How Private Equity Is Corroding Education in the UK

Yves here. Another example of how private equity will buy just about any cash generating cash generating activity of sufficient size that is not nailed down to the floor.

By Guy Standing, a professorial research associate at SOAS University of London. His new book is ‘The Blue Commons: Rescuing the Economy of the Sea’ (Pelican, 2022). He is a technical adviser to the basic income pilot being conducted by the government of Wales.Originally published at openDemocracy

While recent media commentary on the crisis in British universities has chiefly focused on their financial difficulties, much less attention has been paid to a far more fundamental malaise: their conversion from places of intellectual enquiry and critical thinking into ‘human capital’ factories geared to the demands of economic growth and increasingly dominated by finance.

A remarkable event that went right to the heart of this problem occurred in July 2025, yet was scarcely noticed by politicians or commentators. An American private equity firm, Brightstar Capital Partners, bought a 50% stake in a large British university.

Arden University, a for-profit private higher education institute, is the UK’s fastest-growing university, with 33,000 students studying online or across its six campuses in England (three of which are in London) and one in Berlin. It was allowed to call itself a university only in 2015, one year after the government granted it degree-awarding powers. Up until then, it had been known as Resource Development International, an online business school founded by a British businessman in Coventry in 1990 and sold to a US for-profit company, Capella Education, in 2011.

Arden was put on the market again in 2016 and bought by Global University Systems, a Dutch for-profit conglomerate. This year, Brightstar is said to have paid over $1bn for its 50% share and will install one of its partners, billionaire Marcelo Claure, as the chair of the university’s board. Claure, Bolivia’s richest man, who is now an American citizen, made his fortune as a technology entrepreneur and investor. Brightstar was founded in 2015 by Andrew Weinberg, who previously worked for Claure at a Latin American telecoms company.

Claure has announced ambitious plans for global expansion, including using artificial intelligence to translate its 140 ‘career-focused’ degree programmes in ‘over 150 different languages’. Arden will begin offering UK-accredited degrees to full-time students globally next year.

This barely noticed transaction is both symptom and cause of the malaise in British universities, raising troubling questions about the direction of the education system and the type of society Britain is becoming. And the first question we need to ask is what universities are, or should be, for.

Since at least ancient Athens, education has been depicted as the pursuit of truth and the respect for truth, combined with the refinement of morality and empathy. Today, we have more education and more years of schooling than ever; yet there seems to be a withering of respect for truth, as evidenced by the election of serial liars such as Donald Trump, Boris Johnson and Nigel Farage.

All the great universities of the past thousand years were established as relatively closed communities for the collaborative pursuit of truth, the learning of morality and ethics, and the values of citizenship. They were the pinnacle of the education commons, honed to teaching people how to think.

For many generations, universities kept alive the liberal perspective. In 1852, Cardinal John Newman famously stated: “A university training is the great ordinary means to a great but ordinary end; it aims at raising the intellectual tone of society… It is the education which gives a man a clear conscious view of his own opinions and judgments, a truth in developing them, an eloquence in expressing them and a force in urging them.”

Of course, this vision took for granted that only a small minority would be going to university. But that elitism could be overcome without distorting the ethos of university education. Upon being installed as rector of St Andrews University in Scotland in 1867, John Stuart Mill was even more adamant in saying: “At least there is tolerably general agreement about what an university is not. It is not a place of professional education. Universities are not intended to teach the knowledge required to fit men for some special mode of gaining their livelihood. Their object is not to make skilful lawyers, or physicians or engineers, but capable and cultivated human beings.”

This perspective reached its most definitive expression in the UK government-commissioned Robbins Report on higher education of 1963, which asserted that universities were to teach people how to think, to be moral and to be citizens committed to democracy, empathy and social solidarity. It emphasised that universities should be for “the promotion of the general process of the mind so as to produce not mere specialists but rather cultivated men and women”, and for the transmission of culture and common standards of citizenship.

Arden University, which offers distance learning and blended courses combining online and in-person teaching, could hardly be further from that ideal. Courses include health and care management, hospitality and tourism management, computing and data science, accounting and finance. Conspicuously lacking are any courses in the humanities such as literature, languages, history and philosophy.

In that respect, Arden University follows in the footsteps of what was long the biggest online university in the world, Phoenix University, founded in 1976 in the US state of Arizona. The university launched its digital courses in 1989, and at its peak in 2010 had 600,000 students. Its founder, John Sperling, revealingly said: “We are not trying to develop students’ value systems or go in for that ‘expand their minds’ bullshit.” The conveyor belt factory system was up and running.

And Arden is not alone in Britain. This is the tragedy; the takeover of Arden merely extends a very modern trend. It is revelling in the prospect of being a super-charged conveyor belt. The four other private universities in England – the University of Buckingham, BPP University, Regent’s University London and University of Law – follow a similar model, and the UK’s public universities, too, are treading the same path.

In the past 50 years, universities have increasingly become the servants of commerce, economic growth and the producers of ‘human capital’. The revolution began with the Jarratt Report of 1985, the brainchild of Conservative prime minister Margaret Thatcher and Keith Joseph, her education secretary. The report, which was written by a committee including representatives of Ford and the arms industry, openly stated that a university should be regarded as a corporate enterprise like a factory.

This trend took a decisive step in 1992 with the conversion of polytechnics – higher education institutions that were established mainly in the second half of the twentieth century for vocational training – into universities. It was taken further under New Labour, after Peter Mandelson, as secretary of state for trade and industry, said in 1998 that his department would “turn universities from ivory towers into business partners”. The soul of the university was sacrificed.

On that criterion, Arden fits the modern mould and merely promises to go further and faster in that direction. It boasts proudly, “All of the courses at Arden come with a strong focus on employability.” To this observer, it is just a technical training corporation out to make a profit, of which it has been making a great deal. Between the financial years 2022-23 and 2023-24, it doubled operating profits and revenue to £53m and almost £190m respectively.

Arden is presumably hoping to emulate BPP Holdings, owned by British private equity firm TDR Capital, which last year put BPP University, together with four recently acquired training businesses, up for sale for some £2.5bn. Though TDR abandoned the sale in January for lack of a buyer, it is clear that the group’s market value far exceeds the £700m TDR paid the previous owner, a US private equity company, in 2021. This raises a second question: should private capital be allowed to profit from and control the direction of a British university? When profit is the motive, the incentive is to maximise tuition fee revenue, standardise teaching and cut costs to the feasible minimum.

In July 2024, the Office for Students, the regulator for higher education in England, put Arden University on an improvement notice for its low rates of degree continuation and completion, which the OfS attributed to a lack of adequate student support. And although Arden says it is investing to improve these outcomes, its breakneck growth in student numbers from just 5,700 in 2017 and Claure’s expansion plans suggest quality will continue to be sacrificed to growth and profits.

This is not just an issue for private universities. They compete with public universities, which also compete with each other, for students and their revenue from tuition fees. One of the worst features of forcing universities to compete in a market is the diversion of much of their limited resources towards so-called ‘fighting competition’, such that only about 40% of tuition fees in most of them is now spent on tuition.

In that context, letting private equity into the sector is a nightmarish folly. It has a business model that is both parasitic and monopolistic, motivated by short-term profit maximisation. In every sector it has penetrated, there has been asset stripping and conglomeration, the latter intended to gain economies of scale and scope.

Allowing private equity to run a British university creates fertile ground for it to deploy its full range of tactics in the higher education sector, just as it has done in pre-schooling and SEND (Special Educational Needs and Disabilities) schools. I have discussed this in my new book, Human Capital: The Tragedy of the Education Commons, which will be published in January. But consider how just one of these practices might work. There is nothing to stop the private equity owners from indulging in ‘education dumping’ – lowering the ‘price’ for degree courses as a means of drawing students from state universities and thus driving the latter into bankruptcy or out of their selected spheres. Once successful, they could put up the prices, acting from a monopolistic position.

There can be no doubt that private-equity funded ‘universities’ represent an existential threat to most of the 150 state-funded independent universities across the country. A study of 88 private equity deals involving nearly 1,000 American colleges found that buyouts led to less being spent on education, higher fees, more debt per student, lower graduation rates, lower repayment rates, and lower earnings for graduates. Other studies show that healthy firms taken over by private equity have a much higher probability of going bankrupt than other similar firms.

In 2011, one of England’s largest for-profit colleges, GSM London (formerly the Greenwich School of Management), was acquired by private equity firm Sovereign Capital Partners. It was implicated in a student loan fraud in November 2017, when the BBC’s Panorama found that a freelance recruiter who had a contract with GSM was allegedly helping bogus students to ‘enrol’ at the college to secure a student loan. GSM suspended the recruiter pending investigation, but it later fell into deep financial trouble. Yet the government continued to provide it with funds by paying for student fees. It was to no avail. It went bankrupt in 2019, leaving staff and thousands of students in limbo.

Private owners of universities may have ideological or political motives, too. We know from numerous examples in the US that when plutocrats gain influence over universities, whether for-profit or via donations, they drastically re-orient what is done in them and by whom, with a say in the direction of teaching, the structure of staff, promotions, dismissals and so on. This was made only too clear when several major donors to Harvard University stopped funding due to student protests against Israel’s war on Gaza, later reinforced by newly elected President Donald Trump’s attack on Harvard and other American universities.

A third question is whether it is culturally, socially and politically healthy for a British university to be owned by foreign investors? If the owner is a foreign individual or entity, those profits are syphoned off abroad, with little or no benefit to students and staff. And to return to Arden and Claure’s plans for expansion, how can the university award a UK-accredited degree that is taught in a foreign language, meaning students may emerge with little knowledge of English? This threatens to further debase the reputation of UK universities for quality education.

There is a still wider concern. What sort of country and society is Britain becoming, in selling off its cultural commons? The country of William Shakespeare, John Milton, William Blake, Isaac Newton, Jane Austen, Charles Darwin and William Morris is casually selling off universities and schools to foreign finance, which has no deep interest in Britain, its history or culture. It must be stopped.

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Guy Standing’s new book Human Capital: The Tragedy of the Education Commons, published by Pelican, is due out in January 2026.