Loss of overseas students will strike body blow to UK universities

Over the past two decade the number of students in the UK has ballooned. A recent House of Commons briefing paper reported that 271,000 students in 1994 who applied via UCAS were accepted to British universities. By 2019, this number had almost doubled to 541,000. A total of 2.4 million students studied in the UK in 2018 -2019 academic year.

While undergraduate students from the UK still make up the majority of students, the number of international students have driven a good deal of this growth. In 1994 8,000 students from the European Union, and 11,000 students from the rest of the world, were accepted into British universities. By 2019 the numbers had increased by 285% and 298% respectively, to 32,000 and 45,000. Chinese students in particular have played a key role in driving this rise.

These students also make up a disproportionate amount of university income as they pay considerably higher fees. In 2019 overseas students accounted for 20% or more of total fees at 48 of the UK’s higher-education institutions.

Much of that income will now disappear as the world-wide pandemic will slash international travel. Even if international travel does open up, the pandemic’s interruption to the English language tests that international students need to pass will also reduce numbers. Finally, international students may be more wary of travelling and living far from home in these uncertain times – especially given that the UK has now registered the highest death toll in Europe.

Domestic students might make up some of the gap. Student numbers usually go up during recessions as out of work young people turn to university instead of a career. Still, given the likely severity of the ongoing economic contraction many might hesitate at the prospect of taking on the hefty debts studying now entails.

This hesitation will only grow if universities still find themselves unable to return to business as usual by the start of their next academic year in September. Many will balk at the prospect of paying £9,250 a year for online lessons only and may be tempted to defer until 2021 in the hopes of getting the full uni experience then.

Already, the University and College Union has estimated that the pandemic could cost the sector £2.5 billion in lost fees alone, and lead to 30,000 university jobs being lost. Universities UK has issued an even more apocalyptic warning suggesting income could drop £7 billion in the coming academic year, equivalent to a third of all tuition fees.

University finances have already taken a beating. Students are still paying their full fees for the moment but have returned home meaning income from university accommodation has evaporated. Hosting corporate events, another money-spinner, has also quickly dried up.

The situation is further worsened by the fact that many universities are heavily in debt. As the number of students expanded many universities embarked on a building spree, and borrowed to do so. More students meant the need for more accommodation and facilities after all.

However, a swish new campus and plushy student digs were also an excellent marketing tool to lure in new students. This was necessary as, even as the number of students has grown, competition for students has intensified – particularly following the 2015 government reform that removed the cap on the number of students each university could take on.

The problem is that these expansions relied on a steady increase in the number of new students if the debts were to be paid back, a risk noted by an independent panel’s review of the sector for the government in May 2019. Still the sector was ambitious and bullish. According to Catherine Fletcher, Professor of History at Manchester Metropolitan University, rumour had it that if you added up every UK university vice-Chancellor’s projected increase in international students at their institution you came to over 1 million.

Yet with the removal of the cap on the number of students each university can admit in 2015 prestigious and popular universities hoovered up a growing number of students, at the expense of teaching standards some allege, leaving universities lower down the food chain struggling.

Indeed, even before coronavirus some institutions were struggling to keep up financially. In 2019 the Office for Students subjected 55% of universities to “enhanced monitoring” partly due to concerns about their financial health. Some universities were even thought to be at risk of bankruptcy, including the venerable School of African and Oriental Studies.

Now the number of universities that find themselves short will almost certainly grow. Already the university of Roehampton has announced plans to cut 15% of posts, and Fletcher expects “very few universities” will escape job cuts. Manchester, Sussex, Bristol, and Newcastle have started discussing this. Even Imperial, which stands at the forefront of the fight against coronavirus, has moved to cut staff pay and has warned more might come – unsurprising given that in 2017/18 64% of its new admissions were international students.

The government has taken some action in response to the increasingly apparent danger universities have found themselves in bringing forward £2.6 billion in tuition fees it pays to the universities. Additionally, it has promised to fund 10,000 new student places next year. A cap on student numbers has been reintroduced, allowing universities no more than a 5% increase in domestic students, in a bid to stop more popular universities sucking up as many as possible to make ends meet and leaving others high and dry. Universities are also eligible for the furlough and emergency loan schemes.

Still, should no additional money be forthcoming some are beginning to speculate worriedly that some universities may simply go bankrupt. The question is what happens then?

Prior to the crisis the Conservative government was fairly explicit that in encouraging more of a market for higher education it expects at least some institutions to fail, and positively encouraged this for low-quality institutions it felt did not offer value for money by increasing the earning potential of their students.

Still, it seems unlikely that they will be willing to countenance many institutions disappearing completely. These are, after all, extraordinary economic times and the government, while rejcting a requested £2 billion bailout by Universities UK, has left the door open to selective rescue packages. Higher education is after all a sector the UK can still claim to a world leader in, and will likely only become more valuable post-Brexit. Additionally, universities are often economic keystones propping local economies in many areas.

A more likely result is that some struggling institutions will be bailed out, and those that aren’t will be consolidated into other universities. There is already some precedent for this. The School of Slavonic and Eastern European Studies was merged with UCL in 1999, and the Institute of Education merged with UCL in 2014.

However, Fletcher worries that a few years down the line campuses acquired on the cheap might be closed down should they not prove economical – simply delaying the hit to local economies. In addition, even those that survive will likely cut back on the number of courses they offer, with the arts at the forefront of the shrink. In the face of coronavirus, even the shady studies of Oxbridge dons will not be immune from its privations.