When Dubai's economy stumbled in December 2009, it heralded a tough time not only for businesses, but the business of higher education too. The most public example of the difficulties operating in the sector was the experience of Virginia's George Mason University, an American higher education pioneer in the United Arab Emirates. Setting up a satellite campus in Ras Al Khaimah (RAK), 100 km away from Dubai, it started undergraduate courses in 2006 with fewer than 40 students. Those attending praised its American approach to learning, though the university didn't bring faculty from Virginia to teach there. But George Mason never reached its enrollment targets, managing a class of only 120 undergraduate students three years later. When the university couldn't reach an agreement on funding with the RAK government, it decided to shutter its UAE operations.

George Mason's failure hasn't deterred others from establishing campuses, but it serves as fair warning of the oversaturated nature of higher education in the Arabian Gulf: according to a recent study of higher education in the UAE by The British Council, there are just over 91,000 college-level students in the UAE, but nearly 100 colleges and universities in the country vying for their tuition, including 48 international higher education institutions. Even those with strong reputations are finding it difficult to bring in students-Canada's University of Waterloo is renowned for being a recruiting ground for Microsoft, Google and Research In Motion, but its Dubai campus admitted only 25 students in its first-year class.

"Many have come in with far too ambitious targets and I can see more closures," Raymi van der Spek, vice president of administration at the University of Wollongong in Dubai, told the Abu Dhabi-based newspaper The National. "I don't believe their numbers are where they expected them to be. There are too many institutions, which fragments the number of students that each can attract."

Even homegrown institutions receiving all of their funding from the UAE have found their resources cut. Recently, at three of the country's main local higher education institutions, pay freezes and cuts have been implemented, and possible job cuts loom.

College Intake High

The UAE has among the highest rates of college intake in the world, according to a study by Dubai-based Madar Research. Some 90% of secondary school graduates opt for higher education. But according to The British Council study, only 11% of college students in the UAE are Emirati; most students from that group prefer to study abroad in the U.S. or the UK, where they receive full government funding for their studies. Instead, over half of the college students in the UAE are from South Asia, and cost is a large factor in their decision on where to study.

The yearly fees for an undergraduate studies at the Michigan State University in Dubai is nearly US$16,000, compared to US$7,600 for studies at the Manipal University in Dubai International Academic City. In an attempt to bolster enrollment, Michigan State recently offered half-price fees to 100 students transferring from other universities in the country. (Editor's note: Since this article was published, Michigan State University in Dubai's campus closed in July, and 50 of its Dubai students accepted transfers to its home campus in the U.S.) At the graduate level, however, the costs of education are almost similar to studying in the U.S. or UK.

"Given the existing student population in the UAE, most of the institutions would have to seek students from other countries, and be able to house them at a reasonable cost, which compounds the problem," said Balasubramani Ramjee, director of Manipal University at Dubai International Academic City.

Institutions new to the Gulf region have also learned how cultural differences impact their educational programs.

Called the 'Oxford of the East' by Jawaharlal Nehru, The University of Pune offers an MBA course in RAK. Contemplating their efforts, C.M. Chitale, Dean, Faculty of Management, says it is tough to run management programs in the UAE because of two factors: first, Fridays and Saturdays are holidays; and secondly, the other foreign universities there offer one-year courses against the two-year MBA at an Indian institution. "In Pune, we offer an Executive MBA program that we teach three hours every day for six days a week," he points out.

The RAK campus of the University's Department of Management Sciences -better known on and off campus as PUMBA – has only 17 students in its second batch, while maintaining a full-time faculty of 14 on a permanent contract basis. The general feeling in the institution too that it could have caught on better if it had been able to open in Dubai: as Chitale points out, the fees are 'nothing' compared to those charged by the American and British Universities.

Christopher Abraham, senior vice-president, S.P. Jain Center of Management, Dubai and Singapore, agreed "to a certain extent" with Chitale's observation on the two-year versus one-year MBA format, but also notes this issue can be weighed against the cost-value proposition provided by Indian programs. "However, for attracting non-Indians and locals, Indian programs require local accreditation from the Ministry of Higher Education, UAE," he says. (Currently, only 14 foreign institutions have earned local accreditation for degree offerings by the UAE Ministry of Higher Education and Scientific Research).

Ramjee says the traditional two-year MBA program will continue to hold its own against the one-year Executive MBA. "While there is emerging interest amongst the locals to acquire graduate management qualifications, many of them would prefer to go abroad, especially to the U.S., where the traditional two-year program still plays a dominant role," he says.

Accepting the Gambit

Despite the challenges, these institutions have accepted the gambit of coming to the Middle East due to Gulf countries such as the UAE and Qatar modeling themselves as knowledge hubs for the future. This region of the Middle East, Abraham says, was not considered an education destination for most foreign students. But 9/11 spurred the development of education infrastructure in the Arabian Gulf, as students sought to avoid the visa difficulties involved in going to the West. Now, the Gulf is becoming a new education destination not only for other Arabs from the region, but also for South Asian students.

The Gulf countries' incentives early on to spur this development included creating free zones for educational institutions, allowing for complete foreign ownership of schools and a haven from taxes. Qatar has brought six branches of U.S. universities to its Education City in Doha. In the UAE, Dubai, Ras Al Khaimah and Sharjah have such education zones. RAK's set-up has recently attracted a number of institutions such as Pune University, Bolton University of the U.K., Birla Institute of Technology Ranchi and Vinayaha Mission University in Salem, which followed on the heels of George Mason. Those who have already established themselves in Dubai, however, tend to discount this development. "Considering the profile of these institutions, it will take some more years before RAK emerges as a formidable contender," Abraham says.

"Many of the Emirates are trying to make rapid strides in building educational hubs for institutions of higher learning," Ramjee says. But while such efforts are "laudable and in the best interest of the nation as a whole", he says, it remains to be seen as to how successful this experiment will be in the long run.

Currently, the strongest destination for higher education in the UAE seems to be its capital of Abu Dhabi, which does not possess a cluster of institutions in one location, but boasts a roster of well-known colleges, including France's Sorbonne University and INSEAD, and New York University. Established in nondescript locations at the moment, those institutions will be provided new grounds in the multi-million dollar development of its Saadiyat and Al Reem islands. The Abu Dhabi government is also picking up all of the expenses of these institutions-including scholarships for foreign students attending NYU's Abu Dhabi campus.

Education officials say there is still interest from major schools in opening branches that receive similar funding schemes. "When the university is fully backed, you get a guarantee that the major concern – that [financial] impact of the new venture – is offset, so they can concentrate on bringing the best quality education they can," said Professor Jim Mienczakowski, the head of higher education at Abu Dhabi Education Council, in an interview with The National.

(Arabic Knowledge at Wharton is based in Abu Dhabi, in a research facility provided through a partnership between the University of Pennsylvania's Wharton business school and CERT, Abu Dhabi's Center of Excellence for Applied Research and Training).

For those institutions in the UAE without the benefit of such largesse, though, operating in the region is a learning experience, and one they hope won't include the bitter lesson learned by George Mason University.

"We were offered that campus, but it finally didn't work out," Chitale says of the vacated George Mason premises. Asked about the future of his Middle East campus, Chitale frankly describes it as "a situation of wait and watch."