As universities continue to grapple with their “broken” funding model, some are turning to the international market.
A recent Times article revealed that over the past five years, the number of international students has increased by 50%. The Times data revealed that Russell Group universities, including prestigious institutions like University College London, Imperial College, and the London School of Economics, now receive 57% of their fee income from overseas, up from 49% in 2016-17. Some institutions such as Glasgow and specialised ones like the Royal College of Art and the London School of Hygiene and Tropical Medicine, are receiving over 80% of their fees from international students.
Evidently, trends are suggesting that universities are fast becoming reliant on international recruitment. While we know that with tuition fees being frozen at £9,250 for the last seven years universities are in a position where they must look at alternative forms of income – we’re not sure that this is the answer.
While the benefits of international students certainly are apparent – e.g. opportunities for cultural exchange and understanding, contribution to the local economy, enhancing the global reputation of universities to name a few – there remains several cautionary factors.
Resource strains in having to accommodate many students, language and communication barriers, cultural adjustment issues (affecting mental well-being), competition between local and international talent (and the risk of losing local talent). But perhaps more important in this case, is the risk of dependency.
Universities that overly rely on revenue from international students may become financially dependent on this source of income. And handing over control to a volatile and changing market – where fluctuations in international student enrollments or changes in government policies regarding immigration and education could pose financial risks to these institutions.
At Caja, we believe strongly in the diversification of income for institutions. In fact, through our research and client portfolio, we’ve identified that our baseline criteria for measuring risk around financials are whether a university has a 3–5-year financial plan that recognises investment opportunities for future growth, with diversified income streams and can deliver financial sustainability. Those universities relying on international student income alone we know are within our low maturity range and at risk. It’s for this reason we welcome offering our UniAssess tool for institutions to sample.
Whether a desperate effort to find revenue, or a strategic move – there’s much debate to be had. And to quote Rachel Hewitt – “On a longer-term basis we probably need to be looking again at the funding model because the way it’s operating at the moment isn’t sustainable.” – we couldn’t agree more.
To find out more about our UniAssess tool, email Andy.woodcock@cajagroup.com
