Michael Barber, Professor, Chief Adviser to the Secretary of State for Education on School Standards (1997–2001), chief education advisor at Pearson, leading Pearson’s worldwide programme of research into education policy and the impact of its products and services on learner outcomes, London, UK. Email: krdonnelly@pearson.com
Address: Institute for Public Policy Research, 4th Floor, 14 Buckingham Street, London WC2N 6DF, UK.

Katelyn Donnelly, executive director at Pearson where she leads the Affordable Learning Fund, London, UK. Email: krdonnelly@pearson.com
Address: Institute for Public Policy Research, 4th Floor, 14 Buckingham Street, London WC2N 6DF, UK.

Saad Rizvi, Ph.D. in Economics and International Relations, Pearson’s executive director of efficacy, London, UK. Email: krdonnelly@pearson.com
Address: Institute for Public Policy Research, 4th Floor, 14 Buckingham Street, London WC2N 6DF, UK.

Prospects for higher education are discussed in the context of technologies and globalization sweeping over the world and affecting many of the world economy sectors. The report describes opportunities that will appear ahead of universities if they go for radical transformations in their key institutions, and analyzes the risks that may arise if such transformations lose to the challenges of the 21st century.

The model of a traditional 21st century university and its functions are characterized. The authors examine the factors that can radically change the paradigm of a traditional university and points out that universities need to revise their existing business models and education patterns. Marketization of education has turned students into consumers dictating their own terms and has brought about a number of alternatives to universities for talented students. Therefore, universities need to define clearly what they can offer, differentiate themselves from competitors, and identify their target audience among potential student groups.

The authors believe that universities of the future should rearrange functions performed by the existing universities. He also explains why the model of the future is more efficient than the existing one.

It is supposed that the promising prospects proposed for higher education by the 21st century can only be reached if all players of the HE system, from students to the government, support the radical transformation initiative to tackle the challenges they are facing. The study defines the essential questions that all players should answer if they want a productive transformation in higher education.