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INTERNATIONAL HIGHER EDUCATION

Private Universities and Government Policy in Japan

Hideo Akabayashi
Hideo Akabayashi is associate professor of economics at Keio University and a visiting scholar at the National Bureau of Economic Research, Cambridge, MA. Address: 2-15-45 Mita, Minato-ku, Tokyo 108-8345 Japan. E-mail: hakab@econ.keio.ac.jp.

Japanese private universities have recently been said to be losing ground to national (including local public) universities. In June 2005, Hagi International University, a small private college in the rural western part of Japan, was forced to start a legal rehabilitation process to avoid the closing of campus due to a sharp decline in enrollments. According to a government agency (the Promotional and Mutual Aid Corporation for Private Schools of Japan), 160 of the total 542 four-year private universities now have lower student enrollments than the enrollment quota (teiin) approved by the Ministry of Education. This situation threatens many small institutions that rely exclusively on tuition revenue for operating.

Most observers attribute this situation to the declining college-age population, myopic strategies of private institutions (such as investing in a new campus with a small and ill-focused program despite fashionable names), a lack of strong endowments, the low quality of teaching, and other issues. However, the demographic change has had an uneven impact on the higher education system, with the biggest blow affecting the lowest-ranked institutions. This situation seems to have emerged from the inconsistency between government deregulations, the demographic trend, and the strategies of private universities to survive in the industry.

The Question of Deregulation
Japanese government has been deregulating the higher education system over the past 10 years. However, even after the recent major reform in 2004, the ministry still maintains the authority to approve the establishment of new institutions or major academic programs (gakubu) at any type of institution by reviewing the proposed curriculum, facility, faculty-student ratio, and expected enrollments.

If a private university wants to alter the approved program, especially when the change involves an increase in the total enrollments at the institution, it needs to obtain an approval from the ministry. Such an approval is not required of national universities. Such biased regulations regarding private institutions have impeded rational and timely decision making by these institutions.

Approval of New Programs
The 1998 University Council report claimed that colleges in the 21st century must pursue diversity, uniqueness, and internationalization—sending a message that the approval of new programs may be difficult unless the proposals have something to do with these keywords. Under this pressure, higher education institutions have tried to follow those suggestions when they wish to obtain a new student quota. The keywords in the report have been interpreted in a superficial way in order to appeal to the ministry.

Hagi International University, which was established in 1999 after converting from a two-year women’s junior college, obtained an additional quota of 160 students for new degree programs in “international studies” and “business information,” in a Faculty of International Information. This university has faced the challenge of trying to follow the government’s current priorities in a period of declining enrollments. Although these programs were named using the keywords in the University Council report, they failed to meet the local demand that a small local college should have considered. The first year enrollments dropped to only 22 students in 2004 in comparison to a 300 quota of students. In October 2005, the university announced that it would cut back the quota and propose a new program focusing on local elderly care management.

Assignment of Student Quotas
Enrollment quotas are one of the most conflicting and problematic concepts in the Japanese higher education system, especially for private institutions. Quotas exist for all types of institutions and seem not strictly enforced by the government. However, the amount of subsidy to private institutions depends explicitly on whether the program complies with the approved educational conditions, including enrollment. Institutions with a 50 percent lower enrollment rate than the approved quota are likely to face the suspension of government subsidy for not fulfilling the initial promise.

For private institutions, raising quotas still requires much paperwork and negotiation while nothing is required to lower them. Since the ministry is reluctant to give an institution a new student quota, it is unlikely that an increase in quota will be approved easily once it has been lowered. Thus, private institutions tend to set their initial quotas higher than necessary and are reluctant to adjust the student numbers in response to a changing environment. Cutting the costs is difficult since all the educational conditions are approved based on the quota.

The compliance to the quota is also said to strongly affect the budget of national universities. Some argue that, following the government initiatives in the 1990s to expand graduate school enrollments, many top national institutions were forced to accept unqualified graduate students in order to fill the expanded quota.

Competition with Public Universities
In an era of rapid demographic decline, quotas work as an obstacle to maintaining the quality of education. Although the quotas at national institutions declined by 1 percent between 2000 and 2007, the actual first-year enrollment figures increased by 1 percent. Since the national universities offer higher-quality education at lower tuition rates than private universities, most able students tend to go to national universities. Most freshman enrollments are determined in a very short period after the national institutions give entrance exams in February. The vacancies are filled in the order of the college hierarchy. Thus, the lowest-ranked private schools are destined to absorb the whole demographic shock and often find their quotas unfilled in April, at the beginning of the academic year.

As the number of potential students declines, any private university is now matched to students who are less prepared and more indifferent to the education quality offered 10 years ago. The gap between students’ readiness and the school’s expectation is the largest at the bottom of hierarchy, as is the financial impact on the school. The only way the schools can survive is to cut the cost—and perhaps quality—to meet the demand from less-qualified students. Therefore, the education quality assurance at private universities cannot be adequately addressed unless taking these circumstances into consideration.

Regulations’ Ongoing Impact
The trouble with Japanese private universities is not simply the consequence of the aggregate shortage of potential students. If one looks at unregulated vocational schools, there is clearly an increasing demand for professional skills beyond secondary education in areas such as accounting, legal services, care management, computer programming, and business-sector English. Many vocational schools succeed by efficiently providing such training.

The issues facing private institutions should be addressed in relation to the national education policy. Although the Japanese government has deregulated the higher education system over the past decade, there still remain crucial regulations, with a strong concentration on private institutions. These regulations affect every aspect of the operation of private universities, impeding their flexible adjustment in size and content of education. Small regulations can have a huge impact on the bottom of the hierarchy. Ignoring these repercussions would result in any reform effort of higher education system going nowhere.

[Online] Available: http://www.bc.edu/bc_org/avp/soe/cihe/newsletter/Number42/p17_Akabayashi.htm