Coronavirus to impact university funding

The anticipated sharp decline in international srudents will greatly reduce univerities' tuition fee income.

Aimee Seddon
8th April 2020
Image: Pxfuel
With the UK still in the midst of the current coronavirus crisis, there is concern over how the funding of universities will be affected by the outbreak. The most significant worry is over a reduction in tuition fee income, with coronavirus being likely to affect student numbers.

This is especially the case for international students, as Debbie McVitty, editor of Wonkhe, states  “There will almost certainly be a sharp and significant decline in international student demand for entry next year, even if the UK is not still in lockdown in September.”

McVitty goes on to explain the findings of a 2017 London Economics Report commissioned by HEPI which found that global GDP, exchange rates and commodity prices were amongst important determinants of international demand for UK higher education, all of which are expected to be affected by the coronavirus pandemic.

Indeed, a British Council survey of over 10,000 Chinese students showed that 63% of those who had applied to study overseas, 98% of which planned on studying in the UK, are considering delaying or cancelling their plans to study abroad next year, or have already done so. This is worrying for UK universities as China is by far the largest source of international students.

There is also concern over whether UK-domiciled student numbers will fall. A joint UCAS and YouthSight survey, posted on 3 April, found that 86% of A-level students who responded were continuing with their application, despite disruption caused by coronavirus. However, this could change as the crisis continues.

A reduction in tuition fee income will affect each university differently, with some institutions relying more on fees than others. Writing for Wonkhe, Martine Garland from Aberstwyth University Business School, explained the importance of income diversification. This means that institutions should not be overly reliant on any one source of income.

44.73% of Newcastle University’s funding comes from tuition fees

According to Garland’s analysis, the top three most balanced universities are Imperial, University College London and Oxford, with tuition fees constituting 29%, 37% and 13% of their income respectively. In comparison, some universities, particularly those created after 1992, rely mainly on tuition fees. For instance, tuition fee income at Suffolk University makes up 87% of total income, De Montfort University 85%, and The University of Sunderland 84%. Currently 44.73% of Newcastle University’s funding comes from tuition fees, ranking it number 13 out of 102 institutions in terms of income diversification.

It would be expected that those with a higher percentage of income coming from tuition fees will be most affected by a drop in numbers. However, Garland notes that it is the amount of international students a university has which might make it more vulnerable to loss, with international students generally paying a much greater fee. According to Save the Student, for the 2018/2019 academic year, annual fees for international undergraduate students were as high as £58,000 for medical degrees, and £55,000 for postgraduate MBAs, although the majority of international fees for both undergraduates and postgraduates fell between £12,000-£19,000.

Whilst many post-1992 universities rely more on tuition fees, they generally have a lower number of international students. Using the aforementioned case studies, only 8% of the total student population at Suffolk are non-UK domicile students, whilst the figure is 20% for De Montfort and 19% for Sunderland. This contrasts with Imperial at 53%, UCL at 48% and finally Oxford at 33%. These universities may depend less on fees, but are likely to see a larger drop in tuition fee income overall.

When considering whether enrolling more UK students will help balance the loss of international fee income, Garland comments: “the potential loss of an international student leaves a hole in your finances that is not easily plugged by a domestic student (or even three domestic students in some cases!)”

44.1% of postgraduates at Newcastle University are international students who pay significantly higher tuition fees than domestic students

According to the Newcastle University website, only 19.4% of the student population are from overseas; however, there are significantly more at postgraduate level, with international students making up 44.1%. A drop in international postgraduate students could thus cause a particularly large dip in fee income for Newcastle. For example, for the Chemistry MSc course, 2020/21 fees are £10,950 for UK students and £23,400 for international. This means that for every one international student lost, the effect of two UK students is felt financially. According to HESA, the income derived from international fees at Newcastle University is the 20th highest in the UK.

Asian students make up 14.6% of Newcastle's total student population, constituting 57.8% of all international students

Garland also notes the significance of where these international students come from. As coronavirus has affected countries to different degrees, universities with more geographically balanced international student portfolios will be less vulnerable. She argues that universities with a greater reliance on students from Asia may be particularly affected by the coronavirus pandemic. Liverpool University has the largest dependence on students from Asia, where they make up 72% of international students. For North East universities, Durham is the most dependent, with 61% of international students coming from Asia. Newcastle's nearly 4000 Asian students make up 14.6% of its total student population, which constitutes 57.8% of all non-UK domiciled students.

In a different Wonkhe post, Debbie McVitty explains the other factors affecting university finance. For instance, with restrictions lasting into summer, the commercial income from summer student accommodation, conferencing and catering will also suffer. Newcastle University, for example, has waived third term rent payments for all university-owned accommodation. Universities UK estimates that nationally around £600m could be lost from summer commercial income.

McVitty also writes that there will likely be a loss of research income, particularly for those universities who work closely with business. She further states, “There’s also the potential for increased rates of non-continuation, and a greater risk than usual – to put it mildly – of students bringing claims for compensation relating to services not being delivered as expected”.

With income streams set to look very different for universities in the forthcoming year, Mcvitty says “In good times, financial sustainability creates the conditions for universities to serve the public. When that sustainability is threatened, so is the public good of universities.”

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