The rapid expansion of international private universities could leave public universities "caught in the middle", forced to compete on both price and standards.

The scenario is raised in a paper produced for Universities UK (UUK) by Roger King, former vice-chancellor of the University of Lincoln.

Globally, more than one in three students is in the private sector, and the number could increase as well-established markets such as the US are joined by the likes of China, where private universities accounted for 1.3 million of the 20.2 million students who were enrolled in 2006.

Because most private providers focus on teaching and training, and very few on research, the majority of their income comes from student fees, the UUK paper says. Often, however, the indirect source of this income is public funds in the form of student financial-support packages made available by the state.

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"Private providers' increasing profitability and soaring share prices depend to a large extent on publicly financed tuition fees, privately paid by students eligible for public support," Professor King writes.

Highlighting differences between the sectors, he says academic faculty control in private institutions is limited and assessment standardised.

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With governance dominated by corporate boards, he says, government regulation is crucial in determining the rate of growth.

And he adds: "Some of the larger US companies are looking for markets abroad. As tuition fees rise sharply in the not-for-profit sector and at public universities, these new providers may seek to compete on price and with online distance learning."

Sally Hunt, general secretary of the University and College Union, said private-sector expansion was contributing to a "creep towards style over substance" in higher education. She said: "Education is about learning and scholarship, not marketing fads ... If we move towards more private involvement in higher education, then successful universities of the future will be the ones that can flog cheap courses for the most cash."

john.gill@tsleducation.com.