Scotland’s independent think tank
Scotland’s independent think tank

We can’t ignore the financial crisis in higher education

This article by Alison Payne first appeared in The Times on 10 June 2020.

While the Covid-19 crisis is placing often unbearable financial strain on many sectors within the Scottish economy it is not always the root cause of the problem. Occasionally it is highlighting pre-existing issues. The higher education sector is one such example.

Universities Scotland, the representative body of the country’s 19 higher education institutions, has suggested that a 50 per cent drop in the number of non-EU international students could cost the sector £435 millon this year.

The loss of non-EU students will impact some universities much more than others. According to the Higher Education Statistics Agency, 32 per cent of first degree students at St Andrews and 20 per cent at Edinburgh are non-EU students. For 13 of Scotland’s 19 higher education institutions the level is less than 10 per cent. (It is less than five per cent at nine institutions.)

But it isn’t only the universities which are reliant on international students that are facing financial problems. Audit Scotland’s report from last year noted that the good financial standing of three of Scotland’s four ancient universities often obscured the struggles facing other institutions. More than half of our universities are facing deficits, and for most modern and chartered universities that situation has got worse since 2014-15. In other words, prior to the pandemic, our higher education sector was already financially struggling.

As a result, sticking plasters to compensate for the loss of international fees are not enough. Even before the lockdown demand on the public purse was high, and that is only going to intensify.

We need long-term solutions to help get the whole higher education sector onto better financial footing. Reform Scotland believes that there needs to be a better balance between the individual graduate and taxpayers in contributing towards higher education. Graduates should pay back a proportion of their tuition fee once they start earning the average Scottish salary.

Reform could also address the “cap” on the number of Scottish students who can go to university. Scottish universities have to be able to roughly match the number of places they offer to Scottish students with the funded places available. As a result, some applicants who meet the entry requirements are not offered places. The coronavirus crisis has both exposed and exacerbated major financial turmoil in the university sector. Restructuring of the way universities generate income can no longer be ignored.