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What will universities do to soften the financial blow?

By IOE Editor, on 26 March 2020

By Professor John Jerrim

There can be no doubt that the ongoing coronavirus crisis will have a major economic impact upon many industries – universities included. As a sticking plaster, most UK universities have moved to online teaching for the rest of the academic year, with it now almost certain that doors will not physically re-open to students until after the summer break.

One of the greatest potential impacts of the current situation is that the bottom may well fall out of the international student market, at least temporarily. Indeed, with international travel now very restricted, it is hard to see how many of UK universities best customers from the East Asian market would even be able to travel over.

And, indeed, there may well be a lot less demand for international students to study in the UK. If the country remains in the grips of this pandemic for more than a couple of months – or if there is a risk of a second spike in cases over the winter – who could blame foreign students for wanting to stay away?

As mentioned in a Sunday Times article over the weekend, this is likely to further damage some universities precarious finances. Particularly as it has been estimated that international students are worth £20 billion to the UK economy, and over £4 billion to London alone.

How might universities respond?

I can see three possible ways that universities might respond (though there may well be more).

  • First, as we have already seen, universities may rush to move their teaching online to soften the blow. This could be for the entire 2020/21 academic year, or just for the first semester, depending upon how this pandemic plays out. It would allow for second the third year undergraduates to be able to continue with their studies while offering a distance-learning start to those who are newly enrolled.
  • Second, we may see a clearing bunfight. Faced with a drop in international student numbers – and excess teaching capacity – universities may look to partially offset the impact by increasing offers to domestic students. This would likely lead to a race to the bottom, with grade requirements at leading institutions being slashed to entice more domestic students in. In fact, there is evidence that this may already be happening, with some universities turning conditional into unconditional offers, in order to lock students into places. The effects then get pushed further down the chain, with lower-ranking universities also pushed into financial trouble.
  • Finally, with reduced demand for teaching, universities may look to cut costs. If they believe that the impact is likely to only be temporary – affecting only the 2020/21 academic year – then one option may be offer (or enforce) reductions in the hours of staff. For instance, all full-time members of staff could temporarily be asked to work three days per week. This would have the benefit of cushioning universities from the immediate financial blow while being able to quickly increase capacity once things return to normal.

Of course, none of these situations are ideal. But we are where we are, and universities will have to respond quickly. It is likely that they will see how the next couple of months play out before taking any radical action. Though it is starting to look increasingly likely that some tough choices will have to be made.

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