Why universities should not be run as competitive enterprises if they are going to become insolvent: A response to an invitation to university campuses over the next century
A proposal was made to stop teaching chemistry at the University of Hull from the academic year 25th to 26th of the following century according to a letter sent to undergraduate chemistry students. The vice-chancellor has sent further letters stating that the university needs to save money over the next two years. Nature understands that one option under consideration is to stop all chemistry courses at the end of July 2025 entirely and offer to transfer students, “perhaps with compensation”.
In July, the Office for Students — which regulates higher education in England — tendered a contract for financial-management consultancy firms to take over universities that become insolvent. The document states that at-risk higher- education providers should be evaluated to ensure that the interests of students are safeguarded during any financial adjustments or transition. The previous month, UK education secretary Bridget Phillipson told BBC Radio 4’s current-affairs programme Today that universities should not expect a bailout from the taxpayer if they are facing bankruptcy, although she added that universities were a “public good”, and that she would seek to protect them and help them to attract international students.
A ‘squeezed middle’ of newer institutions are less fortunate. Scottish students do not pay university tuition fees in Scotland, but home students in England and Wales do. Many institutions have borrowed a lot of money in order to build more attractive buildings so they can keep up with their more famous competitors. Int. Rev. Econ. Finance 82, 771–783; 2022).
If there is no solution, we are already talking about thousands of jobs being lost.
Hillman thinks that universities should close departments that aren’t popular with students. There are rows about institutions closing language departments and politics departments. He says they don’t want universities to be unchanging. “It’s reasonable that universities could close departments, just as it’s reasonable they should open things up. They’re running AI courses now, which they wouldn’t have been running 10 years ago.”
Many feel that universities should not be run as competitive businesses at all. “To me, it just kind of comes down to ‘What is a university?’,” says Wheeler. Is a university intended to make a profit, or if it is only meant to offer courses which benefit society as a whole, and should be subsidized?
The economic circumstances have made other academics critical of how senior leadership has handled them. “For a long time, I have been generally unhappy with the university management,” says evolutionary anthropologist Brandon Wheeler, who was made redundant by the University of Kent in Canterbury last month.
The department of chemistry is strong, but the university tried to put it on a more sustainable footing despite its league table position. “We are, however, proposing to continue teaching chemistry where it forms part of other programmes, for example chemical engineering, biochemistry and medicine,” the spokesperson concludes. (The university’s medical degree is offered jointly with the nearby University of York.)
As student numbers dwindled, Thomas listed advantages. The fact that the degree was very close knit meant that you got the best out of it. People who had 300-plus people in their degree, I speak to them. Trying to get the lecturer to pay attention just didn’t happen. With such a close-knit cohort you had that help right there.”
There are a number of financial challenges like the fixed tuition fee, high inflation, and changes in student behavior, that the University of Kent faces. Our 2022–23 accounts reflected this, although we have put into action plans to address this and have improved our budget forecast for 2023–24 since initial cautious projections earlier in the year.” The university is already phasing out some courses on the basis of expected student demand, but will continue to offer a mix of subjects across science, technology, engineering and mathematics disciplines, the spokesperson adds.
According to Wheeler, Kent seemed to have wavered for years between cutting the anthropology programme completely and letting it continue. “Confidence in university management is something that’s been completely lacking both from academic- and professional-services staff at Kent,” he adds.
The first day of lectures can be very intimidating for students, but this week it will be more of a relief when they brush their teeth, bag their bags and walk to the chemistry building.
“I was just getting excited and getting a plan together of what I wanted to do in my project,” says Frances Longbottom, a second-year PhD student in the department. “Now it’s all uncertain.”
Because of a heady mix of economic circumstances, 70 of the nearly 290 higher-education providers in the United Kingdom have announced proposed restructures or redundancies, according to data collected by the University and College Union, which represents academic staff.
“Somebody once said, ‘The way to have a great city is to build a university then wait 200 years,’” says Nick Hillman, who runs the Higher Education Policy Institute, a think tank in Oxford, UK. Hull is a much better place because it has a university. In terms of supplying workers to local businesses, in terms of regeneration, in terms of bringing income into the town.”
Some 108 degree-awarding institutions in England are expected to be in deficit by the end of this year, according to the Office for Students, the English universities regulator. Many of those working in higher education say that soon — very soon — one of these universities will become insolvent. In many cases, the cost of educating a UK undergraduate student is more than the amount the student pays the university.
Inflationary pressures and the rise of the number of first-year students: UK universities on the brink as higher-education funding crisis deepens
Inflationary pressures took their toll. “We saw years of plenty at the beginning, followed by gradual years of drift,” says Hillman. “And once inflation hit 10% [in July 2022] then it was more than a drift: it was a really significant cut.”
A cap on student numbers was removed in 2014, further squeezing some middle-sized universities. As many students they like, institutions are able to accept them.
The middle part of the sector has suffered as a result of this because some institutions have a huge draw to students, particularly London and other large metropolitan areas. Smaller universities in less attractive destinations saw the number of first-year students drop. At Hull, the number of first-year undergraduate students in its chemistry programme has fallen from more than 160 students in 2012 to fewer than 20 in 2023, according to data seen by Nature.
Some UK universities wanted to address a decline in European students by attracting researchers from low- and middle-income countries like India and Nigeria. The number of Indian students increased fivefold while the number of Nigerian students tripled.
But students from those countries were more likely to bring dependants with them and, after a rapid rise in immigration figures, a law change in January now prevents them from doing so. The number of visas granted to Nigerian students plummeted by almost half in a year’s time, as the number of visas for Indian students fell by 23%.
Source: UK university departments on the brink as higher-education funding crisis deepens
Universities are not going to close – but they are going to go: Statistics, Economics, and Business in the U.S.: The Case of Kent, in March
There was a warning to the staff in March that there was a chance of a shortfall in income. A professor of applied ecology describes protective measures the institution has brought in. We stopped promotions and bonus payments. And we put a halt to a lot of external recruitment for certain positions. All of those things can be frustrating, but as a group, you and your coworkers have jobs. He believes that is very positive.
In March, Kent announced an expected operating-budget shortfall of over 30 million dollars and said it had changed its debt repayments.
Other countries show that it doesn’t need to be this way. Billions are pumped into research by many European governments. Students pay a small charge, or a heavily subsidized tuition fee, to cover the costs of a degree. Government scholarships are also available in many countries. China has the largest higher-education sector in the world with more than half of its secondary-school graduates taking tertiary education. State governments in the United States support public universities with direct funding and tuition fees.