As Prime Minister Shinzo Abe pursues deregulation, the “third arrow” of his “Abenomics” economic plan, Temple University’s Japan campus is closely watching to see if he will create a more favorable situation for foreign schools here by granting them the same tax perks and credits as Japanese universities, but not at the expense of individuality.

Japanese universities carry the status of “gakko hojin,” or educational corporation.

Even Tokyo-based TUJ, which has been around for 31 years and is the oldest and largest American university branch campus in Japan, does not enjoy the same benefits as accredited Japanese universities, because it does not have the educational corporation status.

As a result Temple, whose home campus is in Philadelphia, is subject to corporate taxes and is ineligible for government subsidies. The roughly 1,000 TUJ students must also pay the 5 percent consumption tax on tuition. This levy may be hiked to 8 percent next April.

Temple, however, believes progress is finally being achieved, following years of consultations with Diet members in both the ruling and the opposition camps and the education ministry to put the school on a more equal footing with its domestic peers.

“There have been serious debates about the reform and internationalization of Japanese universities for more than 10 years, but suddenly the movement appears to have real momentum with Prime Minister Shinzo Abe,” said Bruce Stronach, dean of Temple University Japan. “For Japan, it has become an economic issue rather than a mere educational issue.”

Enhancing Japan’s global competitiveness by reforming the higher education system and promoting growth strategies to steer Japan out of a long economic slump are key goals of Abenomics.

Since taking office, Abe, his Liberal Democratic Party administration and the education ministry have floated various reforms, including adding the Test of English as a Foreign Language to university entrance exams, with a score threshold, and adopting a semester system in which the academic year starts in the fall, in line with colleges overseas, in a bid to attract more foreign students.

The government panel tasked with revitalizing the education system proposed introducing the programs of top foreign institutions, but Japan lacks incentives and is beset by a declining youth population and high costs to maintain college campuses.

There is also no aggressive effort being made to exploit the already present U.S. university branch campuses, like TUJ, which already provide American-style education, to globalize Japan’s higher education system.

When the government set up the Global 30 program to draw more foreign students to 13 selected universities in Japan by offering classes in English, neither TUJ or Tokyo-based Lakeland College Japan, whose home campus is in Sheboygan, Wisconsin, were allowed to participate. Like TUJ, the Lakeland branch has a long history of providing education in English. Both schools were deemed ineligible because they are not accredited as Japanese universities.

“Japanese universities that took part in the program ask our professors to teach them how to conduct classes in English,” said Masanori Nakayama, general manager of Lakeland College Japan.

Japanese professors are not used to discussion-oriented lectures that are common in the U.S., because the education system here puts greater emphasis on memorization, Nakayama said.

For an educational institution to gain the same accreditation as a Japanese university, it must meet a wide range of requirements, including classroom floor space minimums, and have an independent board of trustees in Japan.

The cost to meet floor space requirements, in a nation with a graying population and fewer babies being born, hence fewer students, outweigh any potential benefits to setting up an expensive campus in Japan.

The need to have an independent board of trustees sets an especially high hurdle for universities like Temple, as it means the home campus loses control of the Japanese campus, potentially disrupting curricula and the transferability of credits.

“The most basic thing is that we are an American university. If you become just another ‘shiritsu daigaku hojin,’ (Japanese accredited private university), our reason for being here no longer exists.” said Stronach of TUJ. “Creating an equal ground for all educational institutions would spur competition, and that’s what is needed in Japan.”

One reason greater efforts haven’t been made to ease the burden on foreign schools is their scarcity and little likelihood of an influx of newcomers.

TUJ and the Lakeland branch have maintained their presence, but many foreign universities failed to succeed and exited.

In the late 1980s, in the midst of the bubble economy, more than 30 American colleges and universities began operations in Japan, partly due to bilateral efforts to mitigate trade friction.

Yet most later closed their doors because of a declining number of students, many of whom were averse to the higher tuitions compared with their Japanese counterparts. Many students also dropped out because they could not keep up with the level of English.

Grads of foreign schools also found that their diplomas weren’t considered as valuable as those earned at Japanese universities.

Japanese students also tend to rely more on their professors to help and advise them through their courses, whereas in the U.S., students tend to be more independent and able to fend for themselves in the competitive academic world.

Foreign universities in Japan saw their circumstances somewhat improve in 2004, when the education ministry started allowing certain credits earned at Japanese campuses of foreign universities to be transferable to Japanese accredited colleges, and graduates were eligible to apply to accredited Japanese grad schools.

Up until that change was introduced, Japan campuses of foreign universities like Temple could not provide visas for foreign students even though some 40 percent of TUJ students were non-Japanese. The level of non-Japanese students, including those who did not need student visas, jumped to 60 percent following the change. Before the system was introduced, students were not even eligible for commuter passes, which are available to all students at Japanese colleges.

Yet even after the change, except for TUJ and Lakeland, there are only three foreign universities that fall under this credit transferability category as there are few incentives for foreign educational institutions to thread their way through the red tape and make a costly investment at a time when even Japanese colleges are competing over a shrinking pool of students.

The change didn’t bring any tax relief, as this was beyond the realm of the education ministry. Yet in the U.S., foreign educational institutions, including campuses of Japanese universities, are tax exempt under Internal Revenue Service rules that classify them as nonprofit organizations for educational purposes.

David Satterwhite, a member of TUJ’s board of overseers and also an experienced educational exchange analyst who used to be involved with government-funded exchange programs, said lowering the hurdle to gain educational corporation status or granting similar status is still not enough to woo more overseas universities into establishing campuses in Japan. But having American university programs in Japan could be an attractive option, given the rising costs of tuition and stipends in the U.S., he said.

“Temple would be an interesting case for positive impact if it receives the tax exemption,” said Satterwhite. “If it became possible and they can gain the kind of status in Japanese society and have some education ministry research support, it might indeed become a package attractive to American universities again to set up their campuses in Japan.”

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