Blackstone, Private Equity and the Future of Public Education

Tom White, Ben Jacob and Crystal Ma look at how private firms and billionaire donors could benefit from the radical restructuring of universities during the Coronavirus pandemic

While researchers at Oxford University work tirelessly to develop a vaccine for COVID-19, it seems their employer’s latest donor is not planning to let a crisis derail the quest for profit. Billionaire Stephen Schwarzman, co-founder and Chair of private equity firm Blackstone, donated £150 million to the University last year, in order to build the ‘Stephen A. Schwarzman Centre for the Humanities’.

The proposed Centre, which is slated to open in 2024, will house seven humanities faculties and a new ‘Institute for Ethics in AI’. There was no internal or external consultation over the acceptance of Schwarzman’s donation. Staff and students found out about the plans in the same way as everybody else: when they splashed across the media in June last year. The University has subsequently refused calls from student groups, staff and the Oxford branch of the University and College Union (UCU) to make public the details of its lengthy negotiations with Schwarzman, which are subject to Non-Disclosure Agreements, and for a new transparent and democratic ethical framework for donations. 

“The real golden age”, Stephen Schwarzman told Robert Peston in a 2008 interview, “comes when you have a mess. You have economies that are on their back.” After the 2008 financial crash, Blackstone bought thousands of foreclosed homes and other distressed assets, becoming the world’s largest corporate landlord in the process. In a 2018 report, UN Special Rapporteur Leilani Farha alleged Blackstone was a significant contributor to the global housing crisis, citing practices including “aggressive evictions” and massively inflated rents. (Blackstone refutes Farha’s report, citing “significant factual errors and inaccurate conclusions” while maintaining that “we are responsible, professional and responsive owners and abide by all local laws and regulations”.)

Nonetheless, with economies reeling and tenants additionally vulnerable, it seems Blackstone is getting ready to cash in. According to Schwarzman, the private equity firm is ‘looking aggressively’ to make ‘very significant investments’ in the European housing market. Blackstone describes these moves as bringing “incremental capital to a historically capital-starved market”. Given Blackstone’s track record, though, anxieties remain over these moves and their consequences for renters. 

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The Business of Education

Blackstone is also throwing its weight around to defend and influence Schwarzman’s long-term ally and beneficiary, Donald Trump. Schwarzman has been in “regular contact” with Trump since the crisis began, while Blackstone has been accused of spending over a million dollars lobbying the White House over its COVID-19 relief bill, which has given half a trillion dollars to big corporations but failed to support essential workers and hospitals. (Blackstone deny that it engaged in lobbying for the bill, describing its filings as “for general monitoring and analysis of legislation”).

In March, a veteran physician working for TeamHealth, a Blackstone subsidiary, was removed from his hospital post after he criticised the lack of PPE at his hospital, arguably part of a worrying trend of private equity-owned hospitals silencing doctors’ concerns over PPE.

When asked for comment, a Blackstone spokesperson stated that “Mr. Schwarzman has helped the last three presidents of the United States with initiatives ranging from Veteran hiring to recovery from the financial crisis. When asked, he is proud to contribute his views.”

Although Schwarzman has stated that his donation to Oxford was inspired by his visit to the city as an impressionable teenager in the early 1960s, his philanthropy could be viewed as part of a strategic attempt to further his and his business’ aims in the UK.

Just a few months after Schwarzman’s donation to Oxford was finalised, Blackstone announced the £4.7 billion takeover of student housing firm iQ. In the marketised world of higher education, many universities have effectively outsourced their responsibility to safely house students to private firms like iQ and Unite. The National Union of Students’ 2018 report Class Dismissed found that spiralling accommodation costs driven by private providers are a significant barrier to access and achievement for students from low-income backgrounds. 

As well as student accommodation, private equity firms are investing substantially in education technology. Canvas — a virtual learning environment used by many universities, including Oxford — was purchased last year for $2 billion by private equity firm Thoma Bravo. Edtech firms are driving the ‘datafication’ of the public university, in which information about students is a key source of revenue and profits.

With teaching moving online as a result of COVID-19, and the prospect of student numbers falling next year, education technology represents a key battle ground between university senior managers and academic workers. Academics are