When social distancing restrictions were put in place in March 2020, universities expected a backlash. Without the social elements available, expectations of a mass deferral from prospective students were high. If the job market had continued to thrive, this might have come to fruition.
Instead, hefty demand for education and re-skilling have driven record university plications. A-level teachers handed out inflated grades, which prompted a record number of applicants and university place acceptances in the 2020-21 academic year.
Universities enrolled the help of online platforms and recorded lessons to continue teaching while abiding by social distancing measures.
International students unable or unwilling to travel to an isolated experience in university halls of residence benefited from technology that allowed them to continue with their studies.
However, the end of the UK’s transition period for leaving the European Union brought with it the end of freedom of movement. EU students now face international student fees, which are significantly higher. As a result of this, coupled with travel restrictions, a significant fall in international student numbers is expected in the current year.
With financial pressures mounting amid a spike in demand from domestic students, the threat of industrial action by staff facing pension cuts is adding further complications. Financial support from the government has prevented a round of bankruptcies. However, universities have been forced to become increasingly entrepreneurial as a shortfall in state funding has continued to lead to frictions for educational organisations.
Falling funding
During the COVID-19 pandemic, the government brought forward £100 million in research funding and advanced payments on tuition fees of £2.6 billion to ease cash-flow problems. Without this funding, up to 13 different universities were facing insolvency. Further cuts to research funding and an estimated shortfall of up to £17.9 billion in pension funds have resulted in widespread dissatisfaction and threats of industrial action by staff and lecturers.
University operations are anticipated to be disrupted over the coming two years, with potential walkouts by staff leaving students feeling even more disheartened by limited face time with their teachers and lecturers.
With a new points-based immigration system now in place, on top of issues surrounding pensions, acquiring and retaining talent for universities is expected to become a serious issue over the coming years.
Grade inflation
A-level exams were cancelled for both the 2019-20 and 2020-21 academic years, replaced with teacher assessments, mini-exams and coursework. Predictably, teachers dished out higher grades to students, pushing more through to higher education. Up to 44.8% of students in England, Wales and Northern Ireland received A* or A grades in 2021, equivalent to a 75% increase since conventional exams were taken in 2019.
UCAS has reported a record number of confirmed first-choice places on full-time undergraduate courses in 2021, up 8% on the previous year.
Universities have struggled to cope with a 10% increase in 18-year-olds applying for tertiary education in 2021 due to higher grades and a demographic bulge. As a result, competition for prospective places for popular universities and courses has risen significantly.
While this is expected to support revenue streams for universities, operational capability is likely to be stretched. Additionally, some universities are expected to operate at a loss, potentially limiting the number of establishments over the coming two-year period. By offering cash incentives and free residency, some universities have tried to encourage more students to defer their education for a year to limit demand and support the provision of better-quality education.
EU applicants
EU students starting studies in the United Kingdom after 13 July 2021 must now pay international student fees. London School of Economics (LSE) expects 35,000 fewer EU students enrolling at UK universities in 2021, equivalent to a 57% drop in EU students entering UK undergraduate and postgraduate courses. LSE equates this to approximately £62.5 million in lost revenue in the current academic year.
A combination of COVID-19 travel restrictions, higher fees and greater bureaucracy for EU students is expected to deter international student enrolments in 2021-22 and 2022-23.
A shortage in quarantine rooms for students arriving from red-list countries could lead to an even deeper loss in revenue by making international students unwilling to enrol. High competition from universities offering a wider range of courses in English in other countries at a far lower price is anticipated to pose a significant threat to UK universities in coming years.
International markup
The reputation of a British education is expected to continue supporting demand from international students. A fall in EU student applications was offset by a 14% rise in non-EU applications for the 2021-22 academic year.
Universities will continue to focus on non-EU international markets over the coming years, as they offer a significant opportunity to drive revenue growth.
A report co-published by the Higher Education Policy Institute and Universities UK International, using research from London Economics, has indicated that one year worth of international students is worth £28.8 billion to the UK economy, while their use of public services equates to approximately £2.9 billion per year. It is therefore unsurprising that 50 of the largest universities clubbed together to charter flights to transport 1,200 Chinese students into the country for the start of the 2021-22 academic year and ensure their international fees.
The majority of universities have committed to continuing teaching online in order to scale up their operations and deliver education to a geographically fragmented market of students, allowing for healthier margins for these organisations. This has been followed by an outcry from students paying full fees who feel they are being short changed by institutions that are becoming increasingly commercialised.
Conclusion
Universities have several hurdles to surpass over the coming two years. Dissatisfaction among students, staff and lecturers is expected to be fuelled by a reduction in funding and higher fees.
Online teaching will continue to support institutions amid continued uncertainty surrounding the COVID-19 pandemic. However, many universities have invested in expanding their facilities, as a competitive job market and rising digitalisation is expected to fuel demand for higher education among all age students hoping to keep up with the technologically advancing economy.
Universities will be faced with the need to keep on the front foot of technological advancement and continue providing students with relevant education to keep them engaged. However, the investment required is expected to lead to difficulty in balancing the books for many organisations, heightening fears of insolvency among universities.
As a result, universities are expected to continue investing in the digitalisation of their operations, modernising their capabilities while scaling up the supply of education to a growing pool of students paying ever higher fees.
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