Universities across England are at risk from financial instability and falling student satisfaction, according to a report by MPs who blame the government and regulators for failing to ensure students get value for their time in college ‘Higher Education.
The report, from the Public Accounts Committee (PAC), says some universities are heavily dependent on tuition fees from overseas students, using that revenue to subsidize research and other activities – leaving them ‘potentially at significant financial risk’ if the number of international students fail to keep growing.
The committee notes that the number of universities in budget deficit has increased for four consecutive years, inflation, national tuition freezes, retirement costs and policy changes on student loans and admission requirements minimums making it likely that students will be affected. through class cuts, lower quality teaching or restricted access, or even entire campus closures.
The report concludes that the Office for Students, England’s higher education regulator, has failed to make sufficient progress “to bring the long-term systemic challenges facing the sector under control”.
Susan Lapworth, acting chief executive of the OfS, said: “Overall, universities and other higher education providers have entered the pandemic in good financial shape, and there is evidence that the sector as a whole is well placed to recover from the challenges of the past two years. »
The Department for Education said: “Despite the challenges faced by universities and colleges in recent years, the most recent reports from the two [National Audit Office] and the OfS clearly indicate that, overall, the sector remains financially resilient.
However, PAC notes that 80 higher education institutions have recently declared annual deficits, while 20 institutions have been running deficits for three years or more.
MEPs also criticize the DfE’s failure to anticipate the financial impact of the recent inflation of A-level grades on student recruitment, ‘meaning more students have been able to take up places at high-cost providers , and many mid-priced, low-cost and specialty providers were undersubscribed.
Meg Hillier, the Labor MP who chairs the PAC, said: ‘The 2020 A-level fiasco and grade inflation have a long-term impact on higher education, adding to deep systemic problems in financial sustainability of higher education. The number of claimants in deficit increased dramatically in the four years before the start of the pandemic.
“Too many providers are overly dependent on international student tuition to maintain their finances, research base and supply – this is not a good enough situation in a sector the government relies on to boost productivity notoriously and constantly weak in the country”.
The two years of pandemic-related over-recruitment by selective universities has had a ripple effect this year, with fewer students receiving offers.
In another report released Wednesday, the Institute for Fiscal Studies (IFS) says university students from poorer households are seeing the value of their maintenance loans decline as inflation rises faster than expected.
IFS economists predict that next year the value of government support for the cost of living for the poorest students will fall to its lowest level in seven years. “As a result, even students eligible for maximum maintenance loans will have to settle for far less than they would earn working in a minimum-wage job,” the IFS says.
He calculated that a 22-year-old student would earn £1,000 more than the maximum loan if he worked in a job paying the national minimum wage.
Ben Waltmann, senior research economist at IFS, said real-term cuts to support would cause hardship for students on tight budgets. “Weirdly, this happens because student maintenance loan entitlements are regularly adjusted based on outdated inflation forecasts and forecast errors are never corrected.
” It does not mean anything. The government should use more up-to-date forecasts and correct any errors the following year to avoid permanent cuts. Alternatively, child support entitlements could be tied to minimum wage earnings,” Waltmann said.
Larissa Kennedy, President of the National Union of Students, said: “We hear of students working three jobs to make ends meet, who can’t even afford to go to their college library, and who are cutting their expenses. cooking food due to soaring energy costs. Our research has shown that thousands more people rely on food banks and buy now, pay loans later.