Is this the beginning of the end for poorly performing universities?

The university sector is changing faster than ever as the government attempts to generate increased competition (and, it hopes, increased quality) amongst higher education providers. While concern about universities going under has been circulating for some time, two significant recent changes in the regulatory landscape mean that the end might be closer than ever for failing universities.


Haven’t we heard this before?

Concerns about the challenges that universities will face in the coming years have been voiced for quite some time. In 2010 Vince Cable, then the Business Secretary, put forward the case for a “system with less protection for inefficient institutions,” sparking rumours that the government’s agenda to increase competition would be coupled with a move to allow the weakest colleges and universities to disappear. Across the Atlantic, Clayton Christensen famously announced in 2013 that within 15 years half of all US universities might be bankrupt as they dealt with financial pressures, cloud-based resource networks, and increasingly well informed and demanding prospective students on the other. Yet so far no UK universities have collapsed, and only a few very small (and rather niche) private colleges in the US have failed. Why is this?

In the UK, the controversial changes in student fee legislation were predicted to lead to price competition between universities as newer providers would offer cheaper courses in order to attract applicants, meaning universities that set their fees too high would effectively price themselves out of the market and risk going under. But low-performing (and therefore potentially “overpriced”) universities have not been forced to cut the prices of their degrees since almost all universities have elected to charge the maximum £9000 fees for their undergraduate courses, eliminating any real prospect of institutions competing on price. Moreover, according to Which? survey data, only 29% of prospective students research the costs associated with their preferred course before enrolling.

Commentators have repeatedly predicted that MOOCs (massive open online courses) and cloud-based networks of learning resources would seriously disrupt the sector by providing more personalised and cheaper alternatives, and thereby reduce the viability of the traditional university model. Yet the much-heralded rise of the MOOC has not led to the sudden collapse of bricks-and-mortar universities; instead, much of the online provision of higher education appears to be reinforcing traditional modes of instruction in which a knowledgeable instructor imparts their specialist knowledge to a large cohort of students, who then take tests or write papers to prove they have sufficiently learnt the content. Furthermore, the partnerships between several major universities and a range of online platforms have not diminished the value of a university degree, but have instead strengthened the perceived importance of gaining a widely recognised credential. Higher education student applications are at record levels in the UK, further demonstrating that technology has not yet disrupted the university sector.

In that case, what makes the landscape different this time around?


The end of student number caps

First of all, the lifting of institution-specific student caps and overall student loan caps for the 2015-16 intake cohorts will allow the strongest universities to enrol as many students as they can physically fit into their lecture theatres and residence halls. Previously, universities have been constrained by government-mandated caps on the numbers of students they could each enrol, and the government also limited the overall number of students in the sector by capping the number of loans available for prospective students. These measures distorted competition for students, since there were always more students applying than were able to attend each university – even universities with some of the lowest entry requirements were turning away more than 75% of student applications.

But with the lifting of both types of restrictions this year, we will see a huge movement of medium- and high-performing students towards universities with stronger reputations. When The Guardian polled English universities on their planned responses to the lifting of the student caps, 46% indicated a desire to expand their student intake over the next five years. While many of the most selective institutions (including Cambridge, Oxford, Imperial, LSE and Durham) indicated that they had no plans to expand, several universities with high average entry tariffs indicated that they will seek to expand student numbers, including Bath, York, Sheffield, Newcastle-upon-Tyne, Southampton and Queen Mary London. We already saw the beginning of this trend when student caps were partially lifted in 2013-14 and 2014-15 for school leavers with strong A level grades; there was a noticeable shift in student numbers away from post-1992 institutions towards Russell Group members and other universities with strong reputations. When the 2015-16 academic year begins with student number restrictions lifted entirely, the universities with the poorest reputations will find that their student numbers are even more severely diminished, and that the students they are able to enrol will be disproportionately those with the poorest A level results.

Increased access to information

Next, the government is determined to improve the amount and quality of information available to prospective students about each institution, in its bid to improve overall teaching quality in the sector. Jo Johnson, universities minister, has committed to developing a new Teaching Excellence Framework in order to better assess “value for money” for students, and the government will increase the measurement of graduate outcomes to include data for each course on students’ average income and employment status at 6 months, 3.5 years and 7 years after graduation, disaggregated by student SES group. In addition, the three national higher education funding councils have announced plans to change the way standards are assessed and reviewed in universities, away from a tick-box approach governing university processes and towards measurement of student-focused outcomes such as student feedback, drop-out rates and employment outcomes.

If done well, such a change would have a severe impact on institutions with low quality teaching practices and poor student outcomes, which until now have been able to use the lack of available data to claim that their course offerings were of a comparable standard to all other institutions.

The beginning of the end

It is unclear as of yet how this data will be published, and how government can encourage more students to use the available data when making decisions about higher education providers. But when coupled with a much more open market for students, it may signal the beginning of a shift towards a much more ruthless environment for universities.

For some institutions, these changes herald a new era of growth and freedom: they will be able to enrol as many students as they wish, and according to the higher education funding councils’ proposal more established institutions will face significantly less regulatory bureaucracy – unsurprisingly, a move supported by the Russell Group universities. But for others, these changes may spell doom, since a surge of students into some institutions will inevitably mean a loss for the lowest-ranking universities – particularly given that applications for undergraduate courses rose only 2% this year (around 12,000 extra applicants), a far cry from the 60,000 additional students the government believed would take up the promise of unrestricted access to universities. Plus the proposed new university standards assessment framework will focus primarily on new providers, who will face more regulatory hurdles than ever before, adding significantly to their administrative burden.

It might be time for the government to start developing an exit protocol to support students and staff affected by the possible collapse of a higher education institution.


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