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Adapting to change, the impact of Brexit on HE

All of a sudden even the most resistant university professor will need to acknowledge that market forces exist, says John Holden

Posted by Rebecca Paddick | July 01, 2016 | International

I would guess at this moment that there will be many University Vice Chancellors, head in hands, fretting about the possible impact on their finances. Although of course we are still in the situation where  “anything can happen” it is difficult to see any positives for Universities coming out of Brexit and that in turn impacts on private providers such as ourselves who have less of a state support system as a cushion and are already exposed to the full brutality of the market. 

Universities depend primarily on overseas students  to balance their books. The further down the Ranking Tables you get the more difficult recruitment becomes. Universities have already had their non-EU numbers crushed by an increasingly hostile UK visa regime and the first refuge point from that was the windfall of the influx of Chinese students who got “waved thro” past the visas constraints. But now that particular vein of gold is depleting and just as it begins to stall, the final piece of fertile ground for overseas student recruitment is under significant threat. The Brexit!

Much of the slack in overseas student enrolments was taken up by the EU wide student “soft loan” scheme which Universities turned to and pointed their marketing activities at. Now what will become of that particular pipeline? No one knows. The nearest you can get to certainty is that the loan scheme as we know it will be at the very least reinvented but it is almost impossible for Government to find a soft funding replacement that replenishes the coffers of the weaker Universities.

Already some Universities are investing in various overseas adventures, franchising their programmes for delivery in local markets at massive discounted prices to an extent that inevitably management and quality issues will come back to haunt them and UK reputation generally

And then there is the research funding. Another can of worms. UK University research is truly world class and acknowledged as such. European partners welcome and sometimes depend on UK University participation in their projects. If the various EU funding  “feeding troughs” disappear there could well be crisis at even the more financially stable institutes. The simple question will be, where are our customers coming from? The marketing challenges become the major issue, this in a market that will be oversupplied within a diminishing customer base and a rising cost base.  

All of a sudden even the most resistant University Professor will need to acknowledge that market forces exist and thereby consider things like brand, value for money, USPs, product placement and innovative offerings. The danger will be for those Universities that simply throw investment at a business model that cannot and will not work as all sorts of unanticipated market issues begin to unfurl. Already some Universities are investing in various overseas adventures, franchising their programmes for delivery in local markets at massive discounted prices to an extent that inevitably management and quality issues will come back to haunt them and UK reputation generally. There is also a rush to online delivery often clunky and ill thought through with a business model that cannot hope to replace campus revenues.

Government can of course act to push for lower student entry standards using their “widening participation/social inclusion” mantra. This would almost certainly mean reinventing the loan scheme and given that there is an estimated 50% attrition on loan repayment, another drain on tax payer resources. Questions would also need to be asked about quality of both input and output. Some Universities are looking at private funding through Bonds and the like. The jury is still out. Privatisation is another possible Government response with a White Paper in progress but now delayed. Nothing much there to give hope or respite! 

So market forces will need to take hold. Price competition, inducement offers, investment in retail marketing with its high customer acquisition costs. We in the private sector, already giving remarkable value for money are helpless in the face of such uncertainty. The only certainty we have is that as long as we are customer facing and structured to cope with market nuances at least we do not feel the same threats, and, as 60% of our students are international, we may even get a bit of short term benefit from a weaker £!

John Holden is the founder of Online Business School.

W: www.onlinebusinessschool.com

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