Fatal System Errors in the US Education System

7 Reasons the U.S. Education System Is Failing!

Recently, today actually, I saw a post of a video on Facebook that detailed simple questions posed to university students regarding BASIC social and historic facts, events and the people who govern our country. The results were astounding to say the least! Abject failure and an inability to name or identify ANY of the people, places and events. Let me repeat… NONE.

The formal education system in the U.S. was designed to meet the demands of the industrial revolution by providing basic education to the masses. Pretty simple right? So why is it that we fail to recognize or refuse to acknowledge that the demands are different today? There has not been a calculable redefinition or evolution of the educational system since. This is scary as it will define the failure of our country step-by-step and bit-by-bit until we are reduced to a social collection of ignorance.

Let’s examine the cause and solutions.

1. Closed for Business!

Schools find their existence tied to community standards and financial restraints based on the community support… or lack of. The result is that schools are closing at an alarming rate across the country. The decision to close a school rarely reflects the needs of a community or, more importantly, the needs of the students!

There seems to be less concern for the needs of the communities children’s education than the economic demands of the location of the school or the resources available. Where is the federal government when this happens? Well, they are partially to blame. The government rhetoric details the need for affordable, quality education while they demand that school systems adhere to specific federal mandates that tie the school administration’s hands to comply with political wants. So much for federal support.

2. Two-Gallons of milk in a one-gallon jug!

So, how many kids can you cram into a classroom and still teach effectively? That depends on whether you are looking to teach the children or be a daycare service. I know, pretty harsh but look at the function of schools today. They take your children and house them and feed them for about 6-7 hours a day. Mostly providing them with basic discipline and food that they rarely get a t home! Oh yes, admin it. Teachers are required to discipline your children in a crowded atmosphere where safety is no longer guaranteed and education takes a back seat to providing basic needs that parents are unwilling to, uneducated to or unable to provide. Wait, what about education? Well, there is so little time for that that caring for them takes priority over teaching them.

Secondarily, because of the constraints of federally-mandated guidelines, the children are taught in a cookie-cutter style standard of personality-limiting, creative-minimizing and individually-restrictive processes to get them to their adulthood. Basic education with basic performance that aligns children to basic standards that align with everyone else’s basic needs. Sad because it is done in crowded classrooms where teachers are forced to “teach” more children than one person could attend to. How effective is that?

3. If You Do What You’ve Always Done… You’ll Get What You’ve Always Gotten!

How can we expect our children to excel when their parents are minimally educated. One must understand that this cycle of poor education will produce more poorly educated children who will produce more poorly-educated children and so on and so on. Parents are so busy struggling to make a living today because of a poor economy or a lack of opportunity that there is little time to attend to their children’s education at home let alone at school. Involvement is also critical especially when the parents are minimally educated because they lack the foresight and experience to guide a young person to the right path. The result is a continually-repeated system that fails students and undermines this country’s future. It matters not whether you are poor and struggling to make a living that doesn’t allow for time to teach your kids at home OR whether your well off and struggle to maintain a career that doesn’t allow for time to attend to your kids at home. Either way, the education suffers.

4. Once Stated Always Abated!

I was once told that I was stupid. I was told that I could never learn because I lacked the basic ability to understand or comprehend anything that a normal person was expected to know. Can you imagine? Well, today I am in pursuit of a doctorate in education. Highly educated holding several degrees and formally recognized for my teaching abilities and performance as an educator. So there, take that!

If a child is to be challenged then the child has to recognize their worth and value as an individual. EVERY child is talented and gifted in something and should be recognized for it immediately and consistently. Oh yes, failure happens but that is part of the lesson as well. Individualized learning platforms and initiatives are crucial to the support and future of educational success. The talented and gifted programs require that a child be recognized and advanced because of their special gift instead of the initiative being available to ALL students. I believe that EVERY child has the opportunity to reveal their gift if given the opportunity to allow it to reveal itself. Why limit other children’s opportunity to excel because someone didn’t recognize their talents? Beyond me.

This lack of diversity in basic education is driven by personal prejudices and the nuances of social conformity and economic availability in a school district. Shameful that every student doesn’t have the same opportunity to be recognized for their inevitable contribution to society.

5. There’s a Step to the Prep!

According to the U.S. Bureau of Labor Statistics and the U.S. Education Department, 80% of all high school students graduate and student graduation rates are at an all-time high. This sounds great doesn’t it? Well, no it doesn’t because about 80% of high school seniors cannot pass basic proficiency exams or read at a basic level. The fundamental and core foundation for a successful future lies in their ability to read and comprehend and it is failing miserably. Because of a politically-correct mindset and an unwillingness to admit that we are failing we are passing kids without prejudice. What is the dynamic here? Money, acknowledgment, standards, social constraint?

With fewer than 40% of graduating students able to perform basic reading and math skills, what will their future look like? Poor at best because they are set up for failure and aren’t educated enough to know it. They are not prepared for any part of life let alone future education without the basic skills to learn. It seems a path to socialism.

6. Teacher to Preacher!

With the lack of people who are willing to sacrifice their future for low-paying academic careers there is little to choose from in the way of well-educated teachers. Enter teachers. As student education becomes more technology-supported so must teacher innovation education. A once-proud career, teachers are opting for more industrial careers using their basic educational achievements because it pays more and is less restricting. A lack of qualified teachers translates to a lack of quality education from under qualified teachers. The cultural shift in classrooms demands an academic shift in recognizing and utilizing qualified teachers who must meet higher-level standards before being allowed to teach.

Alas, distance learning take the personalization from the process, individualism from the practice and allows for lesser-educated teachers to perform office-like academics instead of teaching-like practices. Poorly educated teachers who are not held to the highest standards will produce poorly-educated students who will perpetuate the same. Pay teachers better and demand more from them and we will produce quality educated people. There is something askew when ball players make millions and teachers make nothing! Time to rethink this one.

7. Girls Will Be Girls and Boys Will Be Boys!

Or will they? There is a huge nationwide divide in the gender makeup of the student population today in schools. The STEM program is experiencing a narrowing range of student diversity as of recent examinations of student diversity in education. Formerly male student dominated academics and careers are changing to a more female dominated academic showing. Women are now able to perform as well or better than their male counterparts in science, technology engineering and math… previously neglected and they have always had the ability but unrecognized or acknowledged.

A globally competitive market demands equal and qualified individuals to perform and defend the right of opportunity regardless of gender, race, creed or social standing. As we develop our more-diverse communities, so should we develop our academically-driven future with better-educated people… no matter what!

By Dr. Mark Zupo

Which Mode of Education Will You Choose? A Traditional or an Online Education System

With time and evolvement in the technology there is a change in the education system. Now we have different modes of education i.e. the traditional education, distance learning and the online courses. All have importance of their own and all will equally help us in providing us with great level of education and also in getting better employment opportunities. The traditional mode of education is still the most popular and the most expensive among all. Distance learning is not very popular as it doesn’t give the best mode of education for the students and also lacks in the provision of knowledge. Online courses is however, getting more and more popular with each passing day and is also less expensive and, in some cases, even is free.

Neglecting distance learning for this post only, we can compare the traditional and the online mode of education. A student enrolled in an online mode of education can get education from short courses to degree programs, whereas a traditional mode of education, for sure will provide every type of education to every class of student. There are online universities, colleges and other institutes providing online courses and then there are regular institutes providing education to both the traditional and the online students. The choice of education is up to the student. The student can get education through any medium and that all depends on the availability of the student.

The case for a traditional mode of education

Traditional education is the oldest and the most common way of getting education and it’s also the recommended way of study for the young students. We can look at the pros and cons of this mode of education to know it better:

Advantages

  • A one-to-one interaction between the teacher and the student. It’s easy to deliver things to the ones sitting in front of you and also easy to get for the students to understand in a better way.
  • The most common way of providing education.
  • Can choose from number of options.
  • The more preferable by all i.e. the students, the teachers, parents and the government also.
  • Education along with other facilities like: cafeterias, libraries, sport and other recreational activities.

Disadvantages

  • Education is expensive, especially in institutes where the standards, quality and the system of education is on a much higher level.
  • Students can have to travel long distances to reach to their educational institutes and sometimes even have to move to other locations in order to get a good standard of education. This will also increase their expenses.
  • Not very suitable for students doing a full-time job.
  • Not much flexible in terms of study hours.

The case of an online mode of education

Not very new, but as compare to the traditional education mode is new. This too has its own pros and cons and these must be kept into considerations before opting any online course:

Advantages

  • Usually cheaper than the traditional education system, as the cost is minimized to the lowest level.
  • A good but less effective mode of interaction between a teacher and a student.
  • The option to get education from any online institute, no matter how far that institute is. This will minimize the cost of travelling and other expenses.
  • Is more suitable for the people in full-time employment.
  • A vast option for online courses is available for students, seeking education through the online mode.
  • Flexibility in the study hours.

Disadvantages

  • Students are unable to get the facility of any recreational and sports activities, a traditional student can get.
  • As this mode requires an internet connection and a computer system, and these are meant to be effected by any natural or unnatural cause, their education can be affected badly.
  • Not preferable by everyone and is not very effective as compared to the traditional mode of education.
  • Although, vast online courses are available but still there is a limitation on this. You can’t become a practicing surgeon or a doctor through getting education by this mode of education.

This is just a short review on the traditional and the online mode of education system, a much vast comparison can be made and then the conclusion can be made in choosing the best education system. Each of these systems have their own benefits and drawbacks and that too will differ for every type of education seeker.

Fatal System Errors in the US Education System

7 Reasons the U.S. Education System Is Failing!

Recently, today actually, I saw a post of a video on Facebook that detailed simple questions posed to university students regarding BASIC social and historic facts, events and the people who govern our country. The results were astounding to say the least! Abject failure and an inability to name or identify ANY of the people, places and events. Let me repeat… NONE.

The formal education system in the U.S. was designed to meet the demands of the industrial revolution by providing basic education to the masses. Pretty simple right? So why is it that we fail to recognize or refuse to acknowledge that the demands are different today? There has not been a calculable redefinition or evolution of the educational system since. This is scary as it will define the failure of our country step-by-step and bit-by-bit until we are reduced to a social collection of ignorance.

Let’s examine the cause and solutions.

1. Closed for Business!

Schools find their existence tied to community standards and financial restraints based on the community support… or lack of. The result is that schools are closing at an alarming rate across the country. The decision to close a school rarely reflects the needs of a community or, more importantly, the needs of the students!

There seems to be less concern for the needs of the communities children’s education than the economic demands of the location of the school or the resources available. Where is the federal government when this happens? Well, they are partially to blame. The government rhetoric details the need for affordable, quality education while they demand that school systems adhere to specific federal mandates that tie the school administration’s hands to comply with political wants. So much for federal support.

2. Two-Gallons of milk in a one-gallon jug!

So, how many kids can you cram into a classroom and still teach effectively? That depends on whether you are looking to teach the children or be a daycare service. I know, pretty harsh but look at the function of schools today. They take your children and house them and feed them for about 6-7 hours a day. Mostly providing them with basic discipline and food that they rarely get a t home! Oh yes, admin it. Teachers are required to discipline your children in a crowded atmosphere where safety is no longer guaranteed and education takes a back seat to providing basic needs that parents are unwilling to, uneducated to or unable to provide. Wait, what about education? Well, there is so little time for that that caring for them takes priority over teaching them.

Secondarily, because of the constraints of federally-mandated guidelines, the children are taught in a cookie-cutter style standard of personality-limiting, creative-minimizing and individually-restrictive processes to get them to their adulthood. Basic education with basic performance that aligns children to basic standards that align with everyone else’s basic needs. Sad because it is done in crowded classrooms where teachers are forced to “teach” more children than one person could attend to. How effective is that?

3. If You Do What You’ve Always Done… You’ll Get What You’ve Always Gotten!

How can we expect our children to excel when their parents are minimally educated. One must understand that this cycle of poor education will produce more poorly educated children who will produce more poorly-educated children and so on and so on. Parents are so busy struggling to make a living today because of a poor economy or a lack of opportunity that there is little time to attend to their children’s education at home let alone at school. Involvement is also critical especially when the parents are minimally educated because they lack the foresight and experience to guide a young person to the right path. The result is a continually-repeated system that fails students and undermines this country’s future. It matters not whether you are poor and struggling to make a living that doesn’t allow for time to teach your kids at home OR whether your well off and struggle to maintain a career that doesn’t allow for time to attend to your kids at home. Either way, the education suffers.

4. Once Stated Always Abated!

I was once told that I was stupid. I was told that I could never learn because I lacked the basic ability to understand or comprehend anything that a normal person was expected to know. Can you imagine? Well, today I am in pursuit of a doctorate in education. Highly educated holding several degrees and formally recognized for my teaching abilities and performance as an educator. So there, take that!

If a child is to be challenged then the child has to recognize their worth and value as an individual. EVERY child is talented and gifted in something and should be recognized for it immediately and consistently. Oh yes, failure happens but that is part of the lesson as well. Individualized learning platforms and initiatives are crucial to the support and future of educational success. The talented and gifted programs require that a child be recognized and advanced because of their special gift instead of the initiative being available to ALL students. I believe that EVERY child has the opportunity to reveal their gift if given the opportunity to allow it to reveal itself. Why limit other children’s opportunity to excel because someone didn’t recognize their talents? Beyond me.

This lack of diversity in basic education is driven by personal prejudices and the nuances of social conformity and economic availability in a school district. Shameful that every student doesn’t have the same opportunity to be recognized for their inevitable contribution to society.

5. There’s a Step to the Prep!

According to the U.S. Bureau of Labor Statistics and the U.S. Education Department, 80% of all high school students graduate and student graduation rates are at an all-time high. This sounds great doesn’t it? Well, no it doesn’t because about 80% of high school seniors cannot pass basic proficiency exams or read at a basic level. The fundamental and core foundation for a successful future lies in their ability to read and comprehend and it is failing miserably. Because of a politically-correct mindset and an unwillingness to admit that we are failing we are passing kids without prejudice. What is the dynamic here? Money, acknowledgment, standards, social constraint?

With fewer than 40% of graduating students able to perform basic reading and math skills, what will their future look like? Poor at best because they are set up for failure and aren’t educated enough to know it. They are not prepared for any part of life let alone future education without the basic skills to learn. It seems a path to socialism.

6. Teacher to Preacher!

With the lack of people who are willing to sacrifice their future for low-paying academic careers there is little to choose from in the way of well-educated teachers. Enter teachers. As student education becomes more technology-supported so must teacher innovation education. A once-proud career, teachers are opting for more industrial careers using their basic educational achievements because it pays more and is less restricting. A lack of qualified teachers translates to a lack of quality education from under qualified teachers. The cultural shift in classrooms demands an academic shift in recognizing and utilizing qualified teachers who must meet higher-level standards before being allowed to teach.

Alas, distance learning take the personalization from the process, individualism from the practice and allows for lesser-educated teachers to perform office-like academics instead of teaching-like practices. Poorly educated teachers who are not held to the highest standards will produce poorly-educated students who will perpetuate the same. Pay teachers better and demand more from them and we will produce quality educated people. There is something askew when ball players make millions and teachers make nothing! Time to rethink this one.

7. Girls Will Be Girls and Boys Will Be Boys!

Or will they? There is a huge nationwide divide in the gender makeup of the student population today in schools. The STEM program is experiencing a narrowing range of student diversity as of recent examinations of student diversity in education. Formerly male student dominated academics and careers are changing to a more female dominated academic showing. Women are now able to perform as well or better than their male counterparts in science, technology engineering and math… previously neglected and they have always had the ability but unrecognized or acknowledged.

A globally competitive market demands equal and qualified individuals to perform and defend the right of opportunity regardless of gender, race, creed or social standing. As we develop our more-diverse communities, so should we develop our academically-driven future with better-educated people… no matter what!

By Dr. Mark Zupo

India’s Education Sector – Back to School

India’s US$40b education market is experiencing a surge in investment. Capital, both local and international, and innovative legal structures are changing the face of this once-staid sector

The liberalization of India’s industrial policy in 1991 was the catalyst for a wave of investment in IT and infrastructure projects. Rapid economic growth followed, sparking a surge in demand for skilled and educated workers. This, combined with the failure of the public system to provide high quality education and the growing willingness of the burgeoning middle class to spend money on schooling, has transformed India’s education sector into an attractive and fast-emerging opportunity for foreign investment.

Despite being fraught with regulatory restrictions, private investors are flocking to play a part in the “education revolution”. A recent report by CLSA (Asia-Pacific Markets) estimated that the private education market is worth around US$40 billion. The K-12 segment alone, which includes students from kindergarten to the age of 17, is thought to be worth more than US$20 billion. The market for private colleges (engineering, medical, business, etc.) is valued at US$7 billion while tutoring accounts for a further US$5 billion.

Other areas such as test preparation, pre-schooling and vocational training are worth US$1-2 billion each. Textbooks and stationery, educational CD-ROMs, multimedia content, child skill enhancement, e-learning, teacher training and finishing schools for the IT and the BPO sectors are some of the other significant sectors for foreign investment in education.

Opportunity beckons

The Indian government allocated about US$8.6 billion to education for the current financial year. But considering the significant divide between the minority of students who graduate with a good education and the vast majority who struggle to receive basic elementary schooling, or are deprived of it altogether, private participation is seen as the only way of narrowing the gap. Indeed, it is estimated that the scope for private participation is almost five times the amount spent on education by the government.

CLSA estimates that the total size of India’s private education market could reach US$70 billion by 2012, with an 11% increase in the volume and penetration of education and training being offered.
The K-12 segment is the most attractive for private investors. Delhi Public School operates approximately 107 schools, DAV has around 667, Amity University runs several more and Educomp Solutions plans to open 150 K-12 institutions over the next four years. Coaching and tutoring K-12 students outside school is also big business with around 40% of urban children in grades 9-12 using external tuition facilities.

Opening the doors

Private initiatives in the education sector started in the mid-90s with public-private partnerships set up to provide information and communications technology (ICT) in schools. Under this scheme, various state governments outsourced the supply, installation and maintenance of IT hardware and software, as well as teacher training and IT education, in government or government-aided schools. The central government has been funding this initiative, which follows the build-own-operate-transfer (BOOT) model, under the Sarva Shiksha Abhiyaan and ICT Schools programmes. Private companies such as Educomp Solutions, Everonn Systems, and NIIT were among the first to enter the ICT market, which is expected to be worth around US$1 billion by 2012.

Recently, the central government invited private participation in over 1,000 of its industrial training institutes and offered academic and financial autonomy to private players. Companies such as Tata, Larsen & Toubro, Educomp and Wipro have shown keen interest in participating in this initiative.

Regulatory roadblocks

Education in India is regulated at both central and state government levels. As a result, regulations often differ from state to state. K-12 education is governed by the respective State School Education Act and the Central Board of Secondary Education (CBSE) Rules and Regulations concerning affiliation and/or the rules of any other affiliating body. Under current regulations, only not-for-profit trusts and societies registered under Societies Registration Act, 1860, and companies registered under section 25 of the Companies Act, 1956, qualify to be affiliated with the CBSE and to operate private schools.

While the K-12 segment accounts for the lion’s share of India’s educational market, weaving through the complex regulatory roadmap to qualify for affiliation poses serious difficulties for investors. The CBSE requires privately-funded schools to be non-proprietary entities without any vested control held by an individual or members of a family. In addition, a school seeking affiliation is expected to have a managing committee controlled by a trust, which should approve budgets, tuition fees and annual charges. Any income accrued cannot be transferred to the trust or school management committee and voluntary donations for gaining school admission are not permitted.
Schools and higher education institutions set up by the trust are entitled to exemptions from income tax, subject to compliance with section 11 of the Income Tax Act, 1961. In order to qualify for tax exemptions, the trust needs to ensure that its predominant activity is to serve the charitable purpose of promoting education as opposed to the pursuit of profit.

Alternative paths

Alternative routes do exist for investors seeking to avoid the web of regulatory barriers that constrain their involvement. Sectors such as pre-schools, private coaching and tutoring, teacher training, the development and provision of multimedia content, educational software development, skill enhancement, IT training and e-learning are prime sectors in which investors can allocate their funds. These areas are attractive because while they relate closely to the profitable K-12 segment, they are largely unregulated. As such, they make attractive propositions for private investors interested in taking advantage of the burgeoning demand for quality education. Companies such as Educomp Solutions, Career Launcher, NIIT, Aptech, and Magic Software, are market leaders in these fields. Educomp recently acquired a large number of educational institutes and service providers across India. It has also formed joint ventures with leading higher education groups, including Raffles Education Singapore, for the establishment of higher education institutions and universities in India and China. Furthermore, it has entered into a multi-million dollar collaboration with Ansal Properties and Infrastructure to set up educational institutions and schools across the country and closed an US$8.5 million deal to acquire Eurokids International, a private provider of pre-school educational services in India. Gaja Capital India, an education-centric fund, has completed the funding of three education services companies in India. NIIT and Aptech, meanwhile, are engaged in the IT training business.

Core Projects and Technology is also focusing heavily on India and is likely to bid to takeover, upgrade and run public schools for specified periods on a public-private partnership basis.

Higher hurdles

While state governments are largely responsible for providing K-12 education in India, the central government is accountable for major policy decisions relating to higher education. It provides grants to the University Grants Commission (UGC) and establishes central universities in the country. The UGC coordinates, determines and maintains standards and the release of grants. Upon the UGC’s recommendation, the central government declares the status of an educational institution, which once authorized, is entitled to award degrees.

State governments are responsible for the establishment of state universities and colleges and has the power to approve the establishment of private universities through State Acts. All private universities are expected to conform to the UGC guidelines to ensure that certain minimum standards are maintained.

Amity University in Uttar Pradesh is one of the private universities to open its doors. It was approved by the Uttar Pradesh state legislature on 12 January 2005 under section 2(f) of the University Grants Commission Act.

Not-for-profit and anti-commercialization concepts dominate higher education fee structures. To prevent commercialization and profit-making, institutions are prohibited from claiming returns on investments. This, however, does not pose a hurdle for universities interested in mobilizing resources to replace and upgrade their assets and services. A fixation of fees is required in accordance with the guidelines prescribed by the UGC and other concerned statutory bodies. For this purpose, the UGC may request the relevant information from the private university concerned, as prescribed in the UGC (Returns of Information by Universities) Rules, 1979.

In line with the policy on Fee Fixation in Private Unaided Educational Institutions Imparting Higher and Technical Education, two types of fees are required: tuition fees and development fees. Tuition fees are intended to recover the actual cost of imparting education without becoming a source of profit for the owner of the institution. While earning returns on investment would not be permissible, development fees may provide an element of partial capital cost recovery to the management, serving as a resource for upkeep and replacement.

Legal precedents

In order to be awarded university status by the UGC, institutions must comply with the objectives set forth in the Model Constitution of the Memorandum of Association/Rules, and ensure that no portion of the income accrued is transferred as profit to previous or existing members of the institution. Payments to individuals or service providers in return for any service rendered to the institute are, however, not regulated.

In this context recent court judgments on private universities are relevant. The Supreme Court, in Unnikrishnan JP v State of Andhra Pradesh, introduced a scheme regulating the admission and levy of fees in private unaided educational institutions, particularly those offering professional education. The ruling was later notified in the fee policy.

Subsequently, in the case of Prof Yashpal and Anr v State of Chattisgarh and Ors in 2005, the Supreme Court assailed the Chattisgarh government’s legislation and amendments which had been abused by many private universities. It was contended that the state government, simply by issuing notifications in the Gazette, had been establishing universities in an indiscriminate and mechanical manner without taking into account the availability of any infrastructure, teaching facilities or financial resources. Further, it was found that the legislation (Chhattisgarh Niji Kshetra Vishwavidyalaya (Sthapana Aur Viniyaman) Adhiniyam, 2002) had been enacted in a manner which had completely abolished any kind of UGC control over private universities.

The Supreme Court concluded that parliament was responsible for ensuring the maintenance and uniformity of higher education institutions in order to uphold the UGC’s authority. Following the judgment, only those private universities that satisfied the UGC’s norms were able to continue operating in Chattisgarh.

Professional institutions

Professional and technical education in India is regulated by professional councils such as the All India Council for Technical Education (AICTE). Established under the AICTE Act, 1987, AICTE gives recognition to courses, promotes professional institutions, provides grants to undergraduate programmes, and ensures the coordinated and integrated development of technical education and the maintenance of standards. The AICTE has recently exerted pressure on unrecognized private technical and management institutes to seek its approval or face closure.

A single bench decision of the Delhi High Court in Chartered Financial Analysis Institute and Anr v AICTE illustrates the far-reaching implications this kind of pressure can have on all institutions operating independently of the AICTE. The court found that the Chartered Financial Analyst Institute, a US-based organization, was engaged in imparting technical education and that its charter, though not described as a degree or diploma, was nevertheless descriptive of the candidate attaining an academic standard, entitling him to pursue further courses, and achieve better prospects of employment in the investment banking profession. The AICTE argued that the Chartered Financial Analyst Institute fell within the ambit of its regulation and was therefore obliged to submit to the jurisdiction of the regulatory body. The Delhi High Court upheld the AICTE’s view that the Chartered Financial Analyst Institute did qualify as an institution imparting technical education..

This judgment may have emboldened the AICTE to proceed against a number of other establishments that are on its list of unapproved institutions. It holds particular significance since despite not granting degrees and diplomas, the Chartered Financial Analyst Institute was still deemed by the court to be covered under the description of a “technical institute”.

Enthusiasm grows for foreign participation

While regulators such as the AICTE continue to exercise influence in the Indian education system, the sector is expected to witness a surge in foreign investment and perhaps a reduction in the number of regulatory roadblocks as a result of the central government’s enthusiasm for overseas investors. Foreign direct investment in higher education could help reduce government expenditure and there is a general consensus that education as a whole should be opened for domestic and foreign private participation.

The entry of foreign educational institutions into India will be covered by the new Foreign Education Providers (Regulation for Entry and Operation) Bill. The bill seeks to regulate the entry and operation of foreign education providers, as well as limit the commercialization of higher education. Foreign education providers would be given the status of “deemed universities” allowing them to grant admissions and award degrees, diplomas or certificates.

Operationally, the bill proposes to bring foreign education providers under the administrative umbrella of the UGC, which would eventually regulate the admissions process and fee structures. Since these foreign institutions will have to be incorporated under central or state laws, they will also be subject to the government’s policies of reservations. The bill is pending approval from the Indian Parliament but it is unclear if it will be taken by the present government for a vote prior to the general elections in 2009.

Innovative structures unlock profitability

The regulatory restraints on running profitable businesses in the K-12 and higher education sectors have driven Indian lawyers to devise innovative structures that enable private investors to earn returns on their investments. These typically involve the establishment of separate companies to provide a range of services (operations, technology, catering, security, transport, etc.) to the educational institution. The service companies enter into long term contracts with the trust operating the institution. Payments made by the trust to the service companies must be comparative and proportionate to the services rendered by such companies. Furthermore, in order to qualify for tax exemptions, the expenses paid by the trust to the service companies must not exceed what may reasonably be paid for such services under arm’s length relationships.
Despite the regulatory constraints, the Indian education sector is on a path of exponential growth. A growing number of private companies are undertaking creatively structured projects in the education business and the level of investor confidence is demonstrated by the recent spate of M&A activity that has taken place.

With more domestic players emerging, the education sector is likely to witness consolidation, but at the same time, increasing foreign participation will drive competition and raise standards. Liberalization will continue to intensify as the government struggles to remedy its poor public education system and provide quality institutions to educate India’s masses.