Fee rises for over­seas stu­dents ‘can’t be pushed much fur­ther’

THE (Times Higher Education) - - NEWS - Si­mon.baker@timeshigh­ere­d­u­ca­tion.com

English uni­ver­si­ties have been grow­ing their in­come from over­seas stu­dents by push­ing up fees rather than re­cruit­ing big­ger co­horts in re­cent years, a new re­port sug­gests.

But the up­date on univer­sity fi­nances from the Higher Ed­u­ca­tion Fund­ing Coun­cil for Eng­land – one of its last re­ports be­fore be­ing re­placed by the Of­fice for Stu­dents – warns that there is a “limit” to how far such fee in­creases can go be­fore re­cruit­ment is hit.

Over­seas fee in­come to­talled £3.9 bil­lion for English uni­ver­si­ties in 2016-17, ac­cord­ing to the re­port, a 5 per cent rise from 2015-16, ac­count­ing for 13.2 per cent of the sec­tor’s to­tal in­come.

But at the same time, the to­tal num­ber of full-time equiv­a­lent over­seas stu­dents went up by just 0.5 per cent com­pared with 2015-16, in­creas­ing by a lit­tle over 1,000 FTE stu­dents to 238,158.

It is pos­si­ble that a num­ber of uni­ver­si­ties took ad­van­tage of the dra­matic fall in the pound that fol­lowed the UK’s vote to leave the Euro­pean Union in June 2016 by rais­ing fees for over­seas stu­dents in the knowl­edge that price rises would not be felt as keenly in other cur­ren­cies.

How­ever, He­fce says that, even in this ex­change rate en­vi­ron­ment, fur­ther fee rises for over­seas stu­dents will even­tu­ally af­fect de­mand.

“Price sen­si­tiv­ity is a key fac­tor in a com­pet­i­tive global mar­ket, and there will be a limit to the ex­tent to which fees can be raised fur­ther, even with the cur­rent weak­en­ing in ster­ling,” the re­port stresses.

There is also a spe­cific ref­er­ence to the sec­tor be­ing “par­tic­u­larly vul­ner­a­ble” to shifts in de­mand from China, given that Chi­nese stu­dents now make up al­most a third (31.4 per cent in 2016-17) of num­bers from out­side the EU.

Other fig­ures in the re­port sug­gest uni­ver­si­ties with the low­est en­try re­quire­ments are al­ready be­ing hit by falls in in­come from over­seas stu­dents.

Spe­cial­ist and highly se­lec­tive in­sti­tu­tions saw above av­er­age rises in fee in­come from non-EU stu­dents in 2016-17 of about 8 to 9 per cent. But “medium-tar­iff” uni­ver­si­ties that have lower en­try re­quire­ments re­ceived only about 3 per cent more money from over­seas stu­dents and low- tar­iff in­sti­tu­tions had a drop in such in­come of al­most 6 per cent.

This may raise con­cerns that gov­ern­ment poli­cies that have ap­peared to be more friendly to re­search­in­ten­sive in­sti­tu­tions – such as a pi­lot on eas­ing visa rules – could be harm­ing other in­sti­tu­tions.

Mean­while, the re­port also draws at­ten­tion to large vari­a­tions in do­mes­tic stu­dent re­cruit­ment in the lat­est data on ad­mis­sions.

Although there was an over­all 0.8 per cent in­crease in un­der­grad­u­ate en­trants for 2017-18, ad­mis­sions dropped at 60 in­sti­tu­tions, with the av­er­age fall at these uni­ver­si­ties be­ing 8 per cent. And in terms of next year, it again points to higher-tar­iff in­sti­tu­tions – where ap­pli­ca­tions are up 2 per cent com­pared with falls of 5 and 2 per cent for low- and medium-tar­iff uni­ver­si­ties – far­ing bet­ter.

Over­all, the re­port says uni­ver­si­ties’ fi­nances “are sound over­all, and are more favourable than pro­jected in July 2017” but high­lights the “wide vari­a­tion” in per­for­mance, with 24 in­sti­tu­tions re­port­ing deficits in 2016-17 com­pared with 11 in 2015-16.

There is also ex­plicit ref­er­ence to the on­go­ing pen­sions dis­pute, with the hike in the Uni­ver­si­ties Su­per­an­nu­a­tion Scheme’s es­ti­mated deficit show­ing “the in­her­ent volatil­ity in the val­u­a­tion out­comes of the sec­tor’s pen­sion schemes. This poses po­ten­tially sig­nif­i­cant un­cer­tainty and risk to the on­go­ing fi­nan­cial sus­tain­abil­ity of HEIs,” the re­port says.

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