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The Future of Tertiary Education

Sarah Jones • 29/07/2020
Universities are facing an unprecedented shock to the system arising from COVID-19. What happens in the next 3 months, and how well universities can adapt, will define the severity of impact on the whole academic year 2020. COVID-19 will have delivered either the greatest financial impact in memory, or a bump in the road and resulted in workable delay to universities’ plans.  

A monumental effort is underway at universities to come to terms with the main issues arising from the pandemic. This is only a short blog, but here are 3 fundamental strands of activity: 

International students  

These students are behind with their preparations and there are worldwide travel bans. Students have faced delays to exams, English language preparation and visa processing. The machinery is turning back on, but slowly, and it’s now a question of time and logistics. Those 17% of full-time non-EU students bring with them more than 29% of the expected tuition fees for the year - in real terms that means £5.6bn of tuition fee impact at stake and more than £20bn of positive economic impact to the UK. Some internationals are already here, continuing or unable to leave since lockdown. Perhaps new students will arrive by September, there is talk of planes being chartered to get them here. Perhaps they will arrive for a January start so that a whole year is not lost.  

The Russell Group and top universities are most affected by this, as they are most highly reliant on international tuition fee income and the consequent impact on research budgets. Student number control has been revived to mitigate against universities making up ground by over-recruiting UK students.  


What does social distancing mean for a campus… and for the student experience?  

Large lectures will be delivered online for the foreseeable, and campus facilities such as cafes and social spaces may be limited. Not all students may be allowed on campus at any one time. Small groups could be taught in person. But blended learning does not offer a breadth of interactivity, and there is only so far an online approach can go with science, health, engineering and other hands on degrees. The Competition and Markets Authority have put a shot across the bows of universities to make it understood that no one should pay for something that doesn’t deliver what they signed up for. Universities are worried that straying too far into an online/distance delivery model could result in students asking for their tuition fees back; a further and very serious financial implication.  

Importantly, an online experience is deeply unattractive to an 18 year old, particularly one who – by September – will have spent more than 6 months cooped up with the family. So much new research conducted during lockdown has confirmed this obvious point - that there really is no substitute to being present at university. Previous potential disruptions to the sector such as Massive Open Online Courses (MOOCs) and even apprenticeships have had little impact on young people’s study habits. In fact, following the rise in tuition fees – which also saw fees paid back after the fact – more young people studied away from home than ever before to become immersed in the whole student experience.  

The blended learning approach has to be finely balanced. Health, safety and social distancing will dampen the university experience, but it’s imperative that the experience remains attractive, for fear of students deferring to next year. Deferrals are a huge concern – student numbers are rising and there is simply no capacity next year as a bumper intake of new undergraduates is expected in 2021 (due to the growing population of UK 18 year olds and the rising levels of participation). So far UCAS applications for 2020 are at a record high and there is no real evidence that students are deferring, but time will tell.   

The residual effects of COVID-19 itself 

These effects are many and varied. What if there is a significant winter spike in cases? Survey data has confirmed the science – young people are less at risk, and many aren’t worried. But staff may be at risk and everyone needs to feel safe. Buildings will be more expensive to run this year, and less well occupied. The changing role of the estate may evolve even faster. 

There is worry that the system of awarding A-levels this year may lead to a number of UK students wishing to sit actual A-level exams in September. Predicted grades are fraught with complexity and inequity. This could delay some of the UK undergraduates until at least January.  

There is worry that fewer students may want accommodation. The sector granted more than £500m in rent waivers after Easter 2020, denting the certainty that providers had in the income stream. Happily, room bookings are stronger than last year, and students seem intent on travelling to university. Whether people will actually arrive is yet to be seen, and may greatly depend on the status of the virus by term time. Students will have to join new “households”, distanced from their families, follow stringent health guidelines and may need more support with mental health during this time to cope with what is already a huge life change.  

Certainty of income is something the sector has become used to, and this disruption is the most serious threat that universities have faced in at least a generation. The IFS has reported that there are 13 universities who are at deep financial risk of insolvency at this time. They are not those who have taken the largest hit to their income, but those who have insufficient reserves to deal with the storm, compounding existing issues such as pension liabilities. We know that staff restructuring exercises are already underway, in an attempt to mitigate the effect of financial loss. The concept of mergers has also been raised - a deeply unattractive and unworkable notion in the past, but perhaps new models will be considered.

As well as pandemic threats, there are also opportunities. Economically, a recessionary jobs market is a hostile place for young people. So far under COVID-19, the young are most likely to have been furloughed or lost a job. HEPI (Higher Education Policy Institute) highlighted recently that in each recession postgraduate numbers have risen. We hear from some university clients that there has been an uptick in postgraduate taught course applications as students use the time wisely to get ahead in future.  

'Survival of the fittest' is the key to success (as always!) 

Each week, we gain a datapoint from a trusted source such as UCAS, or new survey results emerge to describe the sector. It’s our job to look behind these numbers and pick our route through the data, and to help our clients navigate the next few months and beyond into the longer term strategy. We are regularly discussing these issues with our clients and have worked side by side with them through this time. As the weeks pass we gain further signs of good news. 

Thoughts about the value and role of campuses and residences have been brought to a head by the issues in this paper, and we have advised clients on many angles; from scenario modelling recruitment to releasing value from residential estates. Preparing for rising student numbers is also key for many. The future of universities may be changed markedly by this period in history, but the student experience remains on campus and adapting to deliver in these uncertain times is the focus right now. 

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