Parthenon Perspectives - KnowledgeVisionstatic.knowledgevision.com/account/parthenon/assets/...Parthenon Perspectives Private Universities in India: An Investment in National Development

Parthenon Perspectives Boston • London • Mumbai • San Francisco

Private Universities in India: An Investment in National Development

Prepared for

w w w. p a r t h e n o n . c o m

On-the-Ground Education SectorProjects Completed by Parthenon

About The Parthenon Group

Parthenon’s Global Education Presence

About The Parthenon Group’s Education PracticeThe Parthenon Group is a leading advisory firm focused on strategy consulting, with offices in Boston, London, Mumbai, and San Francisco. Parthenon’s Education Practice is the largest advisory team to focus on the education sector, both for-profit and non-profit/government. Parthenon has 40 professionals focused on advising the education sector in the emerging markets. The Education Practice is a leading advisor to the global education industry with clients across diverse sectors that include publishing, primary and secondary education, higher education, consumer education, vocational education, corporate training, governments, foundations, NGOs, and other non-profit organizations. The Education Practice completes more than 150 education projects per year in over 60 countries globally.

Boston • London • Mumbai • San Francisco

Parthenon PerspectivesPrivate Universities in India: An Investment in National Development www.parthenon.com

1

EXECUTIVE SUMMARY

In its third report for the EDGE conference, The Parthenon Group examines the current state of higher education in India, and by drawing on international case studies, suggests recommendations for its future development.

In order to support its future economic growth, India needs to grow its tertiary enrolment ratio. This report gives insight to the role and responsibility the private sector could take in fostering such growth and in boosting the country’s tertiary enrolment ratio. The Parthenon Group examines the rapid growth and success of private state act universities in India. Parthenon highlights the value proposition of scale private state act universities for different stakeholders – students, employers, entrepreneurs, and investors.

Finally, Parthenon makes recommendations for policymakers, investors and entrepreneurs that will enable the growth of scale private universities, help drive the tertiary enrolment ratio, and contribute to the nation building of India.

This report covers the following:

1. The Role of Higher Education in Nation Building

2. The Higher Education Landscape in India and Growth of Private Universities

3. Private University Proposition for Stakeholders (Students, Employers, Entrepreneurs, and Investors)

4. Recommendations for Investors and Entrepreneurs Establishing Private Universities

5. Regulatory Framework to Support the Growth of Private Universities

Methodology The Parthenon Group followed a bottom-up approach to collect data at the institute level and referred to published information from government sources to corroborate our findings and results.

Our research for the higher education sector comprised surveying more than 200 higher education institutes. Parthenon has a proprietary approach to estimate market size and demand potential. Parthenon has also built detailed proprietary financial models for different configurations of higher education institutions.


2

1. Enrolment in Higher Education Institutions is Correlated to Economic Growth

Exhibit A: Tertiary Gross Enrolment Ratio (GER) vs. PPP Adjusted GDP Per Capita

Parthenon’s research shows there is a strong correlation between a country’s tertiary enrolment ratio and economic strength

(Exhibit A). Education creates human capital, which drives economic growth. Economic growth results in an increase in

affordability of education. The correlation between tertiary enrolment ratio and GDP per capita has also held true over time;

however, the growth trajectory varies by country and individual context (Exhibit B).

Exhibit B: Higher Education Enrolment vs. Income

0

20

40

60

80

100%

0 20,000 40,000 60,000

Ukraine

Israel

Finland

Belarus

Australia

Algeria

PPP Adjusted GDP per Capita

Enr

olm

ent R

atio

Philippines

Vietnam

MyanmarLaos

Singapore

Uzbekistan

Uruguay

United States

United Republic of Tanzania

UK

TurkeyTunisia

Thailand

Tajikistan

Switzerland

SwedenSpain

Slovenia

Slovakia

Russian Federation

Romania

Republic of Moldova

Republic of Korea

PortugalPoland

Pakistan

NorwayNew

Zealand

Netherlands

NepalMorocco

Mongolia

Mexico

Malaysia

Madagascar

Macao, China

Lithuania

Lebanon

Latvia

Kazakhstan

Jordan

Japan

ItalyIreland

Indonesia

India

IcelandHungary

Hong Kong (China), SAR

Guatemala

Greece

Ghana

Georgia

France

Ethiopia

Estonia

El Salvador

Denmark

Czech Republic

Cyprus

Croatia

Colombia

China

Chile

Cape Verde

Cambodia

Burundi

Burkina Faso

Bulgaria

Brunei Darussalam

Brazil

Bhutan

Belgium

Bangladesh

Azerbaijan

Austria

Armenia

R2 = 61%

0

10

20

30

40

50%

0 2,000 4,000 6,000 8,000 10,000PPP Adjusted GDP per Capita

2006

2000

1995

2004

20001995

2005

2000

1996

20052000

1996

2005

20001996

2005

2000

1995

Chile

MexicoBrazil

Turkey

ChinaIndia

Enr

olm

ent R

atio


3

While India’s tertiary enrolment ratio has increased over time, it is significantly lower than the ratios in other emerging

economies. To continue to support economic growth, a significant investment in education infrastructure is required

for India to achieve international benchmarks. In order to develop a globally competitive economy, India should consider

developing education infrastructure as a long-term sustained imperative.


4

2. Private Sector Participation in Higher Education Is Necessary to Drive Tertiary Enrolment Ratio and Sustain GDP Growth

If India’s tertiary enrolment continues to grow at an historic rate, then 0.9M students will need to enrol annually (Exhibit

C). In order to understand the higher education enrolment required to accelerate India’s GDP growth, Parthenon mapped

out two growth scenarios: in one scenario India will grow to reach PPP-adjusted GDP per capita of $8K in 2020, and in

another scenario India will grow its tertiary enrolment at the same rate as that of China. India would need to annually add

1.8M students and 2.7M students respectively to meet these expectations. The Indian government will need to invest

significant resources to meet the enrolment requirements in the accelerated growth scenarios. Private sector participation

and investment is required to ensure the enrolment targets are met in a timely and efficient manner.

Exhibit C: Annual Incremental Enrolment and Minimum Capex Required by Growth Scenarios

Scenario 1 Scenario 2 Scenario 3

If Tertiary Enrolment Grows at Historic Rate

@ 7% Enrolment Growth

If India Reaches PPP-adjusted GDP per Capita of $8K by 2020


If Tertiary Enrolment Grows at China’s Rate


Annual Incremental Enrolment

0.9M 1.8M 2.7M

Annual Minimum Capital Expenditure Required

Rs. 9,000 Cr Rs. 18,000 Cr Rs. 27,000 Cr

TBD TBD TBD TBD

Macroeconomic imperatives are not the only reasons for investment in higher education; investment in higher education

also offers a strong business opportunity. Higher education has five investor friendly characteristics which are rarely found

together in one business (Exhibit D):

Exhibit D: Why Invest in Education?

Long-Term Revenue Visibility

High Barriers to Entry

Demand Greater Than Supply

Prices Rising Higher Than

Inflation

NegativeWorking Capital

Higher Education Depends on Course Type

1 2 3 4 5


5

A. Private sector participation in China has led to enrolment growth of ~14% per annum from 2000 from 2010

The exponential growth of China’s tertiary enrolment explains the necessity for private sector participation (Exhibit E). In

the late 1990s, India’s enrolment in higher education was ~2x that of China. In 2001, China permitted private operators

to enter the higher education sector. The regulatory change was supported by a comprehensive and conducive regulatory

framework. From 2000 to 2010, enrolment in higher education in China grew by 14% per annum while in India it only grew

by 7% per annum. By 2010, China’s enrolment in higher education was ~2x that of India.

Exhibit E: Number of Students Enrolled in Higher Education (Degree and Diploma) in India and China

B. Private universities in India are the fastest growing higher education segment

India’s higher education sector can be divided by types of institute: public universities, private colleges, and private universities

(Exhibit F). Public universities and private colleges have a high level of oversight from regulators on enrolment capacity by

course, pricing, and course offerings. Private universities on the other hand have more flexibility in their operations. Private

universities are the fastest growing higher education format, growing enrolment at ~40% per annum.

0

10

20

30

40MChinaIndia

ANNUALIZED GROWTH RATE(2000-2010)• China: 15%• India: 7%

-

China allows for-profit education

1993 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


6

Exhibit F: Indian Higher Education Landscape by Types of Institutes

In 2011, ~16M students were enrolled in higher education institutes (Exhibit G). Although private universities have a low

base of enrolment (~600K or 4% of the market), private universities have rapidly gained share and have grown at ~40% per

annum while public universities and private colleges have grown at ~2% and ~10% per annum, respectively.

Exhibit G: Indian Higher Education Enrolments by Type of Institution, 2008-2011

Private(Aided)

Private(Unaided) Public

Affiliated Colleges

UniversityColleges

India Higher Education

Private State ActUniversity

Private DeemedUniversity

CentralUniversity

StateUniversity

OpenUniversity

AffiliatingUniversities

Non-AffiliatingUniversities

CentralUniversity

StateUniversity

Private University Public University

ANNUALIZED GROWTH RATE(2000-2010)•China: 14%•India: 7%

0

5

10

15

20M

2008

12.5M

2011

Private Colleges

Public Universities

15.8MPrivate Universities

ANNUALIZED GROWTH RATE

(’08-’11)~8%~40%~2%

~10%


7

C. Public and private universities need to share the responsibilities of nation building

In looking at the social and economic objectives of raising the tertiary enrolment ratio and increasing human capital and

productivity, Parthenon believes both the public and private sectors have distinct functions with some overlap (Exhibit H).

Criticism of private universities often focuses on the amount or quality of research. Parthenon suggests that there should

be a distinction in the primary function of a research university, which could focus on creating knowledge, and a teaching

university, which should focus on the scale dissemination of knowledge. Many university systems, including those in the

U.S. and UK, make these distinctions when allocating government funding and appropriately assess a university’s quality

based on its primary function. Public universities should continue to stand at the frontier of research by creating new

ideas and visions. On the other hand, private universities should focus on deploying funds to build capacity to disseminate

knowledge and to support economic growth by providing trained talent. Private universities in India are technical-intensive,

providing individuals with professional skills to enter the marketplace. In the process and flow of research and information,

both must participate in the preservation of knowledge. This joint partnership enables both sectors to specialize in different

forms of education.

Exhibit H: Goals of Higher Education Institutes in India

CREATE KNOWLEDGE

(Fundamental Research)

PRESERVEKNOWLEDGE

(Applied Research)

DISSEMINATEKNOWLEDGE

(Share Knowledge)

Public Universities

Private Universities


8

3. Private Universities Provide Gains for All Stakeholders

Private universities play the role of an intermediary between students and the job market. They equip students with

academic knowledge and employment training, supply trained talent to the market and ultimately support nation-building

and economic progress. Private scale universities are capital efficient and self-sustaining enterprises for entrepreneurs and

investors. Private education serves to simultaneously bridge the employability gap for students and employers and offers

investors a profitable addition to their portfolio, creating a win-win-win situation for all stakeholders.

A. Faster payback period for students

A Parthenon survey of students from higher education institutions illustrates that available job opportunities post-course

completion are the most important criteria for students to select a higher education institution (Exhibit I). Students evaluate

the economic returns of getting a higher education degree based on the type of jobs and salaries they can receive after

graduation.

Exhibit I: Most Important Criteria for Students Selecting a Higher Education Institute

An investment in education has to make financial sense to the student. Student tuition fees must correspond to the types

of jobs and salaries the students expect to receive after graduation. Parthenon research shows that private universities

have an average payback period of 1-2 years (i.e., students are able to recover the amount they have spent on tuition fees

in less than two years on the job after graduation) (Exhibit J). The average payback period for students from private colleges

is ~50% longer depending on course type.

AvailableJob

OpportunitiesPost

Graduation

Infra-structure

Recognition/Accreditation

BrandReputation

Quality ofFaculty

Tuition Fee

Impo

rtanc

e


9

Exhibit J: Average Payback Period for Private Universities by Course Type

B. Private universities have a unique value proposition for recruiters

There is a strong advantage for employers to target recruitment efforts at large scale universities. The appeal of private

scale universities lies in the convenience the universities provide. Private universities allow employers to streamline their

recruitment process and meet their targets through fewer visits to universities. The ability to recruit 1,000 students from a

single institution is a unique value proposition offered only by scale universities. The average private college has a graduating

class of ~300-350 students, which is a third of the average number of students recruited by mass employers at private

universities (Exhibit K).

Exhibit K: Comparison of Students Recruited from Private Universities with Scale of Graduation Class from Private Colleges

Bachelors of Engineering Program

PrivateUniversities

PrivateColleges

20 Months

30 Months

MBA Program

11 Months

18 Months

Average Number of StudentsRecruited from Private

Universities by Largest Employers

1,000-1,200 Students

Maximum Size of GraduatingClass from a Private College

300-350 Students


10

A Parthenon survey of employers reinforces that size of the available student pool has been cited as one of the top three

selection criteria by recruiters when choosing higher education institutions (Exhibit L).

Exhibit L: Most Important Criteria to Recruiters Seleting a Higher Education Institute

Select commentary from leading recruiters:

“We prefer recruiting from institutes where we have a large number of students to recruit from. Typically, we hire many

students at once, and it makes little sense to go to several small colleges instead of a few large ones. We are very satisfied

with the quality of students we get from these large universities and feel no need to go to smaller colleges.”

Senior Human Resource Personnel, Leading Information Technology Company

“We have been able to establish strong relationships with placement services at large universities. We find them very

professional and easy to deal with. In addition to this, they have more than adequate infrastructure in place to ensure that

the recruitment process flows smoothly despite the presence of a large number of employers on campus.”

Senior Human Resource Personnel, Leading Automotive Company

C. Higher Return on Investment (ROI) and capital efficiency for investors

Larger scale at a single location enables private state act universities to be capital efficient. In comparison to private colleges,

private universities have a higher degree of self-regulation and have the flexibility to launch new courses and programs in

line with industry requirements. Private universities enjoy economies of scale, have access to employers seeking to hire in

large numbers and can enrol students across India (Exhibit M).

PastPlacement

Record

Scale ofInstitution

Quality ofPlacementServices &

Infrastructure

Presence ofOther

Employerson Campus

Location Ranking/Accreditation

AdmissionCriteria forStudents

Impo

rtanc

e


11

Exhibit M: Comparison of Private Colleges with Private Universities

Private Colleges Private State Act Universities

Course Type• Approval required for starting new courses• Courses designed in line with university

curriculum• Flexibility to launch new courses and programs

Scalability• Limited scalability• Slower scalability because of regulations around

capacity, intake, and pricing

• Higher scalability• Faster scalability as they are free to set their

capacity, enrolment, and pricing

Marketing Scale • Higher cost of acquisition per student • Lower cost of acquisition per student

Job Placement• Limited options for employers

(limited course offerings and enrolment scale)• Greater option for recruiters

(larger pool of students to choose from)

National Catchment Area

• Limited national presence – lower proportion of students from out of home state

• Access students from across India – no state quota

A Parthenon financial model comparing the profit margins and financial returns of private universities and private colleges

shows that private universities achieve higher internal rates of return (IRR) and EBITDA margins once they reach steady

state for comparable scales of operations (Exhibit N).

Exhibit N: Comparison of Key Financial Matrix of Private Universities and Private Colleges

PrivateUniversity

EBITDAMargin

30-35%

PrivateCollege

25-30%

PrivateUniversities

IRR

30-35%

PrivateColleges

20-25%

EBITDA Margin Comparison(At the scale university level)

IRR Comparison


12

D. Incentives of investors are aligned with those of students and employers

Setting up a scale private university is a capital-intensive process. Scale private universities become self-financing in Year

7 of operations. As a result, the gestation period for recovering invested capital is long. Investors and entrepreneurs are

incentivized to build quality institutions to protect capital and compete over the long term (Exhibit O).

Exhibit O: Capex Funding Schedule by Source of Funds, Year 0 to Year 10Private universities have invested in building infrastructure for students and recruiters. Academic and non-academic facilities

are important selection criteria for students when choosing a higher education institution (see Exhibit L on page 10). Leading

recruiters have cited better infrastructure facilities as one of the major reasons in choosing a scale private university over

private colleges. Private universities have better infrastructure than private college. Most scale universities have swimming

pools, fully furnished gymnasiums, sports fields, well-stocked libraries, and auditoriums.

Year0

Year1

Year2

Year3

Year4

Year5

Year6

Year7

Year8

Year9

Year10

Internal Accruals

Surplus Cash

Debt

External Equity


13

0

20

40

60

80

100

Pre 2005

Pre2005

17

2006

20068

2007

3

2008

2008

17

2009

2009

19

2010

2010

20

2011

20119

Total in2011

Pre2005

2006-09

2009-11

93

2007

4. A Successful First Wave of Private State Act Universities

India has experienced a recent increase in the number of private state act universities. The first wave of private state act

universities in India has been successful. In North India, which has the largest concentration of private state act universities,

all private state act universities that opened prior to 2008 have been running at more than 75% capacity utilization in their

flagship programs (Exhibit P).

Exhibit P: Capacity Utilization of Select Universities in North India

The number of private state act universities have been increasing each year. More than 50% of the 93 state act universities

in India have been established in the last three years (Exhibit Q).

Exhibit Q: Number of Private State Act Universities in India, 2011

0

20

40

60

80

100%

Type of University(Focusing on

mainstream courses)

DeemedUniversity

State ActUniversity

n=53

Year ofOpening

Post-2008

Pre-2008

n=40

Enrolment Scale

More than10,000

5,000-10,000

3,000-5,000

Less than3,000

n=6

CapacityUtilization in

Flagship Programs

More than90%

75-90%

n=6


14

As demonstrated by Parthenon’s forecast of demand and supply in North India, more supply is being added by private scale

universities to meet demand (Exhibit R). Unmet demand in 2015 is forecasted to be half of the unmet demand in 2010. As a

result, the level of competitiveness to enrol students will increase among private universities. Investors must become more

capital efficient to generate better returns.

Exhibit R: Demand vs. Supply Scenario in North India, 2010-2015F

A. Success factors for new private universities

Investors and entrepreneurs need to focus on two aspects while building capital-efficient private universities:

i. Efficient management of the rollout phase

ii. Investment in brand development

i. Efficient management of rollout phase: In order to sufficiently understand and manage the intake rollout and capital

expenditure plans of a higher education institute, investors need a rigorous approach to diligence the market and

understand its potential. Questions of course type, price point, and enrolment potential can only be answered after

gaining a deeper understanding of the existing market and projected demand potential. Based on these conclusions,

investors can make a methodical plan for course offerings which is in line with market requirements. By understanding

the projected ramp-up of the institute, investors can plan the capital infusion accordingly. Investors do not need to

invest all of their capital expenditure upfront. University infrastructure should be built up in line with enrolment ramp-up

(Exhibit S).

0

200

400

600

800

Demandin 2010

2.3X

ExistingSupply

-1.3X

2011Unmet

Demand

X

Demandin 2015F

3.8X

ForecastSupply in

2010-2015F

-3.2X0.5X

Num

ber o

f Stu

dent

s

2015Unmet

Demand

50% of 2011unmet demand


15

Exhibit S: Optional Ramp-up of Built Area for a Scale Private University, Year 0 to Year 10

ii. Invest in brand development: The value of investment in brand development is often underestimated. Based on

Parthenon benchmarking of successful Indian private universities, universities spend Rs. 50K-125K per student on

marketing during initial years of operations (Exhibit T). Once the universities reach a steady state, they continue to invest

in marketing (~5-10% of academic revenue equivalent to ~Rs. 25K per student).

Exhibit T: Marketing Spend per Student for a Private Scale University

Year 0

23%

Year 1

26%

Year 2

37%

Year 3

51%

Year 4

70%

Year 5

81%

Year 6

90%

Year 7

96%

Year 8

100%

Year 9

100%

Year 10

Hostel

Non

-Aca

dem

icA

rea

Acad

emic

Are

a

100%

Academic Area

Non-Academic Area

Auditoriums

Gym

Swimming pool

Hostel

Faculty Housing

0

20

40

60

80

100K

Year 1-Year 3

Marketing SpendPer Student

Rs. 50K-125K

Steady StateOperations (after Year 7)

Marketing SpendPer Student

Rs. 25K


16

However, the high level of investment must be coupled with a strong marketing message to build student confidence

in their decision making. By investing in brand development, investors must communicate the major quality attributes

that are most important for students. Recent print ads by Amity University, SRM, and Symbiosis focus on the increased

opportunities of employability from completing their programs (Exhibit U).

Exhibit U: Examples of Marketing by Private Universities


17

5. The Regulatory Environment Needs to Evolve to Encourage Private Sector Participation and Ensure Quality

The current regulatory environment for establishing a private university has two limitations:

a. Exposes capital of investors to risk due to uncertainty and long lead time in private

university approval process

b. Provides limited quality assurance to stakeholders (students and employers) because of

poor coverage of accreditation

a. Each private university in India is established by a separate state act but must conform to the relevant provisions of the

UGC Act. The approval process for establishing a private state act university takes 2 to 5 years (Exhibit V). The length of

the lead time for approval increases the opportunity cost for entrepreneurs and investors. The last step of the approval

process, which involves establishment of university via a state act introduced in the legislature, exposes the investor to

a sovereign democratic process with multiple possible outcomes. Investors and entrepreneurs are required to invest

~25% (Rs. 120-150 Cr) of the project cost before the act is introduced in the legislature. This process exposes the

investing capital to a regulatory risk. The level of uncertainty combined with the high level of upfront investment deters

many private investors to invest in the establishment of private universities.

Exhibit V: Approval Process for Establishing a Private State Act University in India

Stage 1(Proposal Submission)

Stage 2(Evaluation of

Proposal)

Stage 3(Issuance of LOI)

Stage 4(Submission of

Compliance report)

Stage 5(Enactment of

University)

Time Required • 3-5 months • 1-3 months • ~15 days • 1-3 years • 3-6 months

Key Features of the Process

• Proposal should incorporate– Land requirement– Constructed area– Manpower and other

infrastructure req.– Proof and sources of

funding– 5-year plan of

development– Details of programs

and fees, proposed programs

– Facilities

• Constitution of Inspection Committee

• Terms of reference for committee (financial soundness, expertise, potential of academic programs)

• Submission of report to Principal Secretary, Higher Education

• Letter of Intent should include conditions on– Endowment fund– General fund– Requirements of

constructed area, manpower, academic infrastructure

– Reservation policy– Compliance timeline

• Applicant must comply with all conditions in 1-3 years

• Inspection committee re-evaluates the report and recommends changes

• Proposed university must meet and fulfill all minimum criteria laid by statutory bodies

• After receiving satisfactory compliance report, state government introduces specific act for university in state legislature

Body Involved • Applicant University • Inspection Committee (Senior Govt. officials)

• State Government • Applicant University • State Government and Legislature

Percentage of Planned Expenditure on Project Incurred

• NA • NA • NA • ~25% of overall planned expenditure (~Rs. 120 -150 Cr)*

* Assuming applicant plans to build a university with capacity of ~15K seats and overall investment expenditure of ~Rs. 550 Cr


18

The regulatory process can be modified to boost investor confidence by guaranteeing approval as long as the investor

meets the minimum criteria set by the inspection committee and letter of intent in the initial approval stages.

b. ~70% of higher education institutions in India are not accredited by the two national accreditation bodies: National

Accreditation and Assessment Council (NAAC) and National Board of Accreditation (NBA).

Poor coverage of accreditation is due to lack of incentives to opt for accreditation. As a result, stakeholders – students and

recruiters – have limited independent assurance of quality. A Parthenon survey of students in higher education institutions

indicated that students do not rank university accreditation as one of the most important selection criteria (Exibit L). The

Indian government has proposed a new mandatory accreditation system. However, the proposed accreditation system

will potentially overburden the accreditation bodies, increase regulatory complexities, and increase lead time for project

approvals. All of these challenges could further deter investments in Indian private higher education.

Globally, evolved higher education markets like the U.S., Brazil, and Singapore have opted for a voluntary accreditation

regime linked with strong incentives. India can learn from these accreditation systems to create a simplified and efficient

process for investors.

i. USA: Even though voluntary, almost all institutions in the U.S. are accredited or if new, are in the process of getting

accredited. Some incentives linked to accreditation are:

• Students in accredited institutes have access to federal student financial aid. Institutes are thereby incentivized to opt for accreditation to attract students.

• Accreditation is important for degree recognition and credit transfer across institutions.

• In several cases, accreditation is a pre-requisite for employment of graduates.

• Government agencies, foundations, and other organizations limit access to many benefits and opportunities to accredited institutions alone.

ii. Singapore: The recently introduced EduTrust voluntary framework does not allow Private Education Institutes (PEIs)

to enrol international students in the absence of EduTrust certification. International students form a significant

proportion of higher education enrolment, which incentivizes higher education institutions to invest in quality to gain

EduTrust certification. The EduTrust certificate has also become a strong indicator of quality to potential stakeholders

like students and employers.

iii. Brazil: The National System for Evaluation of Higher Education (SINAES) releases Comite de Pronunciamentos

Contabeis (CPC) ratings of Brazilian higher education institutes. The New Student Financing Scheme (FIES) is

accessible only to students in higher education institutes with minimum CPC rating of 3 or above. As a result,

universities are incentivized to ensure minimum standards of quality to build high enrolment.


19

Case Study: SingaporeImpact of EduTrust Framework on Quality of Higher Education in Singapore

EduTrust is a voluntary certification scheme introduced in 2009 that helps to distinguish higher quality institutes in

Singapore’s private education industry. Private education institutions need to be EduTrust-certified before offering placement

for international students, which account for a significant portion of Singapore’s higher education enrolment.

In a matter of only two years, EduTrust certification has led to the closure of low-quality private Higher Education Institutions

(HEIs) like School of Applied Studies, Brookes Business School, Britannia School of Education, Froebel School of Education,

and Turning Point, all of which could not comply with the quality standards and failed to attract international students.

Parthenon’s survey of higher education students in Singapore (Exhibit W) indicates that students place high importance on

EduTrust certification when selecting a higher education institute for themselves.

Exhibit W: Selection Criteria for Students When Choosing Higher Education Institutions in Singapore

Joboppor-tunities

Impo

rtanc

e

EduTrustcertif-ication

Availabilityof courseof choice

Brandreputationof institute

in Singapore

Durationof

courses

Tuition/fee levels

Ability topursuefurther

educationcourses

Academicqualityat the

institute

Graduation/passing

rate

Othercriteria


20

Karan Khemka Partner and Head of the Emerging Markets Education Practice [email protected]

Ashwin Assomull Partner [email protected]

Abhinav Mital Senior Principal [email protected]

Amit Garga Senior Principal [email protected]

Anip Sharma Principal [email protected]

Akshay Rathod Associate [email protected]

Shrey Mehta Associate [email protected]

Theresa Wee Associate [email protected]

For further information, please contact Parthenon’s Emerging Markets Education Team

Follow us on Twitter for regular updates on events, research, and reports @edupractice

@karan_khemka

Report development by:

The Parthenon Group’s Emerging Markets Education Practice

1015 Raheja Chambers, Free Press Journal Marg, Nariman Point, Mumbai 400 021 India

+91 22 6744 2500

For more information about The Parthenon Group and the work we do, please visit:

www.parthenon.com

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