£9k for what? - Universities set to struggle

Posted on Jan 26, 2024. by NTI

Alarm bells have started to ring regarding the sustainability of long-term funding for the University sector. This is compounded by a number of different factors including and most notably, that fees have been frozen at £9,250 since 2017. The chief executive of Universities UK, Vivienne Stern, has previously stated that the “path we are on is unsustainable”.

Experts and analysts warn that we could see a number of universities begin to fail this year. Many argue that with lower funding the university sector is inevitably set for worse staff-student ratios, worse conditions and facilities and a reduced incentive for investors to invest.  Turnaround specialists, Buchler Phillips, report that Universities are “heading for a financial iceberg”.  

Having personally worked at a number of universities it is evident that many students are already feeling the pinch with the existing fee structure and that universities are struggling to entice more domestic students. Increased competition from alternative independent institutes/business schools as well as apprenticeship schemes offering a lucrative and practical work-based alternative have also resulted in a lower number of domestic students applying to university with many students asking the question £9k for what? 2023 saw a 10,000 drop in university applications compared to the previous year.

This number is set to further decline due to several reasons including countries such as China and India investing more into their own domestic higher education system.  Historically overseas students from Asia would contribute a substantial amount of funding and in effect subsidise domestic students by a reported £2,000 per head. 

Brexit has further exacerbated the position by essentially cutting the number of EU students in half and cutting off EU funding streams worth £800mn a year to UK higher Education institutes between 2010 and 2020. Universities have, therefore, become more reliant in overseas students but with numbers set to drop as countries invest more in their own higher education systems matters look set to worsen for UK Universities.

Previous governments have also been critical of the expansion in the HE sector with a number of newer less prestigious universities and ex polytechnics offering “low value” degrees. Many have argued that to secure funding from students, some universities are offering places to students who are ill prepared to study at degree level. Reports have emerged that many students are being offered places at university despite their poor command of English and literacy.

Another blow for universities come in the form of regulators and the government indicating that there is no “bail out” and ongoing litigation from 100,000 students seeking compensation from universities for their handling of the Covid19 pandemic. Thousands of students were locked down and their teaching experience reduced to online lessons for long periods of time.

With the cost-of-living crisis, inflation, Brexit, ongoing strikes by teaching staff and a lack of significant funding matters seem set to worsen and it appears inevitable that some universities are set to endure a difficult year.

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