7 reasons why University applications will continue to decline

Universities are facing the largest dip in student applications since the huge fee hike in 2012. This comes as absolutely no surprise and is likely to continue. But the causes are multiple, complex and not going away.

1. Demographic dip

Full-time undergraduates in UK higher education institutions may fall by 4.6% by 2020, or 70,000 full-time under­graduate places, according to Universities UK. The situation in Scotland will get even worse with a drop of 8.4% by 2020, as well as in Wales (down 4.9%) and Northern Ireland (down 13.1%). The tide may turn in 2020 but by then things will have got worse for many institutions.

2. EU students

This number continues, year after year, to take a hit after Brexit. However, it may be no bad thing, as the UK Government provides full loans for these students (not widely known) and the default rate is rising, especially among students from Eastern Europe. It makes financial sense for the Universities but not for the country as a whole. This, of course, is likely to accelerate as Brexit approaches and we leave in 2019.

3. Fees

The £50,000-£57,000 and more costs of a degree is being questioned by parents, students and employers.  The hike in 2012 was brutal and Universities milked it by all of them charging at the top rate. This was a financial bonanza for Universities, whose VCs then started to become rapacious on salary. Raising it further to £9250 was even odder. There is clearly a backlash against this level of debt. Linked to this is the failure of Universities to grasp the idea of lowering their costs base. These is no nearly enough online solutions, which would also expand their foreign markets and teaching is often locked into old ‘lecture-based’ courses.

4. Employment prospects

Sure, a University education is not just about employment – but it is partly. No one goes to do a degree in dentistry because they have an intellectual interest in teeth. Out there, the number of graduates working in non-graduate jobs is increasing and once in such jobs they tend to stay at that level. That, I suspect, will continue, as employment levels are high but the quality of emerging jobs is low.

5. Fewer adult learners

This is complex but Peter Scott summarises it well here. The culture of Universities has shifted towards middle-class entrants and funding for adult learners is difficult. This has been one of the great failures in the system, as online offers have not developed nearly far enough and adults learners, who do not want the full-milk undergraduate experience have been ignored.

6. Fewer nurses

Having land-grabbed vocational education – teacher training and nursing but also other subjects, we have created a real barrier for these professions and the reduction in bursaries for nurses is mad but it has happened. The slack should be taken up by apprenticeships but University numbers in vocational subjects may continue to fall.

7. Apprenticeship Levy

This is now law and young people will have more choices. This is a bit of an unknown but it is clear that it will eat into University numbers. It may be tempered by the number doing Degree Apprenticeships, where the student gets paid to do the Degree but the funding for this is somewhat different. If the projects for apprenticeships are correct, and I hope they are, then this will really bite into the University market. This correction is long overdue.

Conclusion

This market is changing. No one thing is critical but all seven add up to an unpredictable and dangerous future as institutions fail to forecast correctly and simply assume that growth is possible across the entire market. To be fair the sector has been good at spotting new opportunities and adapting but this looks like more of a perfect storm. The deep and long-term cause is the social change in attitudes, where the gloss has gone off the idea that everyone should go to ‘Uni’. Word of mouth from graduates leaving with debt and struggling to find graduate jobs is starting to get traction. But other factors such as demographics, Brexit, failure to support adult and part-time learners and the Apprenticeship Levy, are calculable and predictable. It’s not pretty.
My own view is that this is not bad news and that we need a rebalancing of hte system towards the vocational to give the majority of young people who do not go to University better prospects. It also puts pressure on Univesiities to reduce their costs, get more online wit courses and offers, and improve teaching, as does TEF. The system should emerge as a leaner but better system as the numbers bite.