Hello. I’m Georgina Kuak – you may know me from editing political editors – and today I wanted to discuss the erosion of the “value of money” of students at a university in the UK, the symptoms of the deep financial crisis in the sector.
Academic Grind
Last week, one lesser known story from the world of higher education was that, from 56% last year (34% in 2021), 68% of the semester took on work in the semester, according to a UK-wide survey of undergraduate students. It’s when the school board announced a new investigation into financial pressures to ease the sector and measures needed to “make the university less money insolvent.
The department is being asked to do more with less money. It would be to cut staff numbers, cut courses, cram more students into the auditorium, and move education online.
At the same time, all other costs associated with being a university student (rent, meals, books) have increased significantly, so most students are at the expense of their degree. Combining that with the potential costs of revenue before and after (what you might have won if you weren’t going to UNI), it starts to raise questions about the value of money as the sector’s problematic funding model puts a lot of pressure on key activities.
Mark Corver, former managing director of Datahe at Times Higher Education, used the handy ratio phorus when he spoke about how the value of “content” in higher education has decreased compared to total cost.
Paradoxically, tuition is too low to make the experience more valuable to your money. . . A 1p sausage is probably more difficult to sell than a 1 pound sausage. Because we think people are in less than a pound of sausages. We risk (degree) being low in value and people turning it off.
Viewing data from Unipol’s Accommodation Cost Survey, this chart covers both university-provided student housing and dedicated student housing, roughly showing one aspect of it.
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The latest annual health check of the sector by university regulators for students found that 43% of universities forecast a budget deficit for 2024-25. Even Durham, the Russell Group University, faces awkward finances. The current asset-to-liability ratio is 0.5, far below what is considered healthy by Sector Body Universities UK (1.2-2.0).
It is summarised in inadequate funding for undergraduates in the UK. Prices from international recruits, primarily in graduate courses, helped to close the gap, but their income became more volatile. Essentially, “resource unit” (money per student) funds the core activity of teaching full-time undergraduate students. According to Datahe, inflation is eating away at its value. It’s worth less than £5,600 for 2012 prices.
So what are the universities spending their reduced cash? As a rough guide, staff costs, including salary and pensions, account for half of university expenditure. As these costs tend to rise gradually, the spanner has already been thrown into a tight budget, as employers’ national insurance contribution budgets increase (as they will appear in your account next year). This is partly aided by a rise in tuition fees for workers after the eight-year freeze, between £9,250 and £9,535.
But if we dig a little deeper, we get the core teaching part: the feeling that there is a dent in the reason why we all pay our degree. In some cases, you may not have enough resources to justify all the other costs of attending university. At the University of Manchester, they were shocked to spend only 21% of academic staff costs, compared to 49% of “other operating expenses.”
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Depriving the university of staff costs and funding costs reveals that greater pressure is being put on from “other operating expenses,” including the costs of maintaining lighting, sewage and other maintenance services, rather than capital expenditures on new buildings. On average, these costs rose from under 40% a decade ago to almost half of 2023-24.
Under that “other expenses” umbrella, the burden of marketing and payments to overseas recruitment agents who have poured the majority of international students into UK universities is increasing. As cash-bound universities compete for profitable foreign income, agents charge higher committee fees to acquire students. Durham: Expenses on agency expenses rose from £1.5 million in 2015-16 to £5.2 million in 2023-44, according to the request for freedom of information I submitted.
The quality of student experience has become much more uneven across the university. Institutions with low entry thresholds are most vulnerable to pressure on educational resources.
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The long tuition freeze is why many low-custodial institutions have rapidly expanded their offering of relatively inexpensive graduate courses to diversify their income and attract international students, where one-year programs often sues for courses of three or more years.
It is also the reason why some universities have become reliant on franchises (usually licensed from private partners to offer degree courses). The model allowed institutions to make money without increasing internal capabilities, but it included risks to student experience and value of money. OFS won a Leeds Trinity University fine of £115,000 for failing to properly oversee the quality of the franchise course after initially lowering the English requirements for subcontractor students.
Mediocrity Creep
Despite the challenging circumstances, universities are making a huge amount for young people, so be clear. Many towns are thriving for them.
But the fact is that the university cannot get enough cash from the main things they do, that is, teaching full-time undergraduate students. As workloads increase and are forced to continue beyond contract time, there are numbers on the number of academic staff reporting on Reddit for “slow decline in education quality.” This can lead to burnout and loss of institutional knowledge as scholars leave their profession. As a result, students can experience worsening. One anonymous tutor – at a university that says they avoided the worst financial turbulence – said:
They reduced our education time. There will be 30 minutes less per class with students. They also cannot hold office hours for students. Get “Management Time”.
Another outcome is that the university lacks resources to fully support disadvantaged students. In a UK University survey last month, almost half said they may have to consider student challenges and scholarship investments over the next three years.
As a result, some students will opt out of higher education completely, and disadvantaged people will be disproportionately hit by rising costs.
Other students choose to work part-time or study remotely. This shift allows some institutions to reduce face-to-face education by just two days a week, reducing academic standards and reduced curriculum. In some cases, as written by two anonymous professors at Russell Group institutions last year, staff must adapt their classes to support international students with poor English proficiency.
Unresolved questions for the entire class are often filled with silence, but group tasks are usually carried out using a translation app. . . We recognize that this can be a very stressful and challenging environment for these students.
So, as Kover says, there is a structural concern that not enough resources are sufficient to stack all the other costs. Increased use of AI, both learners and tutors (see this incredible story about the US professor’s use of private ChatGPT), and asks this more “What are you getting at university?”
In the short term, the school board and the government must set up ways to deal with universities that run out of money. In the long run, they need to get a central job of teaching the core financial foundations of the university. Providing streamlined courses – directing universities to offer more vocational programs with employer opinions – is helpful. Otherwise, if tuition fees become a small component of the overall cost of attendance, the university could begin to lose its glow among future recruits at home.
UK numbers
Better buses – the most commonly used mode of public transport in the UK – could become the most visible legacy of the priority regime.
After the deregulation of bus services in 1985, this meant a loss of public control, with use outside of London significantly reduced, particularly in disadvantaged rural areas. According to the Institute for Public Policy, it cost us heartily because lack of investment constrains economic growth and savings in emissions clauses.
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The Workers’ Bus Service Bill, currently underway through Congress, aims to restart the bus network in several ways. First, by extending franchise authority to all local transport, not just the mayoral total authority.
Second, the bill requires councils to identify “socially necessary” services and will work with bus operators to introduce strict requirements before canceling these routes. As it stands, commercial operators can change routes or reduce routes whenever a narrowed local government struggles to plug gaps, often without a formal accountability mechanism.
Conclusion? IPPR believes that for every pound invested in the bus, it returns an economic profit of at least £4.
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