GSM exit rounds off failed era of for-profit HE expansion in the UK

GSM London’s entry into administration creates a spectacular, explosive end to the failed era of government-driven expansion of for-profit higher education in the UK – and a very unpleasant situation for its students when it ceases teaching in September.

And it also leaves an important question hanging in the air for the Department for Education. Given that GSM had already run up a £10 million deficit and only avoided collapsing into administration last year thanks to its private equity owner waiving £26 million of debt, why did the DfE then decide in November 2018 that it was a good idea to let GSM carry on having permission for its students to access public student loans?

If I was a student who started a course at GSM this year as a result of that DfE decision, and now had to find another institution at which to carry on with my degree, I’d want to know the answer. Times Higher Education reported on the DfE’s puzzling decision at the time – the department's choice looks much worse now.

The decision to sink further public money into GSM, which had already benefited from £152 million in public funding via tuition fee loans in the six years to 2017, was presumably prompted by a feeling among DfE officials that the college was “too big to fail”. The Office for Students, which has since taken over regulation of the sector and was in the process of making a final decision on whether to grant GSM access to public loans money for next year, may have felt otherwise. THE reported last week on the OfS’ deliberations over GSM and its concerns about drop-out rates.

I also understand the OfS had told GSM earlier this year that it had concerns about the college’s financial viability.

But to my knowledge, the OfS hasn’t been looking at any new financial information beyond that available to the DfE in November last year (when the last set of accounts was published). Which, again, raises questions about the DfE’s judgement.

To recap, GSM, formerly Greenwich School of Management, was one of the biggest beneficiaries of the Conservative-Lib Dem government decision, under then universities minister Lord Willetts, to let private providers expand their numbers of students with public student loan money without any caps on recruitment. It was all in a bid to create competition for universities and to drive down their fees. Unsurprisingly, this resulted in explosive growth in the sector along with concerns about quality and drop-out rates at some of the for-profit providers that entered.

At its peak, GSM – which offers degrees validated by the University of Plymouth – grew to have just short of 6,000 students with public student loan money (more than the London School of Economics and Imperial College London combined).

Although the government subsequently realised its mistake and introduced number controls, after Willetts left office and after bruising reports on the failure to control public expenditure from the Public Accounts Committee and National Audit Office, GSM remained the biggest English for-profit college in terms of numbers of students with Student Loans Company funding (4,500 at last count in 2017-18).

The belated advent of number controls and then of the OfS, as the new sheriff in town, had already ended the Wild West era of for-profit HE expansion so GSM’s slide into administration marks the boarding up of the saloon.

But that’s not much comfort to the GSM students facing a stressful and uncertain future as they search for other institutions at which to complete their courses.

GSM says that it has a student protection plan in place (though it isn’t an official one, because the college never had OfS registration). The OfS says that it will be working with the DfE to support students and give them information about their options to transfer. Hopefully the DfE can do this properly and go some of the way towards helping the GSM students it has failed.

John Morgan is deputy news editor at Times Higher Education.