In the blog International Enrolments Unchained from February 2023 the UK universities with the most growth from India, Nigeria and Pakistan between 2020/21 and 2021/22 were shown. In the continuing absence of anything from HESA telling us what happened next and after the rather jaded retreading of old enrollment numbers by IHEC it seemed worth having a look at what happened to one of those players and also taking a look at one of the universities bemoaning its failure to keep up.
It’s good old-fashioned grunt work but lots of the data is there if you are prepared to put in the effort. It’s also revealing about the way some institutions have chosen to stash the cash and shown interesting movements in recruitment of domestic students. The picture is not comprehensive but it’s a sight better and more useful than sitting back and reporting on numbers from the middle of the pandemic.
This blog focuses on two institutions with quite different backgrounds and fortunes. The good news is that they give some real insights into what happened to their international student numbers in 2022/23. As these are formal Annual/Strategic Reports and Financial Statements it is difficult to see why that information cannot be entered into a common database and published within months of the financial year end or, on a preliminary basis, even earlier. Higher education may not like being accused of being outdated but the melting glaciers are beginning to outpace its rate of change – which is sad all round.
University of Hertfordshire
University of Hertfordshire (UoH) international student growth from 2020/21 to 2021/22 was pretty startling and they are not shy about highlighting their continued reaping of the Graduate Visa harvest. Overall, the UoH international community grew to 15,730 (45.4%) of a student body of 34,670. The numbers from India, Nigeria and Pakistan grew by 73.5%, 192.8% and 151.9% respectively although it is interesting to see the tailing off of numbers from Pakistan.
Source: University of Hertfordshire Strategic Reports and Financial Statements
The impact on UoH finances has been startling. Total full-time tuition fees have risen by 55.4% in the four years since 2019/20 with full time international tuition fees rising by 285.9% over the period. Despite the international fee bounty the University appears to have reduced its home student intake in 2021/22 and 2022/23 – this is implied because the domestic fee hasn’t changed but the amount collected is down. If one of the reasons for supporting greater international fee income is that it genuinely protects home student places this is probably worth a more detailed look.
Source: University of Hertfordshire Strategic Reports and Financial Statements
Rather than investing in home student recruitment it appears that UoH has been stashing most of the money away for largely unspecified purposes and spending it on largely unexplained “other operating expenses”. While staff costs rose by £20.5m between 2019/20 and 2022/23 the Other Operating Expenses (which do not have any accompanying note in the financial statement) rose £62.6m. There may be good reasons but it would be a comfort to have them spelt out.
Staff costs and numbers reported suggest investment in Academic and Research staff with their numbers growing over the period by 146 compared to all other staff growing by only 41. This is not always the case when universities find themselves flush with cash and it will be interesting to see how UoH deals with any decline in international student revenue.
Source: University of Hertfordshire Strategic Reports and Financial Statements
The Annual Report shows that the main impact of the financial windfall is that Cash reserves have gone from around £100m in 2019/20 to about £170m in 2022/23. The Operating Surplus has increased from about £2m to £20m and borrowings have declined. It looks as if UoH may have been preparing itself for a less certain future and may be reasonable well set to weather any headwinds.
Source: University of Hertfordshire Strategic Reports and Financial Statements
In that respect and just as a thought experiment it is worth considering that if UoH lost 50% of its international student income gained from 2021/22 to 2022/23 this would amount to around £22m. Even at this level the overall fee income is very considerably higher than 2019/20 and there is a substantial cash buffer to manage changes to a smaller scale operation. One suspects that their approach to management will see trimming of budgets and caution rather than them travelling hopefully on recruitment.
University of York
The University of York (UoY) has had a quite different experience. In January 2024 it was reported as “lowering admission requirements for some international students in light of “financial challenges.”” A reported £24m deficit was, they indicated, partly because, “International student numbers decreased in the year following high recruitment after the Covid pandemic and reflecting changed geopolitical circumstances.” It seems more likely that they had their lunch eaten by Russell Group competitors.
Their summary of student enrollments over the four years from 2019/20 to 2022/23 show a sharp spike with 59% growth in enrollments then a fall of 15.6% in 2022/23. They are not quite as forthcoming on the origin of their international students as UoH so we need to look at HESA’s slightly more dated data to get some insight into what might have happened.
Source: University of York Annual Report and Financial Statements
The HESA data (which gives slightly different numbers to those from the UoY reports but are close enough to be relevant) shows us that the growth from 2019/20 to 2021/22 was driven almost entirely by Chinese PGT students with a healthy boost from Chinese UG between 2019/20 and 2020/21. It is notable that UoY also managed a decent upward bump in students from India in 2021/22 which made up for a small decline in Chinese PGT enrollment that year.
The point is that their growth relied almost entirely on Chinese students. We know from HESA that between 2020/21 and 2021/22 the total number of enrolled FT Chinese students in the UK actually rose – from 140,445 to 148,760 – and that the FT PGT number grew from 72,555 to 77,135. It seems likely that UoY simply couldn’t compete against others in the Russell Group (the International Enrolments Unchained blog also looks at this issue) and it will be interesting to see if the 2022/23 numbers from HESA due to be published in April 2024 support this notion.
Source: HESA
The financial impact of the changes is clear. International FT student fee income rose by 67.5% over two years to 2021/22 (home student FT fees rose 10.6%) and dipped back slightly in 2022/23 (with home FT fees stable). The graphs show a relatively stable picture on staff costs (with USS movements excluded) until a spike in 2022/23.
Source: University of York Annual Report and Financial Statements
The staffing picture is notable for the relative suppression of Support Staff FTE during the pandemic but a significant leap in 2022/23. Over the four years the number of Support Staff has increased by 333 compared to Academic Staff up by 285 over the same period.
Source: University of York Annual Report and Financial Statements
Summary
A number of thoughts come to mind:
- While the change in visa regime will have an impact it seems likely that some UK institutions are significantly financially better off because of the extent to which they took advantage of the changes in post-study work. It is plausible that even a 50% reduction on the financial gains from 2021/22 to 2022/23 is far from catastrophic and particularly so if the institution is nimble enough to cut back to reflect changing circumstances.
- While universities like UoH who exploited these markets effectively can seem vulnerable to large declines in application volumes it is also likely that their on the ground operations will be more effective in taking larger share of declining markets.
- Universities that were unwilling or unable to capitalise on student markets that grew strongly because of changes to post-study work are likely to have been vulnerable to more powerful competition taking greater market share in China. Maybe some of the larger Russell Group universities have a secret persona as playground toughs who rough up less famous peers and take their lunch money.
- It will be interesting to see how the pathway operations involved have fared over these years. UoY’s relationship with Kaplan is likely to have supported them in the earlier years reviewed but may not have been able to overcome the lure of the bigger brand names.
- It would be sensible for an incoming Government to get more granular with the way different institutions are responding to changing market conditions. There is a certain logic to allowing the most dynamic and strongest to thrive, as long as academic standards and appropriate visa handling is in place, rather than introducing arbitrary caps on numbers.
- If international student fee income is, as has been argued, a protection for maintaining or growing domestic student places there needs to be some consideration of how direct the correlation is. From the UoH example above it appears that the university has been effective in securing significant increases in international income but has reduced enrollment of domestic students.