The Great University Con

by David Craig

  For many graduates, the return home is bound to be a sobering experience, losing the financial freedom and independence of undergraduate study. It will be the first time that reality really starts to intrude on the narrative they have been sold. Rather than providing a Brideshead Revisited key to the adult world, graduate debt and its monthly repayments are more likely to delay the transition into independence for most graduates. As the Higher Education Commission put it in 2013: “We are deeply concerned the Government may have created a loan payment system where, for example, a teacher is unable to secure a mortgage at the age of 35 because of the high level of monthly loan repayment.”427

  But, as well over 200 of our MPs own one or more buy–to–let properties, any increase in the number of graduates forced to rent, rather than buy, their homes would only be a benefit to our well–paid, well–pensioned, generously–expensed parliamentarians.

  PART THREE: WHAT NOW?

  CHAPTER FOURTEEN: THE COMING CRISIS

  Given the number of supposedly highly–intelligent, and certainly highly–paid, people running our often degree–factory universities, it seems surprising that they appear to be oblivious of the crisis into which they are so enthusiastically and lucratively leading our Higher Education sector. Expansion has been good for these people with their big salaries, generous expense accounts, often free housing, maybe a knighthood, gong or two or perhaps even a peerage and many other perks. But they have created an ever–inflating bubble. As history has so often shown, at some point all bubbles burst – and the bigger the bubble, the greater the damage done when boom turns to bust.

  The Great Expansion was a massive and costly bet on an undergraduate degree being the optimal launching pad for nearly every bright and ambitious young person in the UK. But by expanding the wrong universities, by lowering entry requirements to fill up their courses almost regardless of students’ abilities, by offering easy rather than useful degrees, by oversupplying the jobs market with graduates who have no hope of ever having a career relevant to their degree and by saddling many of these graduates with unrepayable levels of debt, our universities have sown the seeds for their own inevitable nemesis.

  Moreover, as university fees have increased and student debt has risen, so have students’ expectations of what they should receive for these fees. Universities are facing greater scrutiny about their teaching, assessment and what graduates of specific courses might reasonably expect in career opportunities and additional earnings from their degrees. Students have become paying consumers and they are increasingly finding out that what they have bought – their degrees – have not met the marketing claims made by their universities. Universities should expect reprisals from students who feel their consumer rights have been infringed, possibly in the form of organised protests, social media campaigns and legal actions.

  This is already happening in America where law graduates, unable to find legal employment, are suing universities for advertising under a false prospectus.428 And in 2018 a student, who achieved a First at Anglia Ruskin University, launched a legal action against the university accusing it of giving her a useless Mickey–Mouse degree. Given the massive oversupply of graduates in vocational subjects such as law, psychology and social work, it is not far–fetched to anticipate many more such actions being taken against UK universities during the next decade, particularly as ever more students find out how skilfully they were tricked into mortgaging their futures for often third–rate degrees from often third–rate institutions.

  However, the main threat to our universities resulting from their mismanagement of the Great Expansion will probably come from an inability to recruit sufficient students to provide enough money to keep the university bubble inflated. Student numbers will fall for three main reasons:

  There will be a declining number of school leavers to feed into our degree factories due to falling birth rates

  It will become more difficult for universities, especially those at the lower end of the academic scale, to recruit students as people increasingly realise that many degrees incur huge costs without giving corresponding benefits

  Increasing international competition for the best students will reduce the number of both international and domestic students applying to UK universities

  Student fees remain by some distance the largest income stream for most UK universities. The smaller and less established a university, the greater is their reliance upon this income. Maintaining the current level of student fee income will prove more difficult as demand for places in UK universities inevitably declines.

  1. Demographic changes

  Changing domestic and international demographics are both likely to reduce the demand for UK Higher Education in the short to medium term. The UK is currently experiencing a substantial domestic demographic dip in people aged 18–20, a decline which is projected to continue until 2020 (Figure 1).

  Figure 1 – Number of 18-20 year-olds 2006 -2029429

  From a peak of 2.07 million young people in 2010, by 2020 there will be 1.79 million; a difference of about 280,000. As the Higher Education Policy Institute noted: “After 2010, this age group (18–20 year olds) will decline significantly for the following decade – by more than 13 per cent between 2010 and 2020.”430

  This decline is mirrored across the developed world, including the European Union. It is also evident in China, where the ‘one family one child’ policy has dramatically reduced the country’s age cohort.431 This is an especial concern for UK universities as China is their biggest single supplier of international students (and their full market fees).

  In the UK, demographics in favour of university student recruitment will start to slowly improve between 2020 and 2025 but then once again worsen from 2026 to 2030. However by then, if not before, universities will be hit by another threat to their income and financial health – increasing questions over the value of many university degrees.

  2. Declining return on investment

  A second key risk for demand is the increasing body of evidence that the costs of many UK degrees now outweigh the benefits. Growing awareness of the extent to which graduate premiums are dependent on an applicant’s choice of university and subject could present a major recruitment challenge for new universities and degrees in ‘softer’ subjects like media studies and journalism. In addition, the cost of studying in the UK is a growing cause for concern. Our tuition fees for international students are now amongst the most expensive in the world, regularly outpacing inflation.432 If we take into account international flights and the high cost of living within the UK, then the total cost of a degree is becoming prohibitive: “... people are realising that there are other places in the world that offer a better education for lower cost, especially East Asia, such as Malaysia and India.” Finance and management graduate.

  This cost both reduces the potential pool of applicants and increases the exposure of our universities to global currency fluctuations. In the era of Brexit and Eurozone instability, the dependence on international student fees could prove an Achilles heel for the UK Higher Education system over the next decade.

  3. Increasing international competition

  This issue could be compounded by international universities becoming less expensive. In 2011, the Guardian noted an increase in the number of European courses taught in English and UK students studying overseas: “...more than 2,400 courses available in English in the non–English–speaking parts of Europe, the trend will extend beyond the Netherlands ...but last year a record number, 22,000, were studying for degrees abroad.”433

  The rise in domestic fees has even reduced the relative cost of more expensive overseas universities, such as the Ivy League in America. In 2016, the UK sent 11,600 students to US universities, up from 8,861 in 2010.434 Moreover, the generous nature of the bursary system in the major US universities allows them to offer their degrees free of charge to bright students who
could not otherwise afford them. This potential to graduate from a world–class university with no graduate debt could create a future UK brain drain, preventing the UK universities from recruiting some of the very brightest domestic students. 435

  The increasing number of UK students choosing to study in the US is emblematic of a wider problem facing all universities. Student recruitment (whether domestic or international) has become much more competitive in recent years and this trend is only likely to increase in the future. UK universities are facing growing international competition for students, not only from existing competitors such as the USA and Australia, but also from countries investing massively in their own Higher Education infrastructure. Large student exporters, such as China, are now actively seeking to retain their own domestic students whilst increasing their numbers of international students. In 2010, Professor Richard Levin, president of Yale University, noted that:

  “China and India ... seek to expand the capacity of their systems of Higher Education ... and aspire simultaneously to create a limited number of world–class universities. China has doubled the number of its Higher Education institutions in the last decade from 1,022 to 2,263.”436

  The competition to recruit international students is often driven by coordinated national policies aimed at increasing a country’s share of the global Higher Education market. Universities UK made this point in 2009: “Many countries including Germany, France, Singapore and China are all investing in strategies to attract and retain international students.”437

  The scale of some of these countries’ ambitions should concern UK universities in the coming years. In 2011, the Telegraph noted the Chinese Ministry of Education had: “… promised to double the number of foreigners attending university in China to 150,000 by 2020, making it the largest provider of education to foreign students in Asia.”438

  Recruiting and retaining academic staff

  Attracting students in sufficient numbers is only one of the challenges brought by increased global competition. A second lies in recruiting and retaining the best staff. This will be made more difficult in the next decade through a combination of demography, finances and globalisation. UK universities will find it more difficult to recruit staff due to an ageing academic workforce across the developed world, a relative decline in the attractiveness of UK Higher Education to the best academics (who tend to be globally mobile) and increased global competition for academics.

  1. Ageing academics

  A key demographic issue for western universities is the number of ‘baby–boomer’ academics currently in employment. Over the next decade, universities will face their retirement on a massive scale. A Universities UK report warned of this in 2007: “The proportion of full–time academic staff aged over 55 has risen from 10.8 per cent to 17.1 per cent of the total workforce between 1995/96 and 2005/06.”439

  This had risen to 19% by 2016. Moreover, by 2014, 30.9% of UK academic staff were aged 51 or over. The UK’s situation will be compounded by competitors such as Canada, Australia and America also needing to replace their own “greying professoriate” in order to sustain their universities. In 2011, the Sydney Morning Herald wrote that: “....up to 40 per cent of academics and lecturers are expected to retire over the next decade, with no one to replace them.”440 A similar pattern is evident in America, where Universities UK commented: “Over 30 per cent of academic staff are reported as being aged 55 or over. Fewer than 10 per cent are under 35 years old.” 441

  An examination of UK–based academic recruitment sites already shows multiple adverts from universities in these competitor countries. One of the reasons these countries advertise heavily for academics in the UK is that our universities generally pay much less than their peers in Canada, Australia or America.

  2. A worsening offer to academics

  Expansion has seen the average pay of UK academics decline relative to other professionals. This has coincided with a rising cost of living and a relative decline in spending on public services. The pay for UK academics is not only significantly lower than its major competitors (the USA, Canada and Australia), it is also falling behind that of countries building their Higher Education systems. For example, in 2010 Chinese universities in Hong Kong were offering salaries of £200,000, double the top end of the professorial pay scale at a Russell Group university at the time.442 Similarly, high salaries coupled with low tax regimes are now routinely available in many of the Gulf State countries, who are also investing heavily in Higher Education.

  The UK Higher Education offer to academics is also dependent on its research funding. For mobile academics, access to large–scale research funds will often be critical to their employment decisions. The next decade will see research funding in the UK fall in relative terms, whilst the budgets of many competitor countries will rise. In 2010, Ralph Cicerone, President of the US National Academy of Sciences predicted: “Swingeing cuts in university and research budgets will force the most talented British scientists to find jobs in the US, Singapore and other countries that are continuing to invest in science throughout the global recession.”443

  These factors will make UK universities less attractive to mobile academics and talented graduates considering an academic career.

  3. Increased competition for academics

  Many wealthy countries are investing heavily in their Higher Education systems to catapult their universities up international league tables. Other established Higher Education systems are undergoing ambitious mergers to concentrate academic resources and capital to protect or advance their league table positions. Saudi Arabia, for example, has been investing around $10 billion dollars in the King Abdullah University of Science and Technology. Established in 2009, the university’s aim is to be comparable to the top ten science and technology universities in the world by 2020.444

  The same ambition underlines Sweden’s plans to merge three universities, creating a new giant institution, which they hope will be better able to compete globally: “…the Karolinska Institute, Stockholm University and the KTH Royal Institute of Technology – have announced that they are in merger talks. This super–university would be the largest in Northern Europe and have a budget of more than £841 million.”445

  What is happening in Sweden is also being proposed in Finland and Denmark, who want to protect their global league table standings, and in France and Germany, who wish to improve their positions in the same tables.446 Investment on this scale will massively intensify the pressure to recruit the best academics, making it harder for UK universities to compete successfully in this arena.

  This represents a major threat, especially to those UK universities which fall outside the very top tier of UK universities. A number of Russell Group universities (Warwick, Nottingham) have traditionally punched well above their funding weight, regularly appearing in global Top 100 league tables. This reputational advantage has greatly assisted them in attracting talented staff, international students and international research funding. With the heightened level of global competition in future and without any additional funding to counterbalance it, these universities may find it difficult to retain this status and the benefits it confers. Unfortunately for these universities, it is difficult to see how any additional funds could be raised in the medium term or, indeed, whether the current level of funding will itself prove sustainable.

  A narrative of decline?

  “The vice–chancellor of Cambridge… has warned that the UK is in danger of losing its standing as a world leader for university education within a decade.” Guardian (2007)447

  Between 2004 and 2011 the UK had eleven universities in the Shanghai Top 100 global university league table. Of these, six dropped significantly, three remained constant and two improved their rankings.”448 By 2016, the UK only had eight universities in the Top 100. Whilst the actual academic value of these rankings is open to question, they have significant reputational value, bot
h for individual universities and UK Higher Education as a whole. This decline contributes to a wider narrative of decline for UK Higher Education, something that has started to gain purchase in the academic media. In 2012, when British universities performed relatively poorly on the Times Higher Education Supplement international league table, Phil Baty, the editor warned that:

  “Outside the golden triangle of London, Oxford and Cambridge, England’s world–class universities face a collapse into global mediocrity, while investment in top research universities in Asia is starting to pay off.”449

  This perception can eventually create its own reality. Once a narrative of decline emerges, it will be difficult for UK universities to reverse it, either individually or collectively. As more countries seek to compete and establish one or more of their universities in the Top 100, the cost of maintaining a university in this position will inevitably rise. In 2007, the OECD was already signalling this:

  “Rankings are used as a policy instrument. Many governments want one ‘world–class university’. A world–class university is a $1bn–$1.5bn–a–year operation, plus $500m with medical school. This would require many HEIs increasing funding by 40%.”450

  If a story such as this takes hold, it becomes difficult to counter. With their resources spread ever more thinly over an excessively large student contingent of variable quality, how can UK universities show the wider world that they are not in decline without fuelling this narrative? The long–term danger from a perceived or real decline is that, if the UK loses its prestige, it will find it difficult to recover. Whilst the ancient UK universities are likely to always retain their brand and cachet, it will be much more difficult for the second, third and fourth tiers of UK institutions to regain this ground once it is ceded.