What is the effect when universities go to the capital markets for seeking funding?

Oxford university plans to sell 100-year bonds worth £250 million; it will be the first time for Oxford university to turn to the capital markets. Due to the cut in government funding, more and more UK universities sell bonds in the capital markets. What would be the impacts when the capital markets become the major financing source of the higher education sector?

Universities have several functions, and the two major functions are educating students and conducting research. Both functions can be sold; however, for universities, their products are not like ordinary goods or services that can be sold freely in the markets. For example, students pay equally tuition fees to receive education when they meet the entry requirements (ordinary goods and services do not requests buying permits from their customers). Moreover, the demand for research does not match the supply of research. The values of research are like the values of investment that the returns are uncertain, especially for theoretical reserch. This is why the demand side is more likely to demand more empirical research relatively. Theoretical research has lower private benefits but higher public benefits than empirical research. 

When universities enter the capital markets, the investors are more interested in the profit abilities of the universities rather than things like their reputations (of course, reputations can improve the profitabilities). Therefore, to improve profitabilities, unversities are likely to expand their sizes to seek more overseas students who pay higher tuition fees. Of course, receiving alumni’s donations is another source of financing; therefore, in the future, more and more universities’ facilities will be named after sponsors and students would become more selective and those who are more likely to make donations will be offered places first. Moreover, research of the universities would focus more on empirical research than theoretical research, as empirical research is easier to seek funding. In addition, the cooperation between universities and the business sectors would become more frequent.

There is one possible issue that due to the increasing influence from the private sector, the reports made by universities may lose their neutrality.