An American in London

British universities may, technically, be independent but in practice they are part of a state-funded system. With the Government encouraging higher education to be more go-getting, could we see more institutions going private? Lucy Hodges looks at what the future might hold

Just off the Marylebone Road in London and a block away from the trendy kitchen shop, Divertimenti, is an unknown private university that exists to make money and that represents the future of British higher education. At least, that's what Professor Geoffrey Alderman, its vice-president and the former pro vice-chancellor of Middlesex University, believes. As you step into the glass-fronted foyer of the American InterContinental University (AIU) in Marylebone High Street, Professor Alderman's voice booms: "Welcome to the future in Great Britain - the private higher education sector."

Although the university has been around for a while - it was founded in Switzerland in 1970 and moved to London seven years later - its existence has taken on added interest because of the Government's desire to see higher education become more market-driven, internationally go-getting and student-focused. And the American InterContinental University is expanding: a large block parallel to the main site is being upgraded to provide studio space for students on degrees in media production and visual communication as well as a viewing theatre and IT classrooms.

Professor Alderman and AIU's president, Kevin Martin, are especially pleased that they are attracting some British students despite tuition fees of £12,000 a year and a less than stellar reputation in the higher education firmament. Students gain admission to a Bachelor's degree with five GCSEs at grade C and above. A-levels are not needed on the grounds that these are American four-year degrees and the first year operates as a foundation course.

"They come for our small teaching groups, the tender loving care and the fact that we give them two Bachelor's degrees," says Professor Alderman. AIU degrees are accredited by a regional accrediting body in the United States (the Southern Association of Colleges and Schools) and are validated by the Open University in the United Kingdom. The only AIU degree that does not have Open University validation as well as American accreditation is the MBA in international business - and that is because students are not required to spend several years in work first but are taken straight from university.

"Students also like our flexibility," says Professor Alderman. "We enable them to complete a degree in two-and-a-bit years. And they have the near certainty of a job at the end of it because of our system of embedding industrial placements in all our degree programmes."

With a ratio of one teacher to every 12 students, there is no doubt that students receive a good deal of personal attention (see box, right). That contrasts with one teacher to 23 students that Professor Alderman remembers at Middlesex University five years ago. "We get some refugees from British universities, both from the former polytechnics and the pre-1992 institutions," he says.

With campuses in five other cities around the world (Atlanta, which is the headquarters; Fort Lauderdale; Los Angeles, Dubai and Chicago), the American InterContinental University has 834 students in London, of whom only 20 are from Britain. The largest group comes from the USA. They are mainly students on their year abroad. So they are studying at a range of universities and colleges in America (including Princeton and Dartmouth, says Professor Alderman) and have their credits transferred after a year in Marylebone.

Another large group comes from the Middle East, from countries such as Kuwait, Saudi Arabia, Oman, Lebanon, Israel and Egypt. Increasing numbers of students are from the Far East. That contingent includes China, Malaysia, Singapore and the Indian sub-continent. And there are also representatives from Eastern Europe and Sweden. The university is unashamedly vocational. It is not driven by research as most British universities are and its library is small though students have access to an online library too.

"Our mission is to provide you with all the knowledge, skills and practical work experience you need to succeed in the real world - and then to get you started on a rewarding career path, in a profession with a solid growth future," says the prospectus. Courses are in subjects that will help you to get a job - fashion, interior design, business, media production, visual communication and IT. And the university boasts a pretty impressive statistic: 94.5 per cent of graduates get jobs within three months of graduation. Teaching is done by 83 full-time staff and an army of 150 adjunct teachers. In an attempt to try to gain credibility in the United Kingdom and attract more British students the university recently signed up to the quality control mechanisms by joining the higher education watchdog, the Quality Assurance Agency. It will soon be subjected to an audit by the agency.

All of which seems to be producing results. The American InterContinental University is part of a large American company, Career Education Corporation, based in Chicago, which provides "for-profit" higher education, as it is known in the jargon and whose shares are traded publicly. In the past 10 to 20 years this segment of the US marketplace has grown hugely. It is growing at such a rate that the Chronicle of Higher Education, the weekly newspaper for and about universities, publishes an index tracking the performance of the 10 biggest companies. Since 2000 this index has outperformed the regular share index by a significant amount. It was, for example, up by 9.5 per cent for the first quarter of 2003.

Career Education Corporation has been doing particularly well. Its turnover this year is expected to be $230m. In the first three months of 2003 its share price was 19 per cent up on the same period the previous year. In February it announced that it had bought a French firm that operates nine post-secondary institutions in Paris, Bordeaux and Lyon. In March it announced that it would buy another publicly traded higher education company in the USA, Whitman Education Group, in a deal said to be worth $230m. That is why institutions such as American InterContinental University are such a threat. They are doing well at a time when the state-funded universities are running deficits.

"The days when the British taxpayers' money funded the British university system are over," says Professor Alderman. "Somebody else has to pay. Successive British governments have said it's going to be the students, either through a graduate tax or top-up fees. One way or another, they're saying students have to pay.

"There's nothing else for it but to go out into the marketplace and raise capital as any other business does. Universities are businesses. The problem is that most British vice-chancellors are not equipped for this role."

The university system is well aware of the threat posed by a for-profit sector that is nimble and able to use new technology for teaching and learning. Universities UK commissioned a report into global and corporate universities and the Government established the UK e-university to compete.

The only private British university is Buckingham, set up during Mrs Thatcher's premiership and it doesn't exist to make a profit. Its vice-chancellor, Professor Terence Keeley, believes that there is a place for private universities in Britain. But they will only be a niche market concentrating on vocational training while higher education is so heavily subsidised by the state, he says.

"Professor Alderman is wrong to say he is representing the future," he says. "We don't have an independent Ivy League. The best universities are still Oxford and Cambridge and Imperial and University College London and they convey credibility to the rest because they are part of the state system. There's a real sense that the state system represents the best."

Barry Sheerman, the Labour MP and chairman of the Commons select committee on education, believes that private universities are "one part of the future". He has been impressed by the interns he has had from the American InterContinental University, he says. But the fact is that British higher education is still pretty high quality and the link between teaching and research means something, he says. "I think private universities should be carefully looked at. We can't underestimate what's been happening in the United States."

'My course was very career oriented'

Sara Fakhro, 28, was a British MBA student at American InterContinental University. She had done a first degree in German at the University of Lampeter in Wales and had worked in the private sector for five years.

"I was working in human resources and wanted a change of career, so I gave up my job and looked around for an MBA. The great thing about the AIU was that they could give me a quick start date. I could start within three weeks. So, I started in March 2002 and finished in December that year. It was extremely different from Lampeter. I had much more guidance and it was very career oriented. We were given a lot of personal attention because there was a maximum of 10 and sometimes five to a class. The staff had an open-door policy. I'm not sure we would have got that level of attention elsewhere. There were two British students on the programme.

It cost me £16,000 and I did worry about taking an MBA at a place no one had heard of. But it increased my confidence enormously. I got an internship in Parliament and that led to my current job as manager of the Associate Parliamentary Manufacturing Industry Group. I love what I'm doing now."

Nicola Marshall, 22, has A-levels in English, history and mathematics and is taking a degree in media production at the AIU "I really enjoy it. I chose it because I liked the course. There was so much variation and choice. I really wanted to start making short films and that's what they do. Sometimes you find yourself in a class with people who don't know as much as you but the lecturers are great. It costs around £3,000 a term. I am fortunate in that I am able to pay the fees out of a trust fund. I feel it's been worth it."

l.hodges@independent.co.uk