Education: a bad business?

Last month the SEC launched an informal inquiry into BPP Law School’s parent Apollo Global over the issue of revenue recognition at the ­University of Phoenix – something that caused Apollo’s shares to dive by 15 per cent in a single day. As owner of the University of Phoenix, Apollo ­Global – a joint venture between Apollo Group and Carlyle Group – is the biggest for-profit higher ­education provider in the US. The £305m takeover of BPP this summer gave Apollo a bridgehead into a rapidly liberalising UK market and was supposed to give BPP some US muscle over here.

Now that students are seen by education providers as units of production rather than ­potential citizens, revenue recognition is a major issue; when a student drops out, exactly how much of their fees can be left on Apollo’s balance sheet? Life choices meet accounting principles: it’s a tricky mix.

And the saga continues to escalate, with one LPC provider lodging a complaint to the Bar ­Standards Board and the Solicitors Regulatory Authority.

The BPP story highlights a wider issue that will be of intense interest not just to those working in legal education and graduate recruitment, but to anyone with children about to go to university – that is, the prospect of higher education institutions being opened up wholesale to businesses.

BPP has been assiduously courting the Tories, with chief executive Peter Crisp up at the party ­conference this autumn doing the prawn cocktail rounds. It has just been allowed to award degrees, but is not yet classed as a university – much as it would like to be.

Despite the University of Buckingham’s ­comparative success, private providers of higher education have been viewed with a certain amount of apprehension among the Labour establishment, but a Conservative government would be more sympathetic. For BPP, the timing of the SEC inquiry couldn’t be more awkward.