UK University Finances Teetering on the Edge

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A number of UK universities find themselves on the brink of financial collapse at present, according to a recent report sponsored by the Guardian. This comes in the face of potential tuition fee reductions, rising staff, and pension expenses, and the uncertainty caused by Brexit.

The report noted that many respondents criticised recent government policy changes such as a lifting of caps on undergraduate university entrants and discussions surrounding a shift in third-level tuition fees. Respondents, primarily senior figures in UK university administrations, describe the lifting of caps as advantageous for elite universities who experience a heightened demand from applicants but that it leads to many lesser-known institutions facing a deficiency in student numbers.

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This measure, which originally intended to encourage further progression to third-level education for those from disadvantaged backgrounds, may instead hinder smaller universities’ ability to function.

Vice-chancellor of the University of Northampton Nick Petford stated that it is “[ironic] then that a move aimed at giving students more choice is now penalising financially those most closely engaged with social mobility.”

Moreover, a ‘demographic dip’ in the potential pool of domestic UK students seeking to pursue third-level education further threatens university finances. This drought in student supply, expected to last until 2022, further strains the coffers of universities already struggling to compete against world-renowned, research-intensive institutions like Oxford and Cambridge.

It is becoming increasingly important for universities to tap into the international student market in order to replenish their revenue funds, given the higher tuition fees they expend. However, Brexit stands as a potential obstacle to international students who are considering studying in the UK. During last year’s general election, Theresa May’s Conservative Party openly campaigned for a policy of restricting student visa access to UK universities.

Other consequences of Brexit on the university sector include the potential negative effects it harbours for staff faculties. Despite the possibility of a depletion in the rate of student applicants from the EU following Brexit, there is a stark possibility that EU nationals working in UK college faculties may decide to pack their bags and leave. According to Jenny Brown, Chief Operating Officer at consultancy firm Grant Thornton, “it is not just a [student] demand issue facing universities at the moment: it is a supply issue too.”

This loss of prestigious international academic staff could thus hamper a university’s ability to acquire much-needed research funding thereafter, further worsening the financial situation. There is also a fear that universities will miss out on EU-wide research grants with colleges like London School of Economics and King’s College London, which are research-intensive and have high proportions of EU students, being particularly hard hit. This is noteworthy, given the already significant debts accrued across the sector in performing research. The UK Financial Sustainability Strategy Group for higher education reported that “data for 2015-16 show a £3.1 billion shortfall in funding the full economic costs of research across the sector.”

The 2010 coalition government of the Conservatives and Liberal Democrats oversaw hikes in third-level tuition fees which had been fixed at £9,000, which was then raised to £9,250. Yet, for less research-focused institutions who have less access to alternative income sources, these fees barely cover teaching costs. At present, there are discussions within the Conservative Party to alter this by allowing universities to introduce variable fees. This would involve basing tuition fees off students’ prospective income after graduating, though speculation remains regarding implementation. Those in the academic community are less than optimistic, however, with one university vice-chancellor commenting that “if it [tuition fees] was reduced by even £1,000 with no infill from the [government], then you would see universities really struggling almost immediately.”

 

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