Universities’ reliance on foreign revenue exposes them to financial risk – report

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Universities’ reliance on international student fees to fund teaching and research puts them at financial risk, according to a new report.

The Commons Public Accounts Committee report also finds that the proportion of universities with an in-year deficit has increased in each of the past four years, from 5% in 2015/16 to 32% in 2019/ 20.

He adds that some universities are “heavily dependent” on income from international students to subsidize their research, which could put them at financial risk if assumptions about future numbers of international students turn out to be optimistic.

The report states that universities survived the pandemic thanks to government financial assistance, the resilience of individual providers, the fact that no large-scale tuition reimbursement was required and the absence of interruption of international student fees as feared. .

But he adds that continued financial pressures could mean universities risk failing, closing campuses and courses or reducing the quality of education.

PAC said protections for students needed to be strengthened and it was concerned about declining student satisfaction in recent years, with 54% of students saying their course was not of good value- price in 2021.

PAC warned that the Student Union had not made “sufficient progress” in tackling the long-term challenges facing the sector, such as pension fund shortfalls, inflation, rising costs, the tuition cap freeze and the impact of the policy. reforms such as minimum requirements for access to student loans.

PAC added that the Department for Education did not hold the OfS accountable for the financial health of the sector, with 80 institutions currently in financial deficit (32% of all universities), 17 of which had been in deficit at the time. past two years, while 20 for three or more years.

PAC said the DfE needed to create a set of robust performance measures, including feedback from universities, to hold the OfS accountable for its work.

He said protections for students were “not strong enough” in case universities faced financial difficulties.

While universities must put in place a student protection plan to deal with the potential impact of financial risks on students, the report says the OfS has approved a “number of student protection plans which it considered inadequate” so as not to delay registrations.

He adds that the OfS must ensure that all student protection plans are ‘fit for purpose’ and ‘clear enough’ for students to make informed decisions.

PAC said the financial stability of some universities was threatened by their “heavy reliance” on the ability to increase the number of international students, including to subsidize their teaching and research.

It says that in 2019/20 there were more than 340,000 overseas students at English universities, almost half of whom were from China or India, with many institutions’ financial forecasts assuming growth in these numbers at the current time. ‘coming.

These have already been judged by the OfS as overly optimistic, the report says, while an over-reliance on international students could conflict with Home Office plans to control migration and the UK’s “wider geopolitical interests”.

The report added that the DfE had “failed to properly assess” the current and future financial impacts on universities due to the awarding of teacher-assessed A-level grades during the pandemic, resulting in “substantial inflation of grades in 2020 and 2021.

This meant that more students could fill places at higher-fee universities, but other institutions were undersubscribed with a loss of revenue.

PAC said the Department and the OfS should consider the financial impacts on providers of changes to the number and profile of domestic students in the short, medium and long term.

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