The rules on who can award degrees have been loosened, sparking fears that private providers will cash in, Jessica Shepherd reports.

Some predict a rush, others a steady trickle over ten years or more. But whatever happens, the decision to grant private colleges degree-awarding powers is sure to change the landscape of UK higher education.

In May, the College of Law became the first institution to receive the powers from the Privy Council after a review by the Quality Assurance Agency. Four other UK private colleges are waiting to hear whether they will also get the green light, says Peter Williams, chief executive of the QAA. He won't release their names but says they are "specialist institutions" offering training in limited subjects.

The College of Law plans to focus on graduates, although it has not ruled out muscling in on the undergraduate market in the future. From September, students completing the legal practice course and graduate conversion course will graduate with a law degree (LLB), rather than the diploma they received in the past.

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Despite private sector providers playing down the impact of the loosened regulations, many academics at UK universities - all but one of which are public sector institutions - are distrustful of their motives. Private colleges know this only too well.

"A common perception in higher education is that private organisations might be tempted to play fast and loose with the rules," says Steve Evans, who spent 23 years as an academic at Staffordshire University before joining the College of Law five years ago as operational director.

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"But this couldn't be further from the truth. When presenting my quality assurance reports, I am answerable directly to a high-level college-wide committee with senior staff and external input from leading academics. At a university, the report would be presented at faculty or departmental level but with little detailed scrutiny higher up the institution."

The fear is that for-profit colleges, which do not include not-for-profit and charitable institutions such as the College of Law and the BPP Law School, will aim for as many bums on seats as possible to make the maximum amount of cash. Phoenix University, the biggest for-profit higher education provider in the US, was fined $9.8 million (?5.3 million) two years ago for this reason. It was found to have violated the Higher Education Act after a review by the US Department for Education discovered it fostered a high-pressure sales culture that rewarded recruiters who put the most "asses in classes", intimidated those who failed to recruit and encouraged enrolment of unqualified students.

Evans admits that "some private colleges will be motivated by profit", but believes that increased choice will stimulate competition and innovation in the sector as a whole.

The QAA acknowledges there could be potential problems if a private company with degree-awarding powers is sold to an organisation that does not take these powers seriously and sees them as a licence to print money. But it says that, with regular reviews, this is unlikely to happen.

Then there are the purists who question whether a private enterprise should be allowed degree-awarding powers if it provides among its vast range of services some that are not in higher education. One such company is Britain-based FTC Kaplan, which trains students going into jobs in finance, accountancy and management. It intends to apply for degree-awarding powers within the next year.

Its parent company, Kaplan Inc, also provides services for 15 and 16-year-olds preparing for their national curriculum tests and has its headquarters in New York.

William Macpherson, chairman of FTC Kaplan, believes his colleges play their part in fulfilling the UK Government's goal to open up higher education to all by recruiting students who want to work while they study.

He says: "If you look at the US and its online degrees, you see that it is students who would not have normally done a degree who are enrolling. We are helping to widen participation."

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The most obvious worry for universities, however, is competition for students, particularly in money-spinning subjects such as IT, law and business - the areas private colleges specialise in. Some speculate that, particularly for new universities that have also made a point of developing vocational courses with close links to employers, giving degree-awarding powers to private colleges could bankrupt some of them.

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Bahram Bekhradnia, director of the Higher Education Policy Institute, says: "I don't for a moment believe that private colleges are going to make any significant inroads into undergraduate and mainstream postgraduate studies.

But we will see private providers taking niche positions in the market, training students in software engineering, for example. Colleges could link up with a well-known brand or employer, and this could hurt those universities that pride themselves on their professional courses."

Mike Shattock, visiting professor at the School of Lifelong Education and International Development at the Institute of Education, University of London, agrees, but argues that the changes will mean recruiting students will become tougher. "I think the private colleges may take some of the international students. But in the US, where a quarter of higher education is in the private sector, the public sector has outpaced the private sector." One way they have done this is through increasing the resources they put into recruitment - for instance, targeting guidance counsellors who advise high-school pupils on higher education.

The consensus is that the same is likely to happen in the UK. Public-sector universities have all the clout for now: there are more than a million students at public sector universities and only an estimated 3,000 at private higher education institutions. Moreover, stringent quality assurance procedures are in place, so degree-awarding powers will not be handed out like confetti. In the longer term, a little competition between private and public providers could benefit the entire sector.

'We deliver the agenda that students and employers want'

Academics are better paid in the private sector, but they are also subjected to more scrutiny, argues an academic with experience in both private and public institutions.

Richard de Friend was pro vice-chancellor of Kent University for 25 years until he joined the College of Law as senior academic registrar.

He says that the private sector gets more scrutiny than the public sector:

"We are scrutinised annually by the profession and by colleagues who teach elsewhere. It works extremely well."

He says that the image of private colleges being about money and privilege is wrong: he estimates that the private sector pays 5 to 10 per cent more than the public sector. Junior lecturers start on ?28,000, rising to ?42,000 for senior lecturers.

He dismisses the assumption that students at private colleges are wealthier. "Our students don't necessarily have more resources. They regard their education as an investment."

What they are better at than public universities is innovation, he says, because they are more focused on particular subjects and can make changes quicker: "It has been easier to make curriculum changes and adapt programmes. We deliver the agenda that students and employers want."

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