By Reasons Why UK Universities Rely On Overseas Students:
Financial Dependence On Overseas Students:
Several UK universities anticipate that a rise in international enrollments will improve their financial standing, yet there is now significant downward pressure on student demand for higher education in the UK. PwC’s modeling suggests that between 51% and 80% of UK universities may have financial deficits if there is a decrease in overseas enrollments starting from 2024/25. Enrollment statistics for January 2024 shows that UK institutions would experience a decline in two key source economies, India and Nigeria.
A report conducted by the multinational consulting firm PwC reveals the significant reliance of UK universities on international student tuition for financial sustainability. If international enrollments in UK higher education decrease from their current level, more than half of universities in England and Northern Ireland might face financial deficits in 2025/26, as predicted by the firm’s modeling.
The research aligns with the information that student acceptances and deposits at UK universities using the Enroly platform have decreased by over one-third compared to the previous year. Approximately one-third of students that travel to the UK utilize Enroll.
The UK Higher Education Financial Sustainability Report by PwC was requested by Universities UK. It analyzed the 2022/23 regulatory forecasts of participating UUK members and evaluated the potential impact of specific sensitivities on those forecasts. The modeling described below utilized a “base case” cohort of 70 projected financial returns from institutions in England and Northern Ireland.
Impact Of International Enrollments:
Prior to delving into the PwC research, it is crucial to acknowledge recent statistics from Enroll indicating that Confirmation of Acceptance for Studies (CAS) issuance for the January 2024 intake of overseas students in the UK has decreased by 36% compared to January 2023, with deposits declining by 37%.
Nigeria is the most worrisome market due to its significant role in recent expansion. There has been a 72% decrease in deposits from Nigerian students compared to the previous year, while Indian deposits have decreased by 37.5%. India and Nigeria were the second and third largest source markets for UK institutions last year, experiencing quicker growth than China, which was the leading market.
Challenges In UK Higher Education:
The declining enrollment for January 2024 is a significant factor contributing to the challenges that the UK higher education system is currently facing, as outlined by PwC. Universities and Best CIPD Assignment Writing Services are under considerable pressure due to limitations on income generation, growing investment needs, and rising costs. This is causing pressure on profit margins and increasing the dependence on cross-subsidization, especially from revenue generated by overseas student fees, raising worries about excessive reliance.
Declining revenue from domestic student enrolments is fueling the overreliance. Domestic students’ enrollment in higher education decreased in 2022/23, and domestic tuition rates have been constant at £9,250 per year since 2017. PwC states that students are typically educated at a financial loss to the institution. UK institutions heavily depend on international students for money, which has been essential and consistent for a considerable period. The ongoing trend of rising international enrollment at UK universities is facing challenges this year due to:
An immigration policy has been implemented that restricts most foreign students from bringing their dependents. Additionally, the increasing cost of living in the UK poses challenges for students, particularly those from countries with significantly devalued currencies like the Nigerian naira. PwC points out that certain types of higher education institutions are more susceptible to fluctuations in the number of international students enrolling.
Larger research-intensive providers and specialized institutions in England heavily rely on revenue from international students and face a risk of financial exposure if projected international student numbers do not come to fruition.
Risks Of Declining Revenue:
According to PwC’s analysis, institutions across all provider segments anticipated that a rise in foreign fee revenue would enhance their financial standing. In the 2021/22 period, 25% of these institutions were operating at a deficit. They are optimistic because they anticipate that overseas fees will make up 33-66% of all course fee income by 2026/27, compared to a range of 24-64% in 2021/22.
Decreased foreign student demand could disrupt assumptions, and a 5% decline in international enrollments could cause the number of struggling providers to increase double. PwC predicts that the percentage of institutions operating in deficit could increase by 8, 32, or 61 percentage points depending on the decline in full-time international student enrolments from 2024/25 onwards. This could result in 27%, 51%, or 80% of institutions being in deficit by 2025/26.
If domestic full-time enrollments decrease by 5 percentage points, more than half of the institutions in the sample could fall into deficit. These sensitivities, when occurring simultaneously, exacerbate financial challenges and potentially lead to a higher number of members facing deficits.
Future Outlook & Concerns:
PwC concludes that the UK Universities of Higher Education industry and its institutions are encountering substantial financial difficulties that could jeopardize the quality of education and student achievements, notwithstanding their excellent global reputation and academic standards. In the future, this could affect the UK’s global reputation and its capacity to draw and keep students, perhaps diminishing the significant economic advantages the sector provides to the UK.
Providers are increasingly using non-fee-capped overseas students to subsidize local student teaching and research due to limitations on income generation and cost concerns. Exploiting the significant increase in foreign student numbers in recent years, this approach has resulted in some providers becoming overly dependent on international demand, leaving them vulnerable to geopolitical shocks beyond their control.
