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HMV, Comet, Blockbuster and now universities?

February 3, 2013 · Alexandros Pamnani

Higher education has evolved substantially over time.  Following successive political and socio-economic changes, the higher education sector is now a high demand market. To cash in on this, many new institutes emerged across the UK, particularly in cities such as London.

In 2011, after implementation of Lord Browne’s recommendations to raise tuition fees up to a maximum tariff of £9,000 per annum, university applications for the first time in over a decade dropped by 12%.

This was expected for the introductory year of new fees, in similar fashion to what happened in 1998 when tuition fees were first enforced, with the succeeding years picking up and reaching unseen new highs.

However this bounce back has not occurred yet, with UCAS data showing applications have alarmingly dropped again by 8.7% for the academic year 2012-13.

Furthermore, certain establishments such as London Metropolitan University, with a 43% drop in applications, have been dealt such a body blow that senior academics claim if applications drop for one or two more years, which is likely, they and similar universities will go bankrupt.

Suddenly in such a small amount of time, the higher education sector has changed into a fierce battle of survival of the fittest.

This is not surprising.  Whilst I agree a university defaulting could be disastrous for the local area economically, this is not the case in cities such as London which has over 42 higher education providers.   Many of these have been founded within the last decade and set up as businesses with salaries typically higher than private sector CEOs.

Moreover, universities were told by the Universities Minister, David Willets, that charging £9,000 for Home/EU students was only for “exceptional circumstances” and £6,000 should be sufficient for many, especially new institutes with less research activity.   Yet several didn’t listen and decided to charge £9,000 because “they could”.

There are countless universities up and down the country offering genuine value for £9,000, whilst a toxic minority feature very poor graduate employment, facilities, and lacklustre teaching yet demand the maximum tariff fee of £9,000.   As Professor David Green, vice-chancellor of Worcester University says, many of these institutes hiking fees sky high add very little to the UK and feed off vulnerable students.

With more and more school leavers and mature students questioning the so-called graduate premium of some universities, it is clear many don’t think it exists, with several taking alternative paths such as advanced apprenticeships.

Once the momentum of this gathers, those not offering value for money will suffer the same fate as HMV, Comet and Blockbuster, thus being knocked out of the sector altogether.

I, like many, want people to gain the skills for them to reach their potential whilst making the United Kingdom a continued world leader in innovation.  Nonetheless, no university has the right to operate on the basis of people who will pay just for a piece of paper by an accredited institute.

Exploiting students is wrong and I hope to see competition between universities based more on merit, giving students real power in asking what am we are getting for our money, or simply taking our custom elsewhere.

Alexandros Pamnani

Alexandros Pamnani

Alexandros is CEO of Future 4 All.
Alexandros Pamnani
Alexandros Pamnani

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Posted by on February 3, 2013. Filed under Alexandros Pamnani,Columnists.
  • Gianni Teruzzi

    There’s a lot of room for debate on what you say here Alex. The facts and figures are there, I agree. BUT, there is a lot that goes on behind closed doors between universities/colleges and the government that I don’t think we should start pointing fingers anywhere.

    I’ve picked up on two major points you argue here.

    The first is that most if not all of the institutions charge £9000, whatever their position may be on the tables (Guardian, Times, etc.)
    I disagree on the fact that these have turned a blind eye to the advice from the government. Whatever the government said, I believe that it’s more of a financial ‘need’ than selfishness or greed at all!
    As the proverb says, money doesn’t grow on trees! Up until 98, higher education was ‘free’ to us students because the government paid full fare.
    Due to various economical situations, the fares were enforced in 98 and kept rising. I guess the biggest blow was last year when the fare rose by about £5500 p/a.
    The truth is, fares for higher education per head in the UK are much more than just £9000. We get public funding, that lowers the bar down to £9000; and the rest is covered by the Student Loans Company.
    Why do you think international students have to pay so much? (£12250 – £16000 at Loughborough depending on the course).
    By the way, the London RCA asks for £26900 for international students; and I would have to be paying that too if I was to enrol in a degree that was equivalent to or lower than a qualification I already have (i.e. studying for a second masters after getting my undergraduate MEng here at Loughborough) regardless of where I did it or how it was funded. This was enforced in 2008.

    So my question is: if we don’t pay the £9000, then who will? Public funding takes a lot of the load off our shoulders already, and the SLC makes it even easier!
    If institutions were to ask for only £6000, then those extra £3000 per head that the government doesn’t cover would have to be covered by the institution itself.

    The second major point is about how these institutions starting to default could follow the same fate as the recently shut down companies.
    I don’t think the government would allow for that to happen. At the end of the day, an educational institution isn’t a company and shouldn’t be thought of as one. I expect action to be taken before they start shutting on a sudden basis.

    Anyways, those are my thoughts. Nice article bud!

  • Alexandros Pamnani

    Hi Gianni,
    Thanks for your reply and adding to the debate. Always welcomed!

    Your point that universities are charging on a financial need is correct in most cases but as I stated in the piece, it is a toxic minority that are not which is based on fact not opinion, by their financial information which is open access for everyone to see. The minority that has acted in such a way have been slammed by fellow Vice-Chancellor’s and non-governmental organisations specialising in higher education, that have no bias interest to criticise any institute.

    The RCA and international students is a different point altogether. Postgraduate and international funding is completely different which I would love to discuss on a new article with your input. Here I am discussing Home/EU undergraduates as postgraduate/international courses charge whatever they wish without such regulation. I, like the point you made, would pay the same as international students for an MSc at the University of Oxford touching nearly £40,000. Funding is genuine for such courses at RCA, but this is missing the point that some institutes openly are not using the £9,000 for anything of use along with the vast sums charged to international students. Please note, the kind of university I mean in London which I have collated from experience, doesn’t have any feature you would associate with a university and their accounts show this with large student complaints and accusations of open cheating and staff ignoring such behaviour. This is not an attack on universities who may feature only low on rankings because rankings are no definite way of saying how good a university is and what they should charge!

    I agree funding should be from us who ultimately benefit from a higher education, but that does not mean a university has the right to charge X, Y, Z amount without justification that their institute will benefit those attending. Universities such as Cambridge argue they need more than £9,000 to stay competitive and I agree like you, they need money to stay competitive. Harvard, who are on par with Cambridge academically, charge much much more to both home and international students.

    On you second point let me be categorical in saying government has NO power to stop an institution failing. I find universities being run as companies wrong and if a university went bankrupt, it would be the students who are the real casualties sadly. However, the funding councils and government bodies, who no longer provide the majority of higher education funding, do not have sufficient power to intervene to avoid a bankruptcy. Previously they had the monetary power to encourage mergers between weaker universities to stop one collapsing but not now. The government are in the same boat. Ministers, as found under both Labour and Conservative/Lib Dem leaderships, cannot force new management and dictate how to steer the university out of defaulting just like they can with hospitals and schools.

    Thanks again for your input Gianni and apologies for the essay. I look forward to perhaps covering some issues on international/postgraduate topics in more details with you.