Universities taught hard lessons in financial fight for survival

A fall in overseas students poses an existential crisis for higher education chiefs

As the Spanish Flu ravaged the US in 1918, the country’s universities were forced to adapt. At the University of Montana, lectures were held in the open. Students at Stanford University were fined for not wearing masks. But it wasn’t enough; data shows university enrolment plummeted as a result of the disease which killed more than 50 million people worldwide.

More than a century later, universities are once more attempting to adapt to the circumstances.

Online learning is the new normal, and experts predict that will not change for some time. But for the lucrative industry of higher education, the question is not how to teach students remotely, but how to survive.

The UK’s universities, which have grown dependent on profitable international students, now face an existential crisis as those revenues dry up. A deep recession could mean domestic students spurn degrees and the heavy debt that comes with them.

Universities face a £2.6bn shortfall in the next academic year, according to a study by the consultancy London Economics. Much of that black hole is attributable to the disappearance of overseas enrolment. The report predicts international students will decrease by 47pc due to restrictions on travel triggered by Covid-19.

This will cost the UK’s universities more than £1.5bn, the report says. The number of international students at UK universities has skyrocketed over the past decade. Chinese students attending UK institutions, for example, leapt 62pc between 2011 and 2019.

A further £612m will come from a fall in domestic students, many of whom will likely decide to try their chances in the jobs market straight away, analysts say. Enrolment from within the UK is predicted to fall 16pc.

The remaining £350m will come from a drop-off in entrants from the European Union, whose attendance will collapse by 47pc next year.

This leaves the country’s institutions in an extremely precarious situation, with three quarters of universities facing a “critical financial position where income only just covers expenditure”.

Evidence suggests the bleeding has already commenced. The University of Roehampton announced last week that it would become the first institution to introduce a voluntary severance scheme during the pandemic. 

At least 15pc of the university’s academic posts will be cut.

All told, the rapidly approaching hit to higher education could result in 30,000 jobs being lost at universities, with an additional 30,000 jobs evaporating in local communities. This will trigger a £6bn hit to the UK economy.

In the US, the situation is similarly grave. “Everything I’ve heard from the universities is that they’re forecasting, at best, no new incoming international students,” says Daniel Hurley, chief of the Michigan Association of State Universities. “That’s not just a one-year hit, that’s a four-year hit. Those students would typically be enrolled for four years, so that’s a negative on the balance sheet for several years.”

For many students, the prospect of taking on as much as £40,000 in debt at a time of global upheaval is unpalatable. This is made worse by the fact traditional drivers of university enrolment – the social life, networking and face-to-face teaching – have disappeared. “Unless they slash the fees, I’ll be joining the list of students who have deferred,” says one student due to start their degree in September. “There’s no way in hell I’m distance learning after these last few weeks.”

Being asked to pay for full tuition to simply watch lectures online is not appealing, another student adds. Deferrals – where a student who has a place at a university pushes their joining date back by a year – have already begun to soar.

More than 111,000 applicants, or one in six, who were due to start their degrees this year have said they will wait until 2021, in the hope that some semblance of normality will have returned to collegiate life. But other students, who were on the fence about going to university before the onset of coronavirus, are likely to be lost forever, experts predict.

Meanwhile job vacancies for graduates are drying up at an unprecedented rate:

In a desperate attempt to avert a wave of bankruptcies among universities, the Government stepped in last week to offer its support, although academics have questioned whether it will be enough.

While offering a glimpse of some of the ways that universities might restyle themselves to survive the pandemic, history also suggests one potential glimmer of hope.

During the UK’s last major outbreak of the plague in 1665, a young student named Isaac Newton had just started at the University of Cambridge.

Newton was forced to flee the city for a countryside retreat with other students.

He would later call the time he spent out of education his annus mirabilis, or year of wonders.

“For in those days, I was in the prime of my age for invention and minded mathematics and philosophy more than at any time since,” Newton recalled.