These could be PhD thesis topics in Geology or Hydrology but are, in fact, business questions vice chancellors have been wrestling with for years. With A level results in the UK out on the 17th August some might be about to find out. This summer has seen an exceptional storm of challenges to university and higher education recruitment, reputation and value.
But is the storm big enough to undermine the deeply embedded British social imperative among parents and teachers to steer students into 3 year university degrees with their £27,000 fees? History from 2012, when fees went up, suggests universities should be OK.
But the public atmosphere is poisonous. From the apparently robust financial and policy settlement of the Higher Education and Research Act 2017 passed on the final day of the last parliament, just 3 months ago, it has all been down hill all the way.
Labour’s populist campaign promised to abolish fees, fracturing the political settlement. Its unexpected vote share revealed middle class/squeezed middle discontent about debt, deep enough and serious enough to spook the Conservative government.
Lord Adonis, an architect of fees, lost patience with vice chancellor pay and lack of reform and joined David Willetts, another former minister, in the fiscal panic about student loan repayments. A system which underpins the fees model. All of which matters, especially to universities heavily invested and with debts to service and the elephant in the room of the University Pension deficit. For them a predictable, strong and stable, income is essential.
The TEF publication knocked the shine off some Russell group teaching reputations but cheered others up. Over the summer The Times and Sunday Times have run almost daily stories questioning university education, governance, salaries, extremism, Bentley’s in Bolton, pensions and more embarrassment on gender pay. Longitudinal Education Outcome (LEO) data cheered the Russell Group up again on graduate earnings, but were denounced by some and used to score points where it suited them.
Universities and colleges knew that applications were down, and now know it was 4% (with some numbers among UK 18 year olds holding up). Universities knew that nursing applications were down – which is serious because there are so many of them. They knew that European applications were affected by Brexit, but it does look bad. On international students they can only be grateful that President Trump is making a bigger hash of attracting students than the UK government.
All this they knew and have been preparing, planning and acting to address. Vice Chancellors have taken on board basic lessons from sales and marketing, namely that the key is to get the buyer to a definite “yes” where they commit absolutely to “buy” without leaving themselves alternative options.
Not that such language is actively promoted. Universities, for instance, don’t offer “discounts”. Nothing as tacky as the perpetual 50% discount offered by DFS. Instead there are “bursaries and scholarships”, most of which offer money off in ways that just look like a discount, without anyone being able to see the real yield.
On undergraduates it is now several years since Birmingham University broke ranks with the implied merit system of UCAS and made “unconditional offers” to tie enough students to saying “yes” to be sure of its market share. Again I am sure it was never expressed like that. Now everyone is doing it one way or another. When will someone break ranks on headline fees? Some of the newer universities, with leaner systems and lower overheads and gold star teaching must be tempted.
Revenue is not all about undergraduates, the MBA and MSc market has boomed for over a decade, pouring money into university coffers. They attract many overseas students, at premium prices higher than £9000 per year, and any trouble on that front would hit some institutions very hard indeed.
The next 8 weeks will see one of the biggest and most intense marketing and sales operations in the UK and it won’t be Ryanair offering 1 million seats for £1 for November and February, it will be universities trying to sell £27,000 courses to teenagers and their parents. This will be conducted in a sea of league tables, Research Rankings, TEF results, newspaper adverts, web and social media contacts. Colleges will be using bursaries, scholarships, buy one get one (MA) free offers, on top of the traditional hooks of guaranteed 1st year accommodation. There will be personalised touches via telephone calls from real academics and social media networking that would have been unimaginable even 10 years ago.
But this summer also sees a push by alternative providers, like the University of Buckingham with its Gold rated teaching and 2 year degrees, and the unpredictable impact of the new degree level apprenticeships. Will apprenticeships cannibalise traditional recruits or bring a new cadre from the world of employment who have been missing for a decade since part time HE and a chunk of the OU was strangled? Not to be forgotten is further education, where 11% of degrees are taught, some in collaboration with universities, but some in scratchy competition.
In addition the government have opened up postgraduate loans, which should help some. Finally universities can reach for their ace up their sleeve, independence and academic freedom and take an optimistic view of an applicants grades, think of widening participation, social justice and admit candidates on lower grades.
But this years students are still applicants, not binding contracts. Like the online entrepreneurs and telecoms companies in the 2000-2001 dotcom bubble the business was booked ahead, looked great, looked predictable but one day the buyers just didn’t turn up, didn’t sign on the line. Not all the customers went missing, but enough to burst the illusion of perpetual prosperity. The weak were found out, were deserted, had a run on their reputations, were damaged and started to topple.
The dotcom bubble burst was actually a two year slide, but the banking bubble turned out to be a cliff edge when, for RBS, it was bailout or bust in days. I don’t think we will see that. What we will see, and are seeing already, will be ruthless pruning of hard to fill courses, even whole departments, redundancies and changes of mission. Sustainability strategies will be central, is it better to be smaller, predictable, focussed and surviving than big, generalist and vulnerable.
Universities do have one robust advantage. They already have a couple of years of business booked into the system from existing students. Most claim to have three years to adjust. And if those adjustments have to be painful then they will look more like mergers and transfers; specialisation; efficiency improvement; down sizing or regionalism than closures and bankruptcies. The student visa pains of London Metropolitan University in 2012 reminded us how the university system can pick up and absorb displaced students.
But it is going to be a roller-coaster ride. One of the signs of stress in the telecoms market was the biggest phone companies suddenly trying to sell top end digital telephone systems to very small businesses. You couldn’t say there was anything wrong with it, it was unexpected, just business doing what business does, chasing contracts and expansion. A bit like seeing Russell Group universities in clearing.