vouchers, tests, loans, privatization-will they help tackle

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O P E N F I L E

Vouchers, tests, loans, privatization: Will they help tackle

corruption in Russian higher education?

Ararat L. Osipian

Published online: 1 October 2009 UNESCO IBE 2009

Abstract Higher education in Russia is currently being reformed. A standardized com-

puter-graded test and educational vouchers were introduced to make higher education more

accessible, fund it more effectively, and reduce corruption in admissions to public colleges.

The voucher project failed and the test faces furious opposition. This paper considers

vouchers, standardized tests, educational loans, and privatization as related to educational

corruption. Many criticize the test for increasing educational corruption, but it is needed to

replace the outdated admissions policy based on entry examinations. This paper alsoconsiders the growing de facto privatization of the nations higher education system as a

fundamental process that should be legalized and formalized. It suggests that the higher

education industry should be further restructured, and decentralized and privatized, and

sees educational loans as a necessary part of the future system of educational funding.

Keywords Corruption Education reform Russia

Introduction

Throughout the world, higher education is undergoing a process of change, which includes

reforms in access, quality assurance, financing, governance, management, legislation, and

the forms of property in higher education. Massification of higher education in less

developed nations and processes of restructuring and privatization in the developed ones,

raise important questions of quality control and corruption. These issues are also charac-

teristic of Russian higher education. Until recently, higher education in Russia was funded

solely by the state; access to it was free and competitive. The reforms of 1991 created

private and public for-tuition programmes and led to further massification of higher edu-

cation. Currently, 7.5 million students attend higher education institutions (HEIs). In 2007,54% of students paid for their own education; the state paid for the other 46%. Between

1989 and 2000, the share of people with higher education degrees participating in the

A. L. Osipian (&)Vanderbilt University, Peabody #514, 230 Appleton Place, Nashville, TN 37203-5721, USAe-mail: [email protected]

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labour force almost doubled to 25% (Sandgren 2002; Ministry of Education and Science

of the Russian Federation 2007). Several authors, including Gounko and Smale (2006),

Tomusk (2003), and Kniazev (2002), have described recent legislative changes and

reforms in Russian higher education.

Corruption in Russian higher education is an established fact, acknowledged by theauthorities and discussed openly in the media. It occurs on such a scale that it creates

significant problems for the education sector, and for society overall. Nor is any decline in

sight. Explanatory theories are needed to understand this phenomenon of corruption, to

analyze the existing situation, and to design and implement solutions. This article focuses

on corruption in Russias higher education sector and offers a grounded theory to explain

its fundamental causes. It also suggests some changes that will make it possible to curb this

corruption.

Corruption in higher education

At the start of the current century, scholarly literature on corruption in higher education

was non-existent. Waite and Allen (2003) stated that discussions of the issue seemed to be

entirely absent from the literature on educational administration. Since then, some pio-

neering work has been done on this issue. Heyneman (2004) classified the major forms of

corruption, based on the functions of higher education. Petrov and Temple (2004) reviewed

corruption in higher education in Russia and Azerbaijan, focusing on need-based bribery

versus extortion. Surveys of students regarding corruption have been conducted in various

regions, from Kaliningrad in the West to Kamchatka in the East (Kan et al. 2006). Hallakand Poisson (2002, 2007) developed an exhaustive list of the forms of corruption in the

education sector throughout the world (Osipian 2008b). Heyneman (2007) used interviews

in selected HEIs in Georgia, Kazakhstan, and Kyrgyzstan as a basis for qualitative research

on corruption in higher education, and Heyneman et al. (2008) studied the impact of

corruption in higher education on personal income in Central Asia.

The definition of corruption in education includes the abuse of authority for material gain

(Anechiarico and Jacobs 1995); more broadly, it is the abuse or misuse of public office or

public trust for personal or private gain. Heyneman (2004) points out that Because education

is an important public good, its professional standards include more than just material goods;

hence the definition of education corruption includes the abuse of authority for personal aswell as material gain (p. 638). Petrov and Temple (2004) apply a narrow definition in which

corruption always implies illegality. I define corruption in higher education as a system of

informal relations established to regulate unsanctioned access to material and nonmaterial

assets through abuse of the office or of public or corporate trust (Osipian 2007a, p. 315). This

definition also facilitates an analysis of education corruption in the private sector.

Organizational adaptation to resource decline in Russian universities occurs along with

growing corruption (Morgan et al. 2004). Many forms of corruption may be found in

higher education in Russia, including: bribery in admissions and grading, unauthorized

private tutoring, embezzlement, extortion, fraud, nepotism, clientelism, patronage, cro-nyism, favouritism, kickbacks, cheating, plagiarism, misconduct in research, preferential

treatment, sexual and ethical misconduct, transgressing rules and regulations, bypassing of

criteria in selection and promotion, ghost instructors, breaches of contract, provision of

false information, discrimination, abuse of university property, monopolization in aca-

demic publishing and distribution of textbooks, misallocation of public resources, and

gross waste. The Russian media have reported on all of these forms of corruption in

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education (Osipian 2008c, g, h). Corruption affects not only college degrees, but graduate

degrees too. Russia has a growing market of dissertations for sale (Osipian 2009i). In fact,

politicians themselves contribute to the corruption of doctoral education by acquiring or

simply buying doctoral dissertations and doctoral degrees (Osipian 2009g).

A number of Chinese scholars, including Gong (2007), Li (2007a), Li (2007b), Wangand Chen (2007), Wang (2007), Xia and Feng (2007), Xiao (2007), Yuan et al. (2007), and

Zhu (2007), present different viewpoints on academic corruption, concentrating mostly on

plagiarism and a weak research orientation, as well as administrative control of HEIs.

Similarly, US scholars are concerned with academic corruption (see, for instance,

Anderson 1992; Sykes 1988; Washburn 2005; Osipian 2009b, h); they have yet to

investigate a wide range of corruption in admissions, examinations, graduation, and

financing, types of behaviour that involve bribery, embezzlement, and fraud.

Between 2000 and 2005, over 8,000 economic crimes in education were reported in

Russia. In 2005 alone, more than 3,000 crimes were committed, including 849 cases of

bribery and 361 cases of embezzlement, gross waste, and misallocation of public funds(Newsru.com 2006a). Table 1 provides data on corruption in the education sector in Russia

in 2001 and 2005.

Table 1 Characteristics of everyday market corruption in the Russian education sector, 2001 and 2005

Indicator Secondary education Higher education

2001 2005 2001 2005

Supply of and demand for corrupt services

Corruption risk (risk of being subjected to corruption) 13.2 41.0 36.0 52.1

Corruption demand (readiness to bribe) 76.2 60.8 66.7 63.2

Annual volume of everyday corruption markets

Market size, in $ million US 70.1 92.4 449.4 583.4

Total market share 0.0 0.0 0.2 0.2

Amount of average bribe (in rubles) by sector

Value 1238.0 2312.0 4305.0 3869.0

Rank* 7.0 8.0 2.0 4.0

Percentage change 1.6 -0.2

Corruption intensity within corruption markets

Value 2.2 0.9 0.8 0.9

Rank** 1.0 5.0 10.0 6.0

Percentage change 2.2 -0.3

Demand on public services in corrupt markets (percentage)

Value 6.1 2.9 8.1 7.4

Rank*** 9.0 12.0 4.0 6.0

Percentage change -52.5 -8.6

Secondary school: corruption needed in order to enter school and finish educational process successfully

Higher education institution: corruption needed in order to enter HEI, transfer to another HEI, pass courseexaminations, midterms, term papers, theses, etc

Table created by author using data in Satarov (2006)

* Rank 1 is assigned to the sector with the largest average bribe

** Rank 1 is assigned to the market with the most intensive corruption activities

*** Rank 1 is assigned to the segment of the public services market with the highest demand

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In the same 5 years, the willingness of college administrators and faculty members to

accept bribes and collect other benefits of corruption increased from 36 to 52.1% (Satarov

2006). These upward trends are characteristic of the accepting side, i.e. the recipients of

illicit benefits, although the reliability of surveys focused on corruption remains concep-

tually questionable. Diplomas are available for sale not only from the college adminis-trators but also online, for prices varying from $1,000 to $2,000; Vuzdiplom (2008) is one

example. Some people apparently use fake diplomas to get jobs and promotions, or even to

teach in academia (Voronezhsky 2005). As more students enter higher education, the

potential base for corrupt activities grows. The student population in Russia grew from

2.64 million in 1992 to 5.43 million in 2001 (Tomusk 2003, p. 215). According to some

estimates, the number of students per 10,000 population reached 500 (Newsru.com 2007).

Figure 1 shows the dynamics of student numbers in Russia.

Colleges and universities run the entry examinations, which are administered by the

faculty. As the cost of education rises, admission to publicly-funded places is becoming

susceptible to corruption; in 2001, more than 1,000 cases of bribery to enter higher edu-cation were recorded. Konstantinovsky (2001) estimates that the amount of money spent to

gain illegal access to higher education is equal to 0.75% of GDP. Monetary pledges, gifts,

private donations, bribes, and nepotism seem to be commonplace. In some cases, grossly

underpaid college instructors have turned HEIs into family enterprises where admission is

guaranteed to friends and relatives and those ready to pay. Competition to enter govern-

ment-financed programmes is stiff, as Fig. 2 shows.

These situations are being noticed, however. Sixty-seven criminal cases concerning

educators have been investigated; they include six members of admissions committees,

nine officials of territorial educational organizations, five rectors and deans, seven pro-fessors and senior lecturers, and 40 directors and assistants to directors of educational

institutions. Criminal charges were brought against members of the admissions committees

in the Omsk, Volgograd, and Lipetsk oblasts, and criminal investigations have been

launched against educators in many regions, on charges including embezzlement, extor-

tions, and bribery. Bribery can be found in all areas of the educational industry (Gazeta.ru

2006). The post-Soviet media often discuss cases of corruption in academia, but the details

and facts are shallow at best (Lyzhina 2004; Osipian 2007e, 2008c).

Corruption in higher education has a negative impact on the quality of higher education

services, increases inequality in access to higher education, and causes social inequities.

The possible negative impact of corruption in higher education on the rate of economicgrowth and development in transition economies in the long-run has been analyzed by

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Fig. 1 Numbers of students in Russian higher education institutions per 10,000 population, 19801999.Source: Commonwealth of Independent States (CIS), Official Statistics, retrieved from the database,8 August, 2006

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Osipian (2009f). However, corruption is relatively widely accepted in higher education in

Russia, as it is considered a part of everyday life. Petrov and Temple (2004) note that In

Russia, our interviewees also despised bribery, but at the same time expressed the view

that, perhaps, in the present situation, corrupt practices in higher education were inevita-

ble (p. 92). Based on a 1999 survey, Spiridonov (2000) concluded that in Russia, the

person who regularly accepts bribes is regarded as an absolutely normal element of real

life (p. 245). The public believes that it is virtually impossible to gain a publicly funded

place in HEI without a bribe or personal connection. Victor Sadovnichiy, the rector of

Moscow State University (MGU), estimates the total volume of illegal payments in highereducation at around $5 billion for 2005 (Gazeta.ru 2007). In fact, the authorities

acknowledge the rampant corruption in the country, and Russias President, Medvedev

(2008) mentioned it in a recent Address to the Federal Assembly.

Suggested solutions: tests and vouchers

Several solutions have been suggested to address corruption in higher education; they

include modernizing and restructuring the industry, and introducing a standardized test and

education vouchers. Standardized tests are being introduced in all of the former Sovietrepublics as part of a wider education reform (Drummond and DeYoung 2003; Heyneman

2007; Heyneman, Anderson and Nuraliyeva 2008; Osipian 2007c, 2009a, e). The Russian

parliament approved the nationwide implementation of the unified state exam, or yediny

gosudarstvenny ekzamen (EGE), to begin in 2009 (MacWilliams 2007), but opposition to

it has been growing since its pilot implementation in 2001 (Kolesov 2002). Georgia,

Kazakhstan, and Kyrgyzstan are among the former socialist countries that have instituted

it. According to Heyneman (2007), these republics did so explicitly to address corruption

in admissions, and with some success. He quotes a professor at Tbilisi State University:

Because of the examsmany things have changed. Students from rural areas and from

poor homes are more numerous. When bribery was necessary to enter the university, these

students had no chance to enter (p. 314). But the test does not seem to be eliminating

corruption completely. A professor from Kazakhstan said that After 2 years, each college

student takes an internal exam designed by the ministry of education. For the first several

years it operated fairly. But now it too has become corrupted. Cell phones and cheat sheets

(for a price) are allowed into the test (p. 314). Retention and attrition remain issues even

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1993 1995 2000 2001 2002 2003 2004 2005

Fig. 2 Competition for admittance to public and municipal higher education institutions in Russia,19932005.Source: Number of applicants per 100 places. Compiled from data in G. Satarov (2006)


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if the admissions process has become less corrupt with the introduction of the standardized

tests.

The EGE and the vouchers were designed to work together as perfect complements, to

change both the admissions process and the mechanisms of funding. The vouchers were

based on the money follows the students concept of higher education financing,designed as portable grants that could be spent only on higher education and could not be

refinanced. The EGE results were graded on a scale from one to five, and every high school

graduate obtained an educational voucher with a value corresponding to the grade

received. The idea was that prospective students would bring their vouchers to the HEI of

their choice; the government would then issue the vouchers and transfer funds directly to

the HEIs, based on the number and value of the vouchers that the HEIs collected from the

enrolled students. Replacing direct state funding with indirect voucher-based funding

would force HEIs to compete for students, i.e. for their vouchers. Since vouchers were

intended to be of different values, HEIs would compete for the better students with greater

academic promise and higher voucher values. This would encourage the HEIs to improveand update their educational programmes, so they would become more competitive and

more attractive to prospective students. Eventually, less competitive HEIs would give way

to their more successful counterparts.

This model was intended to preserve the state funding of students while at the same time

introducing market mechanisms into the largely public education sector. This part of the

reform was never realized, however, and the vouchers for education were soon forgotten. It

is not clear why the voucher system failed, and the media never addressed the issue. One

may speculate that the idea itself was good, but that a combination of technical difficulties

and strong opposition from the HEIs made the whole project less feasible. It is difficult topredict whether the vouchers would actually reduce corruption in education and improve

the industrys funding. Implementing the voucher system would in fact complicate the

processes of college admissions and financing, and facilitate a further increase in cor-

ruption. However, now the idea of vouchers has vanished, so has this element of the

reform, as HEIs are not competing for the students with higher EGE results who would

bring higher voucher values. The reform is not limited to the introduction of the EGE. The

transition to the new system of academic degrees, in accordance with the Bologna Dec-

laration, is another step in the direction of Europeanization. The Declaration anticipates

that educational programmes and degrees will be standardized within the European

common space. Like the EGE, this part of the reform has also been harshly criticized, andmost of Russias HEIs oppose the reform (Leonov and Semenova 2007).

Education corruption and reform: a grounded theory

Case studies and small-scale surveys with a low response rate remain the major tools for

assessing corruption, but it is important to consider other potential methods. The reliability

of surveys and interviews is undermined by the sensitivity of the topic, since corruption is

illegal. Some methodologies do make it possible to approach the issue of corruption andmeasure it; see, for instance, Bellver and Kaufmann 2005; Besancon 2003; Kaufmann and

Kraay 2003; and Osipian 2007a. Some of these methods also involve law (Kaufmann and

Vicente 2005; Osipian 2008f; 2009c; Zimring and Johnson 2005) and economics (Kauf-

mann et al. 2000; Rose-Ackerman 1978; 1999).

In addition, Hallak and Poisson (2007) developed a comprehensive classification of

major opportunities for corruption sorted by area of educational planning and management;

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they attempt to understand how researchers can move from a subjective assessment of

corrupt behaviour to objective evidence measuring corrupt practices (p. 63). They suggest

participatory assessment including report card surveys; financial, functional and personnel

audits; and public expenditure tracking surveys (PETS) as specific methodological

approaches for diagnosing corrupt phenomena in education. They also include both per-ception surveys aimed at collecting subjective data from various stakeholders, especially

teachers, students and their parents (such as participatory assessments), and fact-finding

surveys aimed at collecting objective data directly from the Ministry of Education or

from various educational institutions; these include PETS and quantitative service delivery

surveys (QSDS) (p. 84). Participatory assessments seek to collect information on the

perception of corruption based on cross-interviews of various focus groups. American

scholars use several methods to research academic corruption in the US higher education

sector; having analyzed these approaches, Osipian (2009b) suggests nomological deduction

and a grounded theory approach as the two most important for this kind of investigation.

Cellular automata can also be applied to investigate corruption in large educationalorganizations (Osipian 2008d).

Heyneman (2007) makes extensive use of interviews to assess corruption in higher

education in three former Soviet republics; he believes personal interviews often present a

more complex and comprehensive picture of the phenomenon under investigation than do

surveys. Heyneman et al. (2008) used survey results to trace the negative impact of

corruption in universities on the personal income of graduates in the Central Asian

republics. Their quantitative analysis allowed them to quantify these negative impacts and

assess the economic damage caused by corruption. Osipian (2007a) offers simple mathe-

matical measurement techniques as assessment tools for quantitative comparative analysesof corrupt HEIs and educational systems.

Thus, researchers aspiring to investigate corruption in higher education have many

techniques at their disposal, including surveys, open-ended interviews, quantitative anal-

yses, regression analyses, mathematical assessment tools, and participatory assessments,

including participatory diagnosis, report card surveys, and social audits. Nevertheless, the

issues involved in conceptualizing, theorizing, operationalizing, and measuring education

corruption remain largely unresolved. Dreher et al. (2004) compute a measure of the losses

due to corruption as a percentage of GDP per capita and derive a cardinal index of

corruption for approximately 100 countries. Lancaster and Montinola (1997) suggest that

studies of corruption should ultimately incorporate the most central goal of all compar-ative analysesthe assessment of rival explanations. The advancement of logical expla-

nations, grounded in systematic empirical testing of theoretically-derived hypotheses,

facilitates healthy debate about the primacy of one explanation over another (p. 187).

This understanding anticipates the development of a grounded theory that can explain the

issue of corruption in higher education in Russia. It can facilitate the analysis of the previ-

ously suggested ways of curbing corruption and reforming the system of higher education and

can then offer alternative solutions to the problem. Grounded theory is developed induc-

tively; data are conceptualized and integrated to form a theory. According to Strauss and

Corbin (1998), this provides a reliable way of connecting diverse facts into an explanatorytheory. Glaser and Strauss (1967) envisaged grounded theory as a systematic, qualitative

process used to generate a theory that explains, at a broad conceptual level, a process, an

action, or interaction about a substantive topic (as discussed in Creswell 2002, p. 2).

Clifton (1982) suggests that when a grounded theory is generated from data that are

obtained systematically through the constant comparative method, it is a valuable research

strategy for higher education. He believes higher education research can be redirected


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towards the development of theory. The grounded theory approach is specifically designed

to address issues that have not been well researched, or are theoretically underdeveloped

like corruption in higher education. We still do not have even a simple theoretical

description of the phenomenon of corruption in the higher education industries of different

countries. Thus, the grounded theory approach can be used to generate a new explanatorytheory for this phenomenon, by looking systematically at procedures, actions, or interac-

tions. Grounded theory may be applied to the areas where no extensive scholarly literature

exists. Strauss and Corbin (1998), Glaser (1978), Strauss (1987) and Haig (1995) offer

concepts, detailed descriptions, and methodologies of grounded theory.

It is also important to consider the social structure behind higher education and thus the

reasons for reform. Two fundamental processes are driving the extension of higher edu-

cation: the development of production and social development (Dye 1966; Lindeen and

Willis 1975; Volkwein and Malik 1997). The national economy creates a demand for

skilled labour, i.e. human capital, which is produced in HEIs (Marshall and Tucker 1992).

As state governments represent the interests of producers, their function is to supply skilledlabour to businesses by maintaining the system of public education. Public higher edu-

cation may be in place in every developed nation, but it is not the only determinant of the

education industry, as the economy requires the productive resource of human capital at

minimum cost. Hence, the governments task is to maximize the effectiveness and effi-

ciency of public higher education. It may do this by reforming the market, destroying the

vertical axis of subordination, and balancing university autonomy with its accountability to

the state.

The essential feature of human capital is that it is indivisible from its bearer, i.e. the

individual. Unavoidably, then, the governance of public higher education has a socialdimension. Individuals see higher education as a way to become involved in the process of

societal production and to sustain and increase their personal wellbeing. This social

dimension is complex; it includes such characteristics as access to higher education based

on individuals social and economic characteristics. Disadvantaged members of society are

interested in the states function of decreasing inequalities in access to higher education,

and they try to advance their interests through the system of democratic representation.

Meanwhile, the producers are interested in increasing the publics access to higher edu-

cation since that will generate the needed qualified labour force; they also want to reduce

inequalities in access to higher education so that society can more effectively accumulate

human capital. The government is thus under pressure from both the producers, driven bythe goal of maximizing profits, and the public, made up of individuals trying to maximize

their socio-economic position, and states make structural adjustments to the higher edu-

cation sector in order to meet economic and public demands.

Furthermore, in order to maximize profit, business requires human capital of a certain

quality and quantity at the lowest possible price. Costs are being reduced in higher edu-

cation in order to extend this sector. The state represents the interests of business: its task is

to build and operate a system of mass public higher education that will be effective and

efficient and satisfy the demands of business. This is true in all developed industrialized

nations, where higher education is administered by the public sector, predominantly if notexclusively. The states leading role predetermines a large state bureaucracy in the sector.

The state owns the HEIs and regulates access to higher education. By shaping the structure

of higher education, the state determines the characteristics of education programmes and

the criteria for admission.

The distribution of state funding, along with control over the content and quality of

educational programmes, and access to higher education, are all eroded by corruption. In

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the highly centralized Russian system of higher education, corrupt relationships become

even more complicated, since the government is both the major financier and the regulator

of both state and private colleges. Thus a case of embezzlement or misuse of college

property by a college administrator constitutes an act of corruption as it abuses the public

trust: the public, through the state, has entrusted the administrator with proper managementand financial operations. Similarly, when a professor engages in corruption, public trust is

abused: not only is the student assigned a higher grade regardless of academic merit, but

government financing is likely misused, given that half of Russias college students are

funded with taxpayer money.

At this stage, however, there is no need for the state to continue to play the leading role

in higher education. There are enough places in HEIs to accommodate all those who want

to receive higher education and to meet the demands of businesses for qualified workers.

Given this, it is assumed that private HEIs can provide higher education services more

effectively and efficiently than the state. It is generally accepted that, in the market system,

private enterprises operate more effectively and efficiently than public ones, because theydo not need to collect and redistribute funds through the tax system and budget, and need

not obey regulations about access. But in Russia, the state continues to own and regulate

public HEIs, regulate private HEIs, distribute publicly funded places in HEIs, and guar-

antee the degrees conferred in state-accredited HEIs. Through these functions, the state

itself becomes a source of corruption, as bureaucrats and educators misuse their monop-

olistic authority over access to higher education services and degrees. Of course, plenty of

misconduct and illicit activity also occurs within private education, but that may be con-

trolled by its presence within the market economy. As the system operates at present, the

state interferes in the economy and the education sector remains separate from production.The task is to integrate this system into the economy, while moving the state away from

economic production.

Several secondary forces help shape higher education, among them public and private

HEIs, the government, and lobbying interest groups. These institutions also have an impact

on higher education along with the economic and social fundamentals presented above.

The redesign of the education sector raises two major concerns: (1) the quality of edu-

cation, including its content and responsiveness to market demands; and (2) access to

higher education, including educational opportunity, affordability, and inequalities. Here,

inequality in access is expressed in terms of access itself, educational quality, and student

satisfaction.I start my analysis with the assumption that reduced state control and increased uni-

versity autonomy will reduce the inequality in access to higher education. The rationale

behind this assumption is fourfold. First, universities that are less supervised and more

autonomous can operate independently on the market; this should make them more

effective, efficient, and flexible in meeting changing market demands. As a result, the

quality of education in these institutions will rise, as will student satisfaction. This will lead

to increased and more equitable access. Second, more autonomous universities, which

experience less state supervision, are more effective and efficient, as they can spend more

time on core activities, such as research and scholarship, and less time on administrativeduties, i.e. bureaucracy. This makes them more competitive. Competition lowers tuition

fees and thus increases access to higher education and reduces the inequalities in access.

Third, more autonomous universities are free to grow, merge, and establish new pro-

grammes based on market demands rather than central directives. This creates more places

in higher education, and therefore increases access and reduces inequalities in access.

Fourth, indirect funding from the state leads to competition among public universities,


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leading them to close programmes that are not in demand, consequently leading to higher

quality, higher student satisfaction, and lower tuition, which means increased access and

more equality in access.

The second force driving the extension of higher education is social development.

Higher education is an important public good. Discussions about the nature and function ofRussian education point to priorities like the most appropriate form of upbringing for youth

(Nikandrov 2007) and the development of civic values and patriotism (Gavriliuk and

Malenkov 2004). The value orientations of contemporary Russian youth include friends,

health, interesting work, and money (Semenov 2007). According to a 2005 survey of

students conducted in four HEIs in St. Petersburg, when it comes to prestige, the leading

professions are economist (37%) and lawyer (36%), with the lowest rankings going to

schoolteacher and blue-collar worker (1% each). At the same time, when it comes to the

social significance of occupations, the ratings are different, with medical specialist (45%)

and schoolteacher (36%) at the top (Semenov 2008, p. 40).

According to an October 2004 survey, conducted by the Centre for Public OpinionResearch, 23% of Russians see diminished accessibility to free education and medical help

as the nations greatest problem. Meanwhile, 55% consider bureaucratic high-handedness

and corruption among the present political and economic elite to be the major factor that

hinders Russia from emerging from its socio-economic crisis and achieving economic

prosperity (Kofanova and Petukhov 2006, p. 24). That it is becoming more and more

difficultKofanova and Petukhov (2006) point outto find ones way in the spheres of

semi-free of charge medicine, education, housing and communal services (p. 26). They

found that people with higher levels of education and income are more likely to mention

the prevalence of corruption in the authority-wielding government institutions and lawenforcement bodies, while young people are more likely than others to encounter it in the

military commissions and the sphere of education and medicine. Educated people and

those with higher incomes are more inclined to offer gifts to civil servants. Among

respondents between ages 35 and 44, 29% regularly give little gifts; among people of

retirement age this figure is only 12%. Among those with higher education, 26% give gifts

(Kofanova and Petukhov 2006, p. 35).

The higher education sector cannot remain outside the mainstream of development; it

must adjust to the changing socio-economic conditions. Accordingly, corruption is

becoming part of the education sector, as it is of other sectors of the economy and the

government. The hypothetical evolution of corrupt hierarchies in HEIs points to changinginternal structures shaped by the external influences of the market and the state (Osipian

2007b, 2009d). The state may be interested in corrupt HEIs as entities it can blackmail and

control (Osipian 2008e). The nexus of political graft and educational corruption that may

be observed in the former Soviet republics includes collusion, compliance, and control

(Osipian 2008a). Underpaid educators are naturally more susceptible to corruption. The

state uses educators need for illicit benefits to create what I call the feed from the

service scheme and to control the agenda in HEIs (Osipian 2007d). Given this situation,

the state might be interested in maintaining corruption in education and preserving its

functions of financier and regulator of access. Darden (2008) points out that Whileprevalent in the post-Communist states, the use of systematic graft and blackmail to secure

compliance from subordinates appears to be a tool for building state cohesion elsewhere

(p. 53).

The system of test-based admissions and vouchers that replaced the HEI-based entry

examinations and direct state funding means that the same system is preserved when the

state retains the distribution function. Under this system, corruption is unlikely to decline,

56 A. L. Osipian

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even in the long run. One way to remove the state as an intermediary and distributor is to

replace direct state funding almost entirely with payments by consumers. Educational loans

can compensate for unequal incomes; the loans could come from both state and private

banks, in the form of credits. But simply reforming education financing will not result in a

change in the system; reform will have to include privatization or at least a long-term leaseof HEIs, including privatization of their campuses. This will allow HEIs to raise funds for

investments in many areas: university facilities, equipment, libraries, faculty salaries,

research, and scholarships for the most promising low-income students.

Possible solutions: privatization and loans

Given the many imperfections in the newly introduced test-based admissions policies,

colleges and universities can preserve the right to run the admissions process at their will.

HEIs interpret test scores at their discretion; those who have applied without the testcertificates may have to take the traditional entry examinations or be interviewed. This

looks like a poorly disguised sabotage of the testing reform, but it can be found throughout

the system, and many bureaucrats and related businesses are cashing in on the situation.

Meanwhile, university autonomy is developing, as universities resist the state regulations.

Indeed, Victor Sadovnichy, the rector of the flagship Moscow State University (MGU), and

possibly the future president of the Russian Academy of Sciences, appears to be a more

important figure in the educational landscape than the Minister of Education (Taratuta

2007a). MGU is becoming more and more financially independent and profitable, and a

beacon for other HEIs, while the ministry is becoming more of a pure bureaucracy withlittle financial leverage over the universities. In other words, now that the university is

financially sound and more sustainable, the ministry is less relevant and the university

more powerful. MGU refuses to enroll students based on the results of the EGE and is

adhering to the old system of entry examinations (Ivoylova 2008).

As described above, the reform using vouchers has failed. Vouchers were a perfect

vehicle for selling the reform to the public. The educators did not buy the reform, though,

and the general public is apathetic, accepting the idea that free access to higher education

has vanished. Educational vouchers were a part of the new system. The failure of one part

of that system reveals problems and contradictions in the entire design. For example, the

test was never solidly connected to the admissions policies. The introduction andnationwide implementation of the test reached far beyond the initially established goals of

reducing inequalities in access to higher education and curbing corruption in admissions to

HEIs. The expansion of higher education has reduced inequalities in access, while the

increasing number of for-tuition programmes is restraining corruption in admissions,

because access is open to all those able and willing to cover the full cost of education.

The quality of education in different HEIs varies significantly; the same is becoming

true of secondary schools. Moreover, because of the reforms poor design and an unclear

implementation policy, the corruption and inequalities in higher education may now be

spilling over into secondary education. The quality of education in different HEIs variessignificantly; the same is becoming true of secondary schools. As the EGE is implemented

more widely, it will measure the outcomes of schooling and may lead to teaching to the

test. Meanwhile, university autonomy and issues of financial survival will push HEIs more

toward profit-making rather than test-based admissions. This new orientation will trans-

form admissions policy into a selection system based on the combination of academic

abilities and ability to pay, and HEIs may focus more on selling educational services than


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preparing specialists. Private enterprises are known to be better at selling services than

their public counterparts. The same may be true of HEIs. This model may eventually

become dominant not because it is perfect or free of corruption, but because it might be the

best fit to the new socio-economic conditions.

Unavoidably, in this new system, new forms of corruption will emerge and some oldones will grow. After all, reports in the media point to a wide variety of corrupt practices in

US and European universities, including fraud, embezzlement, financial misconduct, and

diploma mills (Desruisseaux 1999; Wilgoren 2000; Henry 2001; Baty 2004; Bartlett and

Smallwood 2004; Reznik 2004; Bartlett 2006; Van Der Werf 2006a, 2006b). Other forms

of misconduct, such as plagiarism and student cheating, will continue.

The system of higher education in Russia is in transition and is still far from long-term

equilibrium. It will reach a new steady state when it achieves a new balance of public and

private involvement, with private dominating. In this new configuration, societies no

longer have to pay for the postsecondary education of their young people, even in cases

where the selection process is even-handed and honest, and the selection criteria aredesigned to choose the best and the brightest. In fact, it appears more effective and efficient

if the system of mass tertiary education is organized in such a way that the immediate

consumers of educational servicesthe studentscover the cost of their own education.

The higher education sector is becoming privatized and re-oriented from the domain of

specialists based on manpower forecasting, as in the planned economy, to the provision of

educational services that meet the demands of the open market; all this indicates that

higher education is going through a process of commoditization.

People in European welfare states anticipate free access to higher educationbut they

also expect to pay. For example, Psacharopoulos and Papakonstantinou (2005) showempirically that in Greece, in a constitutionally free for all higher education country,

families spend privately more than the state in order to prepare for the entrance examin-

ations and while studying at the university (p. 103). Privatization in higher education in

Russia is an important process, but it is not being widely discussed. One reason for this

might be the negative connotation that the term privatization carries in the minds of many

Russians. The massive privatization that occurred in Russia in the 1990s is seen as sym-

bolizing inequality, unfair distributions of property rights, social tensions, corruption, and

the criminal underworld. In fact, that privatization can be seen as a process of stealing state

property from the public and allocating it to a small group of party leaders and directors of

state enterprises.Thus many see that process of privatization as a major failure of the state and of market

reforms. In that context it would not be beneficial for the government to discuss the

possible privatization of education. Moreover, in Soviet society, education and healthcare

were traditionally considered to be human rights. The process of privatizing state property

was riddled with corruption, but it was done in expectation of building a new system that

would be more effective and efficient than the socialist system had been. Similarly, the

process of privatization in higher education will undoubtedly bring at least a temporary

increase in corruption, including tax evasion and illegal forms of struggle over property,

but it may help make the education sector more effective and efficient in the long run, andalso less corrupt.

I suggest that Russia should partially privatize HEIs. The new system will perhaps allow

other forms of corruption, some of which also exist elsewhere, but if admission is based on

tuition and test scores, corruption in admissions may decrease. At least a partial privati-

zation of higher education may be one of the measures necessary to reduce corruption in

this sphere. Moreover, it may help modernize the industry and ensure that quality

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educational services are provided to the public. The process of privatization is already

taking place in the education industry: over half of all students pay tuition. Though private

colleges provide only 10% of all the places in higher education, more than 40% of the

students in public HEIs are enrolled in programmes that charge tuition. Historically, the

process of moving property into private ownership emerged from the tradition of com-munal or shared property. In the former socialist states, however, privatization has a

different meaning; in Russia, it is a process of de-nationalizing state property. Many see it

as unfair to allocate property rights over the former state properties to just a few people.

Referring to work by Shleifer and Treisman (2000), Bortolotti and Perotti (2007)

describe this process: In a grand political bargain to buy out opposition to privatization

most Russian enterprises became controlled by their managers. Perhaps there was no other

way to securely establish private property in Russia than to buy in the potential oppo-

sition (p. 59). Similarly, one would reasonably expect that the state will let the top college

administrators privatize their HEIs. But this may not happen. The state is not likely to give

HEIs to the employees, also called the labour collectives, for free. It will want to preservecontrol over the majority of the HEIs. Nor is the state likely to sell the HEIs to the labour

collectives, again to preserve control. Meanwhile, the labour collectives will not buy the

HEIs from the state: they believe they already have every right to own them, and they do

not have the means to buy them.

At the same time the faculty and administrators are not likely to let any investor

privatize the publicly-owned HEIs. Though they do not seek to gain title over the property,

at least so far, they might privatize HEIs by privatizing their various functions. Presum-

ably, the state sets the admissions criteria for the publicly-funded places in colleges and

universities, but de facto the faculty and administrators set their own standards. Becausethey accept bribes and admit their relatives and friends, admissions criteria are no longer

the academic achievements and knowledge that the state would demand, but money and

personal connections instead. The faculty and administration monopolize discretion over

the admissions decisions and privatize access to higher education. This phenomenon

merely represents a privatization of the selection function. Formerly state and now semi-

public HEIs are run more like private enterprises, based on family ties and informal

payments.

A similar situation applies to grading policies and the setting of curricula. In all the

HEIs these are set by the state, but de facto faculty members assign grades based on their

own criteria that do not always coincide with those set by the government. Students may begiven high grades in exchange for gifts, bribes, or collective presents, or based on kinship

and personal connections. This means that faculty members are partially privatizing the

function of student retention and control over academic progress. The content of academic

programmes is determined by the state and controlled through the centralized processes of

licensing and accreditation; it varies significantly from one HEI to another. The quality of

educational programmes also varies. Thus the real content and the quality also depend

largely on the faculty. The state defines the degree requirements and qualifications for

college graduation, and issues diplomas for all graduates. At the same time rampant

corruption in HEIs undermines the credibility of the degrees, as the faculty and admin-istrators privatize the function of certifying knowledge. College administrators are now

taking over many functions previously regulated by the state, including the process of

selecting, hiring, and promoting faculty, and distributing state funds. Universities demand

the right to confer academic degrees without the approval of the Ministry of Education.

According to Psacharopoulos (2005), The degree of privatization of a university system is

a major institutional arrangement that affects academic quality. What matters is not the


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and conditions reduce the degree of accessibility of higher education, increase student debt,

and eventually lead to the withdrawal of more competitive providers from the market. The

practice of having a list of preferential loan providers may also constitute a breach of

contract between the student and the university. This is only possible if universities are

under the obligation to provide their current and prospective students with the best possibleoptions in terms of educational loans, both private and public. The Russian government,

with its anti-monopolistic committee, will have to oversee the educational loans industry,

which is now in its infancy but has good prospects for development and growth.

Conclusions

Three major determinantsthe changing role of the state, the shifting socio-economic

environment, and the changing rules of the gameare forcing change in the higher edu-

cation system. In this context, it makes sense to view privatization as a tool for makinguniversities more autonomous, flexible, and adaptable, rather than as a process of dis-

tributing and selling state property to individuals. The recent offeringsstandardized tests

instead of entry examinations and education vouchers instead of direct fundingsym-

bolize the same state function of distribution, and thus preserve the role of the state.

I believe that the changes needed should include privatization through both sale and lease

of HEIs. This should include privatization of land that would allow for mortgages and

collateral. Collateral is needed to raise funds to invest in university facilities, equipment,

libraries, faculty salaries, and research. The vouchers had the distinct advantage of por-

tability, and the portability of educational loans may provide some compensation for theloss of vouchers. Direct state funding may be largely replaced by educational loans, both

state and private. The higher education industry itself has to begin functioning as a market,

with competition and pressure to maximize profits. The services of higher education should

be commoditized, but this will only become possible as higher education is further

decentralized and privatized.

References

Anderson, M. (1992). Impostors in the temple: American intellectuals are destroying our universities andcheating our students of their future. New York: Simon and Schuster.

Anechiarico, F., & Jacobs, J. (1995). The pursuit of absolute integrity: How corruption control makesgovernment ineffective. Chicago, IL: University of Chicago Press.

Bartlett, T. (2006). Fake university paid bribes for credentials. The Chronicle of Higher Education, 52(30),A14.

Bartlett, T., & Smallwood, S. (2004). Inside the multimillion-dollar world of diploma mills. The Chronicleof Higher Education, 50(42), A8.

Baty, P. (30 April, 2004). Survey shows cheating is rife. The Times Higher Education Supplement.http://www.timeshighereducation.co.uk/story.asp?storyCode=189740&sectioncode=26.

Bellver, A., & Kaufmann, D. (2005). Transparenting transparency: Initial empirics and policy applications.

Policy Research Working Paper. Washington, DC: World Bank.Besancon, M. (2003). Good governance rankings: The art of measurement. World Peace Foundation Report36. Washington, DC: World Peace Foundation. http://siteresources.worldbank.org/EXTWBIGOVANTCOR/Resources/wpf36governance.pdf. Accessed October 1, 2008.

Bortolotti, B., & Perotti, E. (2007). From government to regulatory governance: Privatization and theresidual role of the state. The World Bank Research Observer, 22(1), 5366.

Clifton, C. (1982). Grounded theory: An alternative approach to research in higher education. Review ofHigher Education, 5(4), 239249.


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