EUROPE: HIGHER EDUCATION
University challenge – the international edition The UK higher education sector is bracing for a multibillion-pound loss come September, when a sharp fall in international student enrolments caused by Covid-19 will wreak havoc on universities’ finances. With a spate of potential mergers looming, Josh O’Neill wonders if it is time for the sector to think small – and agile
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decades-long shift to a market-based higher education system in the UK – mirrored in Australia, Canada and the US – began in the 1980s with the introduction of full tuition fees for international students. Now, three decades on, a dearth of foreign admissions poses an existential threat to some universities’ very existence. Locked in their home countries due to widespread travel bans as the Covid-19 pandemic shows little sign of abating, and unwilling to pay full whack to undertake online degrees, hundreds of thousands of international students are rethinking their study-abroad plans. This is a major problem, because, over the years, the government has withdrawn financial support in the form of grants in favour of higher tuition fees. Meanwhile, propelled by burgeoning middle-classes across the world, the international student market has grown at around 6% a year – even throughout former crises. Many institutions are now hooked on income from lucrative foreign students – who sometimes pay three-times that of their domestic counterparts for degrees – and withdrawal symptoms could prove fatal in due course. According to London Economics, which was commissioned by the University and College Union to assess the extent of the fallout, UK universities could collectively lose £2.47 billion next year if, as its forecast suggests, first-year enrollments of international students fall by 47%. Universities UK (UUK), the sector’s lobby group, has warned that some institutions will go bust if the government does not grant a bailout (it has not,
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Anip Sharma, L.E.K. Consulting
so far). The University of Manchester, at which one in eight students is Chinese, has said it expects to lose £270 million and will cut jobs and staff salaries to cushion the blow. Across the sector, between a quarter and a third of revenues are derived from international students. This publication, from conversations with market sources, is aware of at least five institutions that are exploring mergers to avoid outright collapse.
EducationInvestor Global • June 2020
