Crossroads (Toward Philippine economic and social progress)
Philippine Star, 2 April 2014


Raising the quality of education in all the higher private educational institutions in the country is a long term task.

It takes some years for a young plant to become a tree and then to yield its first fruits. Similarly for institutions of learning.

To improve the quality of educational output. Better quality of the output of our higher educational sector would be the result of four important factors:

  1. The preparedness of the incoming class of students – to emphasize the k-12 reforms and further investments in lower levels of education.
  2. Good teachers produce good students – to emphasize the role of professional schools.
  3. The government regulator sets and monitors educational standards and benchmarks.
  4. The educational institutions are competent and innovative.

Each one of these will not improve overnight. Each involves a long evolutionary process. Through proper regulatory interventions, government efforts could make a big difference.

CHED’s plan and institutional reaction. The Commission on Higher Education (CHED) is currently working to improve the more than 1,600 colleges, institutes and universities in the country. That is the mandate of CHED.

I have already previously noted that private sector institutions account for about 65 percent of all enrolment in higher education. The stakes are high in the private sector.

In operational terms, CHED is tasked to set quality standards for higher educational institution (HEI) programs. Where “quality assurance standards” are not present in constraining the educational institutions in their curricular offerings, the CHED can intervene.

Through memorandum circular (CMO 46) in 2012, CHED circulated a policy framework plan. To operationalize a new quality assurance culture, the plan seeks to establish a two-level classification of HEIs.

The first is a horizontal typology into: (a) professional schools (those producing outputs for the practice of specific professions), (b) colleges, and (c) universities. Essentially, this is a functional description of their educational missions.

CHED also proposes a top-down, or vertical, typology. This would identify the quality of the institutions. It gives CHED the power to bequeath judgment on the way the institutions are to be regulated. Such institutions are either: (a) autonomous, (b) deregulated, or (c) regulated.

By this top-down classification, CHED would set apart the high quality institutions and let them grow on their own. On the other hand, it would through “deregulation” and “closer regulation” handle those institutions that are not autonomous.

Understandably, the program as indicated would reshape the tertiary education system, most especially the private tertiary sector.

This move of CHED to introduce quality standards as well as to create specific typologies of institutions has met tough opposition. The loud objections of the private Association of Colleges and Universities (PAASCU) and the sectarian schools, especially the Catholic schools (CEAP) presage a battle of wills.

Even if the set of measures it proposed can get established, CHED would have to upgrade its own formative learning to fine tune the regulatory framework.

An economic route toward raising quality. CHED’s efforts to raise quality standards could be improved through an economic approach to its monitoring of the educational institutions.

A start could be along the matter of tuition fee policy. There is scope to introduce a “soft” approach: CHED could adopt a policy of laissez-faire assurance in the matter of setting tuition fees. Market competition is enough of a check since the schools offering most educational courses are operating in a competitive market.

Prolonged control of tuition fees in the past has done more damage to the economic viability of many private HEIs than to their sectarian counterparts, which were allowed some leeway in raising fees.

A soft approach to fee setting benefits the private schools and the public. The squeeze on tuition fees first and foremost affects the pay of teachers and the incentive for the enterprise to improve facilities, both of which have a strong bearing on quality. At the very least, the freedom to adjust fees enables the educational enterprises to manage their own affairs better.

However, quality assurance reforms are still needed. A way of getting there could be through an economic approach.

What CHED can learn from the central bank. A different approach outside of educational standards could strengthen the regulatory arsenal of CHED. This approach first and foremost recognizes that educational institutions are economic or business enterprises.

Such working knowledge begins with identifying which HEIs are corporate, proprietorship, partnership or cooperative in structure. All corporations are required to submit reports of their annual operations to the Securities and Exchange Commission.

When educational institutions reach a given size in enrolment, the corporate form of organization becomes the natural institutional structure for school governance. Studies are needed to understand the size of capital, investments per students and other economic data that would yield relative quality and effectiveness among the educational institutions, in particular for universities, colleges, professional schools as the case might be.

CHED could learn more from the central bank. When the latter decided to set minimum capitalization for the continued operations of universal and commercial banks, what was set in motion was the reorganization of the major banking institutions.

The banks did it themselves! The banking system underwent a process of mergers and acquisitions. The weaker institutions were replaced by stronger ones. The banks began to operate better as new investments were infused into the enterprise and improved their flexibility. The new investors often improved the management of the banks.

Result: the quality of Philippine banks rose. They improved their services. Their deposit and loan bases expanded. They became more competitive and established more extensive branch networks to reach more clients. Most importantly, the banking system became more stable.

Such an approach could work within the educational sector. The entry of bigger investors – represented by new business interests (as recounted last week) is helping to strengthen the system.

The route via requiring minimum capitalization of higher educational institutions could move the system toward higher quality standards. It is time for bold measures in education that are more directed toward strengthening their economic organizations. It will help make the push for quality less painful from a regulatory viewpoint.