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Higher education
US universities to lose ‘at least’ $3bn due to Covid-19, says association
The US higher education sector “will lose at least” $3 billion as a result of the coronavirus crisis, a national association has warned, with losses driven mainly by tumbling international enrolments across the country.
The Covid-19 pandemic will cost US universities dearly, according to NAFSA: Association of International Educators, which surveyed leaders across the country’s $520 billion higher education sector in April. A specialist university in Dorset, England has acquired a local private school that was set to close down after the summer term.
Bournemouth’s AECC University College, which specialises in health sciences, has bought the site on which St Thomas Garnet’s School is located, opposite its main campus in Boscombe.
St Thomas Garnet’s School announced in May that it would close permanently at the end of the academic year, which prompted AECC to spark discussions with the school’s board around a potential acquisition.
AECC will use the school site as a second campus, in the short term providing additional socially distanced teaching capacity for new and returning students in September.
“When we heard about the news of the closure, we began a conversation with the school’s trustees.
“For us, this was a once in a generation opportunity and it gives us the chance to expand our site to
It found that universities had already collectively spent around $638 million on “financial support” for international students, scholars, faculty and staff who remained on campuses when courses were moved online earlier this year.
Education-abroad programmes, whereby students enrolled at US universities spend a portion of their courses at sister institutions overseas, will not resume until it is deemed safe to travel, and universities “are a second campus within 30 yards of the first.
“With the current coronavirus situation, this acquisition will give us extra capacity to spread out across the two sites, providing greater social distancing when we start our new academic year in September – creating the safest possible scenario for our students and staff.”
The deal is an example of cross-pollination within the UK’s education sector, constituents of which – including private schools and universities – are facing perhaps the most significant financial pressures in decades, forcing many to close down. Earlier this month, we reported that nine private schools had closed down since the pandemic began – though this number may have since increased.
In 2018 – the year for which Charity Commission data is most recently available – St Thomas Garnet’s School’s charity parent had funds totalling £811,756 – up from £728,578 a year prior. not certain when they will be able to offer education-abroad programmes again”, said NAFSA.
The group found that, of 346 respondents to its survey, most (53%) had cancelled study-abroad programmes due to Covid-19, and would “not be able to recoup” funds.
Meanwhile, nearly a third (32%) of US universities said that, throughout the crisis, they had financially supported foreign Private higher education provider Global University Systems (GUS) has acquired Trebas Institute, an independent music and entertainment college in Canada, amid a crisis that poses an existential threat to many universities’ finances.
The transaction, the value of which was not disclosed, will expand GUS’s roster of Canadian universities, which includes University Canada West, Toronto School of Management and The Language Gallery Canada.
According to its website, Trebas Institute, which has campuses in Montreal and Toronto, offers “high-end” educational programmes in the entertainment industry and claims music “artists themselves” are among its graduates.
The private university was founded in 1979 and was registered under Canada’s Private Career Colleges Act in 2005.
“Our institutions provide a variety of study paths and qualifications and we are always students by bearing costs related to airfare, food, housing refunds, rent, scholarships and tuition refunds.
In projecting a decline in international student enrolments in the autumn, most (35.5%) US universities said that they expected to lose between $100,000 and $500,000. Nearly a fifth (18.4%) thought that they would lose between $500,000 and $1 million, while 6.6% expected
UK: Specialist university buys closed-down private school to expand socially distanced campus
Global University Systems expands Canadian footprint with purchase of private music college
to lose more than $3 million. looking to expand to new sectors and locations,” said Cyndi McLeod, GUS Canada chief executive. “With Trebas Institute, not only will we expand our education offer by adding creative disciplines, but we will also establish a presence in Montreal for the first time.”
Founded in 2013, GUS owns more than 20 for-profit universities across the world, including The University of Law and Arden University in the UK. Most of the group’s institutions specialise in various fields, such as law, business, management and creative industries.
The deal closed during a turbulent period in Canada’s higher education sector, which, like that of other countries, was rocked by a pandemic that has caused domestic and international students to reconsider plans amid concerns that in-person instruction and flights may still be banned in September.
Higher education
UK: Universities could lose £760m if degrees are delivered online – survey
UK universities face a potential loss of £760 million after a survey found that one in five students will not enrol in the next academic year if instruction is delivered online.
A survey of undergraduate applicants, published by the University and College Union and London Economics, found that more than 20% – equal to 120,000 students – would consider delaying studies if universities could not offer a full campus experience due to Covid-19. Private US universities could experience “more meaningful financial effects” of a decline in enrolments in autumn stemming from the coronavirus crisis than their public counterparts, a ratings agency has said.
US-based Fitch Ratings said that it anticipates a decline in annual enrolments of between 5% and 20% at many US higher education institutions.
But, given a higher reliance on tuition and student fee revenues, private for-profit colleges will be adversely affected, said Fitch Ratings, whose analysis assumed
It estimated that the “likelihood of attendance” in Autumn this year, if universities “will not be operating as normal”, was around 72% – a result which, if it materialises, would see the higher education lose £760 million in tuition fees and teaching grants.
If universities were operating as normal, the likelihood of attendance was found to be 86.7% – evidencing that the chance of deferral among UK-domiciled students was approximately 17% higher as a result of the pandemic. that most residential campuses will re-open in autumn.
According to Fitch, 82% of private universities’ total revenue, on average, comes from tuition and student fees, compared with 38% at public institutions, which rely more heavily on grants and subsidies.
“Enrolment pressures, particularly related to declines of international students and incoming freshmen, will not affect institutions equally,” Fitch said in a statement. “Tuition constraints will exacerbate the financial effects of enrolment declines.
“The economic downturn
UK universities typically receive around 530,000 applications a year, of which just 6% of students – around 30,000 – decide to defer.
The survey was published just days after Cambridge University – in response to demands by the higher education regulator for clarity around whether classes will remain online in September – announced that all lectures would be hosted digitally until next summer. could weaken expected family contributions, increase financial aid needs and undermine enrolment decisions.”
Fitch said that private colleges in “competitive regions with challenging demographics”, such as the Northeast, and/or already waning enrolments will be most affected. Institutions with a wider geographic draw, high selectivity and revenue diversity are “less vulnerable”, it added.
Universities are expected to provide – or are already offering – discounts on tuition fees in an effort to attract and retain students.
The findings will deal a fresh blow to universities across the UK, which had already anticipated a multibillion-pound loss due to a sharp fall in the number of international students. Some universities, including one of Manchester’s, have announced that extensive job cuts and salary sacrifices may have to be made in order to cope with vast income losses.
Gavan Conlon of London Economics said: “The analysis illustrates that there continues to be a huge amount of uncertainty amongst prospective students in respect of the potential higher education offer in September.
“If the current deferral rates as a result of the pandemic are borne out, then the financial consequences facing universities will be even more severe than those identified recently.
“There are a lot of jobs at risk, both in universities and in the wider local and regional economies where
US: Financial effects of pandemic will be worse on for-profit universities, says ratings agency
universities are based.”
The median discount rate across private colleges rated by Fitch is around 35%, it said, noting that the range varies “widely”, from less than 10% to more than 60%. The national average discount rate of about 40% is higher for first-year undergraduate students, “and is viewed by Fitch as unsustainable”.
This follows annual tuition fee increases of 2% at private colleges over the past three years, said Fitch, adding that revenue growth over this period was “due almost entirely to tuition increases”, as enrolments were “largely flat” across its portfolio of rated institutions.
Higher education
Australia: Seven universities at ‘high financial risk’ as La Trobe seeks lifeline from banks
Seven universities in Australia are at “high financial risk” as a result of a cash crunch that could stem from a loss of revenue linked to international students, new analysis shows.
While most Australian universities have adequate cash and investment reserves to weather the financial impact of Covid-19, the “longer term prospects are grim”, research by academics at the University of Melbourne has found.
Ian Marshman and Frank Larkins, honorary fellows of the Melbourne Centre for the Study of Higher Education, identified seven institutions at which a downturn in revenue from foreign students risks exceeding available reserves. These are: Monash University, RMIT, University of Technology Sydney, La Trobe, Central Queensland and Southern Cross University, and the University of Canberra.
The findings were published as La Trobe, situated in Melbourne, confirmed it had sparked talks with PwC has acquired a near 50% stake in a German “business school for the digital age”, whose aim is to better prepare senior executives for technology-enabled careers.
The Big Four professional services firm did not disclose the value of its investment in Berlin-based Digital Business University of Applied Sciences (DBUAS), but said the capital injection would be use to accelerate growth.
In the coming months, PwC will embed DBUAS’s portfolio into its internal curriculum, it said, allowing its roughly 12,000 employees in Germany – who generate more than ¤2 billion in revenues – to enhance their digital skillsets.
“For a successful digital transformation, we need new skills three banks around a lifeline and began discussions with staff about voluntary redundancies.
Two of the universities most at risk – Southern Cross and Canberra – have “very low” levels of available cash and investment reserves, according to the research, the authors of which said “this adds to their financial vulnerability”.
Out of 38 universities analysed, 13 faced “medium” financial risk, the study said, while the remaining 18 – comprising nearly half of the sector – faced “management risks that are of lower severity”.
“The adverse consequences of the Covid-19 pandemic on the university sector are both immediate and can be anticipated to endure for many years,” wrote Marshman and Larkins. “Some strategic policy choices that will need to be made to varying degrees by universities to mitigate predicted losses are discussed.
“These choices are likely to result in changes to sector-wide operational practices more profound and different ways of thinking and working. Combining our expertise with DBU’s practical, project-based learning and agile methods, enables us to train the digital pioneers of tomorrow,” said Ulrich Störk, a leader at PwC in Germany.
Research by PwC published earlier this year identified that a significant proportion of executives consider digital upskilling as a key pre-requisite for success in an age in which working life is inherently interlinked with technology.
Founded in 2018, DBUAS provides business leaders with executive training courses, and professionals and students with bachelor’s and master’s programmes, as well as short online courses – all of which are centred on digital skills. than anything experienced since the establishment of the unified national system in the early 1990s.”
The stark revelations follow numerous warnings from Australian universities about the adverse financial effects of a fall in the number of international students who make up a multibillion-dollar sector because of the pandemic. Deakin University called for voluntary redundancies after it forecasted a A$110 million drop in revenue for this year; the University of New South Wales has projected a A$600 million cut to income, Melbourne A$500 million, and Sydney University A$470 million.
Between 2009 and 2018, Australian universities enjoyed an unprecedented boom in international student enrolments, as revenue from foreign students grew by 260% from A$3.4 billion to A$8.8 billion.
But Australia’s market-based higher education system, in which universities rely heavily on tuition fees and less so on state handouts, has seen institutions become “increasingly reliant” on international student fee income to fund teaching, research and capital infrastructure programmes, Marshman and Larkins said.
Their modelling suggests that, as a result of the Covid-19 pandemic, Australia’s universities will lose international student fee revenue amounting to A$18 billion by 2024.
Even under what the pair calls an “optimistic scenario”, international student enrolments will not return to pre-pandemic levels until the same year.
Regional universities, given their relatively smaller cohorts of international students, are expected to be “less exposed financially” to a drop in enrolments, Marshman and Larkins said.
However, few institutions have sufficient operating margins or reserves to withstand a sustained reduction in international fee
Big Four group invests in German digital business school
revenue, the researchers said.
Vocational & skills training
London-listed Myanmar Strategic Holdings is to acquire Wall Street English Vietnam from Verlinvest, despite the financial havoc that Covid-19 pandemic has wreaked on English-language tuition (ELT) providers globally.
The firm announced that it had exchanged contracts to take control of WSE Vietnam from Verlinvest, a private investment firm which owned the business through A-StarEducation, a platform for which it provided seed capital.
The deal will see Verlinvest reinvest $4 million into WSE Vietnam’s holding company, which also owns Education First (EF) is set to have “one of its biggest investment years ever” despite the coronavirus crisis, as the language tuition giant draws up expansion plans for its Chinese operation, one of its executives has said.
Jacob Toren, chief executive of one of the world’s largest educational travel and language training provider’s China London-based investment holding company MBH Corporation has acquired Logistica Training, a training provider serving the health and social care sector, for £5.8 million.
The deal is MBH’s 11th in the education sector and will expand its portfolio, which includes Acacia Training and the Parenta Group.
Logistica Training, which was established in 2012 as a vocational training business, last year recorded earnings before interest and tax of £800,000 against £1.9 million of revenue – meaning a Wall Street English Myanmar, after becoming convinced “of the longterm potential of Myanmar Strategic Holdings”, said Raphael Thiolon, executive director of Verlinvest.
WSE Vietnam, which in the 12 months ending 30 April 2020 generated nearly $14 million in revenue but lost $1.4 million, is a franchisee of Wall Street English, which is owned by Baring Private Equity Asia and CITIC. The organisation announced last month that it would wind down its China operations because of the fallout from Covid-19, which earlier this year caused centre-based education division, said that EF is “confident to open more schools” this year across the country, where it already operates more than 300 centres.
EF, which was founded in 1965 and now has 52,000 employees in 114 countries, is also accelerating the development of its “hybrid” language tuition offering in light of the Covid-19 pandemic, said Toren, which forced it price-to-earnings multiple of just over seven will be paid for the firm.
The transaction comes at a difficult time for the UK training and apprenticeship market, which has been hampered by the coronavirus crisis as governmentenforced lockdown measures forced brick-and-mortar training centres to close indefinitely in March. The sale of another business in the sector, Lifetime Training, was cancelled last month after the number of apprenticeship starts dropped off a cliff due to Covid-19.
Training provided by Logistica providers to close for often indefinite periods of time.
Myanmar Strategic Holdings said that its purchase of WSE Vietnam will see the firm’s centres continue to operate under 10-year franchise agreements made with Wall Street English, the terms of which are “similar” to those in place for WSE Myanmar. As of 30 April 2020, WSE Vietnam, which focuses on the “premium” market segment, enrolled more than 6,000 students at seven centres in Ho Chi Minh and Binh Dhuong.
Myanmar Strategic Holdings said that the acquisition will involve a to close all of its locations and transfer tuition online.
His comments, which were made during an interview with China Global Television Network, came a month after it was revealed that rival organisation Wall Street English would wind down its China unit due to insurmountable operating conditions ushered in by the pandemic. Training, however, is “fully funded by the EU”, according to MBH, which added that the firm recently started to deliver online training to workers in sectors unrelated to health and social care.
MBH highlighted synergies between Logistica and other training companies in its portfolio.
“Logistica Training is a strong addition to MBH, supporting synergies in the education vertical with other businesses in the group, and widening our UK reach in regulated qualification delivery in health and social care,” said “nominal consideration” payable in cash, plus the assumption of certain liabilities, including “a commitment to service the existing WSE Vietnam students”.
The deal is expected to complete by July, subject to regulatory approvals.
Alain Thibault, chief operating officer of Myanmar Strategic Holdings and chief executive of WSE Myanmar, described the acquisition as “a tremendous opportunity to generate operational synergies and leverage the competencies we have developed over the years” since
EF plots China expansion weeks after pandemic prompted rival to shutter mainland operation
investing in WSE Myanmar in 2017.
“The Chinese education market has great potential, both in size, and in quality,” said Toren. “We think it is set to become the largest education market in the world and we will, therefore, of course continue to invest in this region. “We think this [pandemic] will be a defining moment that will strengthen China and we will see a strong rebound
Investment firm targets health and social care sector as it snaps up UK-based training provider
when all cities can return to normal.” Victoria Sylvester, managing director of Acacia Training. “Logistica Training holds contracts similar to other members of MBH which cover additional regions in the UK and by sharing knowledge, expertise and experience between the companies will support continued group growth.”
MBH said it had launched a ¤50 million bond programme, a portion of which will be used to fund its purchase of Logistica Training.
The firm is reportedly targeting between five and 10 acquisitions this year.
