow both quality and efficiency and the implications of that would mean a radical change in UK higher education, the way it is delivered and the way it is funded.

What are the implications?

A combination of increased work-based learning, self-learning and e-learning would almost certainly mean that many HE institutions would no longer require such large campuses as they currently maintain. Many teaching staff could be home-based and indeed some teaching staff could work on a freelance basis for multiple institutions. It may be that a reduced number of teaching staff would be needed and it would certainly open the door to new ‘facilitator’ roles. There would be a place for specializations in planning learning programmes, assessment, APEL, award development.

The proposed system would open up a wealth of franchising opportunities, allowing strong ‘brands’ to maximize their potential whilst at the same time providing greatly increased ‘local’ provision and choice for both learners and employers.

In closing, I argue that the flexibility of the proposed educational/payment system would allow governments to better ensure alignment of higher education provision with the needs of society and the economy.