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Financial risks remain for English unis, OfS says

While most English universities are recovering from the pandemic and getting back to their pre-Covid income levels, financial risks remain, the Office for Students has said, pointing to continued over reliance on overseas student income.

English universities are said to be in a fiscally sound position currently, but financial risks remain, the OfS has said. Photo: iStock

Rising pension costs for staff, fluctuating student enrolments, and growing inflation are other financial risk factors

A report from the independent regulator of higher education in England provides data on higher education economic trends from 2019 to 2021 and forecasts to 2024/25.

It predicts growth of over £7 billion in total income by 2025, from £37.31bn in 2020/21 to a forecasted £45.72bn for 2024/25.

While UK student numbers are expected to grow by 16.5% between 2020/21 and 2024/25, the numbers of non-EU students are to rise by 40.2%, the agency predicts.

“EU student numbers are expected to decline by 37.3% (43,000 FTEs) although the financial impact of this is partly offset by increases in the fees that EU students pay,” the report adds.

OfS forecasts that between 2020/21 and 2024/25 total fees from non-EU students will rise by 52.7%, reaching an estimated £3.325bn.

Failure to hit forecast non-EU income targets will lead to increased financial pressure for providers relying on the income for sustainability, it warns.

“The sector, and some providers in particular, continue to be reliant on recruitment of students from China”

On the risk of overseas income, the report says, “The sector, and some providers in particular, continue to be reliant on recruitment of students from China. Any event that reduces the flow of such students to the UK is likely to have a significant impact.”

The current economic climate and steadily rising inflation are said by the OfS report to be possible reasons that expenditures will increase for universities in the coming years, as inflationary pressures are likely to be more significant than what the data has predicted.

Commenting on the report, Susan Lapworth, interim chief executive of the OfS said, “Universities need to carefully consider whether they can deliver the growth they have forecast and whether they are becoming too reliant on income from overseas students, particularly if these students come from a small number of countries.”

Rising pension costs for staff, fluctuating student enrolments, and growing inflation are other financial risk factors for English universities being monitored by the OfS.

Lapworth also shared that the OfS continues to monitor the financial health of English universities through multiple sources, in an effort to create predictions students and educators find helpful.

“We have a range of tools at our disposal should an institution encounter financial difficulties and will always take steps to protect the interests of students,” Lapworth said.

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