Category: Education

US University Pathways – Build It And They Will Come?

In 2014 Karen Khemka, a partner with the Parthenon Group, said “The U.S. third-party/outsourced pathway market is less than half the size of the Australian market despite having a higher education system that is 10 times the size.We anticipate that growth will be constrained only by the pace at which private providers can develop the market.” (Inside Higher Education, Bridge or Back Door? 30 April, 2014).  With reports recently indicating that two leading providers in the US, Study Group and INTO, are for sale it’s a good moment to see what has happened.

Khemka’s statement came towards the tail end of a period when more than a billion dollars was invested in private pathway providers with the potential for pathway development in the US a strong incentive.  But the next billion-dollar question facing potential investors may be whether US pathways were really a field of dreams where you could, to borrow loosely from the film, ‘build it and they will come’.  Or has attention to the supply side of the equation ignored the challenges of changing patterns of demand around the world?

To size the growth in capacity in the US I took the NAFSA publication Landscape of Third-Party Pathway Partnerships in the United States (NAFSA, 2017) as a starting point. The publication identified eight providers who were partnering with 45 institutions on 1 April 2016. The criteria was that these partnerships had to be ‘contractual agreements between universities and third-party entities to provide English language courses along with academic credit.’

I revisited each of the third-party entities listed to determine what relationships they have added. It is reasonable to say that the wording of some media statements and the content of web-sites is, either by accident or design, unclear about the exact nature of the relationship or offering. However, Table 1 summarises my understanding of new partnerships that meet the original criteria and notes the dates they were announced.

Table 1 – New US Pathways of Eight Providers Announced 2016 to 2018

* Source: Landscape of Third-Party Pathway Partnerships in the United States (NAFSA, 2017)
**I can find no public announcement of the Shorelight partnership with Utah but it is reflected on the web-site of each organisation

Table 2 shows arrangements listed on the providers’ websites but which I have omitted. I am happy to accept any authoritative corrections in my understanding of the nature of the partnerships or courses provided and to add any partners I have missed.  I have not gone beyond the original group of providers although a number of additional providers, such as EC Higher Education, have also developed pathway courses in recent years.

Table 2 – Partnerships listed on provider websites but not meeting criteria

The eight providers have added 21 new partnerships to the 45 shown in the original study – a growth of 47%. This suggests that the private providers have set about growing their businesses in the US with a good deal of vigour and some degree of success. At the time of Khemka’s quote in 2014 Shorelight was a new player but they have moved on to secure the most partnerships just four years later.

That growth in pathway capacity comes at a time when the global balance between supply and demand is in a state of flux and the future is somewhat less certain. The expanding availability of degrees taught in English and the ambitious targets of both traditional recruiting countries and emerging destinations has radically changed the competitive environment. While much of the world is adding rocket fuel to its recruiting engines the US looks to have loaded its unleaded petrol engine with diesel.

In the US a decline in non-degree new enrolments in 2015/16 was followed a year later by both graduate and undergraduate new enrolments declining. And non-degree enrolments continued to fall in 2016/17 which may be a leading edge indicator of further decline. The IEE Fall 2017 International Student Enrollment Hot Topics Survey says ‘Responding institutions report a 6.9 percent decline of international students enrolling for the first time at a U.S. institution, continuing the declines first seen in Fall 2016.’ (IEE, November 2017)

Table 3 – US New International Student Enrollment, 2006/07-2016/17
Source: Institute of International Education (2017). Open Doors Report on International Education Exchange. Retrieved from http://www.iee.org/opendoors

Like many sectors higher education is being obliged to rethink the fundamentals of supply and demand as demographics, competition and disruptive technologies undermine the old certainties.  It is a challenging moment to be launching new initiatives and building capacity based on past performance.

NOTES AND CORRECTIONS

This post was updated on 24 September 2017 to include Lynn University as a Study Group partner announced in May 2017.  Other related statistics have been updated.  At the time of announcement it was billed as ‘is set to open in January’ – presumably 2018.  As of the date of this correction the partner is billed on the Study Group site as ‘Launching Soon’.

UNIVERSITY PATHWAYS – INTO THE VALLEY

The potential sale of INTO University Partnerships has created a lot of interest with a particular focus on the Joint Venture (JV) model it pioneered and how they are performing.    A sharp-eyed and smart ex-colleague pointed me to Companies House, the United Kingdom’s registrar of companies, which offers access to annual reports for every JV as well as the wholly owned entities INTO Manchester and INTO London World Education Centre.  They make for interesting reading.

No doubt the wonks, analysts and number crunchers will comb these reports over the coming months as part of their due diligence and financial interrogation. As The Skids minor-hit of 1979, Into The Valley said – its ‘time for the audit, the gathering trial.’ But for this blog I am going to focus on enrolments because that is the area where most pathway providers claim they bring expertise, investment, global reach and commercial nous which add up to student recruitment that universities cannot match.

The individual filings appear to be consistent in reporting the average number of students in each Centre during the year. Table one shows these for ten entities operating in the 2013/14 Financial Year and still operating in 2016/17. This excludes the now closed St George’s University JV and the INTO Newcastle University London JV established in 2015.

Table 1: Yearly Average Enrolments at INTO Centres

*Manchester and London are not joint ventures.  Their parent company is INTO University Partnerships
Source: Annual Reports 2013/14 to 2016/17

The average enrolments in 2013/14 across all Centres was 4284 while in 2016/17 it was 4016 – a decline of -6.3%. The peak year for enrolment was 2014/15 when an average of 4293 enrolments are shown. As a comparator HESA reports that the UK HE sector’s first year international enrolments declined from 179,250 in 2013/14 to 172,275 in 2016/17 – a fall of 3.9%.

There will be many drivers for enrolment performance and as my previous blogs have indicated there have been winners and losers amongst universities over the past few years. Many in-house international offices have secured outstanding results and some universities have received strong support from the performance of their pathway partners. The picture for INTO looks mixed with only the Queen’s and Stirling JVs showing an increase in average numbers enrolled.

What also interested me was that I once heard a pathway leader explaining to a worried Vice-Chancellor that the period from start up to profitability for a pathway was ‘deepening and widening’. Both Gloucestershire and Stirling JVs were in start-up mode in this period having been incorporated in 2013. But their fortunes seem to have taken different directions with the latter forging ahead as the former has fallen back. It would be no surprise if pathways at more lowly-ranked universities were finding it harder to make progress under increasingly competitive conditions.

We can also see that even some of the pathways at well-known top 30 universities, Newcastle and East Anglia, have had a pretty torrid time in terms of enrolments. Newcastle enrolments fell by 24.3% from their peak in 2014/15 and East Anglia by 17.5% in the same period. City, a relatively well-known university with strong international intakes and a London advantage, saw numbers fall by 25.5%.  This suggests that even well-established partnerships with big name partners are not a guarantee of successful enrolment.

The university partners are, of course, still securing students who progress from these pathways but this scale of decline is unlikely to be made up for by improved progression rates or increased fee levels. My recent blogs have demonstrated that both Newcastle and UEA have seen their overall international student fee income declining over recent years. And while INTO University Partnerships’ share of the JV profits is not the only stream of income to its business it is reasonable to assume that the company would prefer operating profits to losses.

For INTO, and the pathway sector more generally, in both the UK and the US the challenges are not going away any time soon. These include the growth of favoured locations such as Canada, Australia and Europe, the emergence of new destinations and particularly those in Asia, and the ever-present spectre of improving on-line delivery and in-country tuition improving English-language levels.

Tennyson’s poem, The Charge of the Light Brigade, provides an apt metaphor. He wrote that as the cavalry charged ‘into the valley of Death’ there were ‘cannon to right of them, cannon to left of them, cannon in front of them’. There were survivors but of the original 600 Light Dragoons, Lancers and Hussars in the charge fewer than 200 were able to re-assemble with their horses.

Over a billion dollars has been invested in private pathway providers since 2010 as the prospects for growth in the US and UK seemed bright. If there is a next round of deals for those providers – Study Group have also been for sale recently –  it seems likely that the price must reflect the market challenges. If not we may recall that, as French Marshal Pierre Bosquet reportedly said of the Charge, “C’est de la folie” — “It is madness.”

GETTING TO GRIPS WITH PATHWAYS – A THORNY SUBJECT?

After looking at the broader picture on winners and losers in HE recruitment I’ve focused on a small number of high profile university partnerships to give some texture about those with pathway providers. Diving into the detail published by universities gives some insight as to whether pathway provision is delivering a stable stream and enhancing direct recruitment through global brand-building. Comparisons against the national picture indicate whether they are doing better than the sector overall.

Detailed breakdown of pathway volumes and progression rates are usually deemed commercially confidential and are rarely matters of public record. As a proxy I have looked at overall international student enrolment for the institutions involved as one would expect a thriving pathway of any size to provide a solid underpinning for broader recruitment efforts. Where possible I have supplemented this with Quality Assurance Agency for Higher Education (QAA) or University Annual Report data (available through the BUFDG site.

The examples I have chosen show sharply different outcomes at the university level.  The underlying detail from supplementary sources suggests that the pathway is a contributing factor to those outcomes.  In a broader context some institutions have done better than average and some not as well.

While the detail is UK related there is little reason to believe that the same isn’t true of the US and I’m doing some more work on that hypothesis for a later blog.

Three Big Players and Partners
Institutions are never wholly comparable but the universities of Newcastle, Liverpool and Sheffield are all large, metropolitan, Russell Group universities with substantial global ambitions. In the Times League Table 2018 Newcastle is 26th, Liverpool is 42nd and Sheffield is 21st. Newcastle and Liverpool have partnered with INTO and Kaplan respectively since 2007. Liverpool recently extended for another 15 years while Newcastle opened a new London campus with INTO in 2015 and are also in for the long haul. Sheffield was with Kaplan but switched to Study Group from September 2015.

Information published in University Annual Reports on overall international student enrolments in the five years from 2012/13 to 2016/17 suggests that Liverpool have, to date, weathered the headwinds facing the UK better than Sheffield or Newcastle.   Source: University Annual Reports and Financial Statements 2012/13 to 2016/17

The university financial statements suggests that any changes to fees have not been sufficient to make up enrolment shortfalls. The fee income reflects the down-turn in student numbers for Sheffield and Liverpool in the 2016/17 year but also suggests weakness for Newcastle over the past two years.
Source: University Annual Reports and Financial Statements 2012/13 to 2016/17

To provide a comparative performance for the universities I have used HESA data for all international enrolments (all levels, full-time and part-time) in the 129 universities in the 2018 Times League Table. This is a measure which should include students enrolling across the whole year and should account for pathway progression from all intakes.  It usually differs from the University Annual Report enrolment figures which are generally taken from a count in December of the academic year.  I review the complexity of the broader HESA data in an earlier blog.

All the universities outperformed the average in the first two years under review. Liverpool and Sheffield achieved this between 2014/15 and 2015/16. Liverpool continued to outperform the sector from 2015/16 to 2016/17.
Source: HESA

Understanding The Pathway Performance
There is some insight into the changes at the pathways for Liverpool and Sheffield through the Quality Assurance Agency reports. For INTO Newcastle there has been no similar educational oversight although my understanding is that the changing visa situation will mean that ISI will provide oversight in the future which may lift the veil. My observations below are drawn from published material including university annual reports.

Newcastle and INTO
The University notes in its 2016/17 Annual Report that the enrolments at INTO Newcastle ‘had a disappointing year with a 7% reduction in student volumes’ which was comparable to the University’s direct recruitment decline. As a 50/50 joint venture partner the University also reports on its share of joint venture income and surplus/deficit. For completeness I have shown both the Newcastle-based and London-based operations but note that the latter has substantial undergraduate and postgraduate intakes in addition to pathways.
Source: University of Newcastle Annual Reports 2012/13 to 2016/17

The London joint venture is still in start up mode and student numbers are reported as having grown from 24 in year one to 184 full time and 20 part-time students in year two. The income and operating surplus/deficit are reported as:
Source: University of Newcastle Annual Reports 2014/15 to 2016/17

Liverpool and Kaplan
What is most striking about reviewing performance through the lens of the University Annual Reports is that it can reflect a level of engagement and shared commitment – or in some cases not. On page three of the 2016/17 Liverpool University report the Vice Chancellor reflects on the long-standing relationship, the renewal agreement for the next 15 years and the investment in new facilities for the pathway. The report notes that the partnerships with both Kaplan and Laureate International ‘are vital to the University’s international outlook and global ambitions.’

The Annual Report notes that Kaplan’s International College opened in 2007 with 146 students and has seen 6,500 students study at the College, with 20% of the institution’s international recruitment achieved via its pathways. Future investment includes construction of a new, 47,000 square foot, 13-storey college building due to open in 2019.

A key determinant of a successful pathway relationship is the extent to which the University partner embraces the strengths of the private provider and clears roadblocks to innovation and recruitment. Both parties are undermined if the University does not engage productively at both a senior and operational level. The 2016 QAA Report for Kaplan International College at Liverpool notes ‘The close working relationship with the partner university, which enables highly effective and regular processes for developing, monitoring and reviewing of programmes’.

Sheffield and Study Group
Sheffield International College was first established by Kaplan with the University in 2006. In 2010/11 it had over 1100 students and this number had ‘grown’ by 2013 despite no new programmes being introduced (QAA Reports 2012 and 2013). Over a period from March 2014 to September 2015 there was a transition to Study Group.

The November 2016 QAA Review indicates that 933 students were in the Centre and the next report in October 2017 says that ‘student numbers fell by around 12 per cent between 2015-16 and 2016-17’. On the upside it was noted that 7 per cent more students entering programmes at USIC being eligible for progression to the University. The timing of the QAA review makes it difficult to draw firm conclusions about full-year recruitment.

It’s still early days in the partnership and the whisper in the sector is that the University protected its commercial interests in the event of any performance issues – perhaps a sign that universities are becoming more commercially minded. The PIE noted in August 2017 that ‘Providence Equity Partners, which owns higher education provider Study Group, is reportedly preparing to sell the company for £700m’  so there is a lot at stake as the company manages the expectations of its large stable of partners. Interesting times as the UK itself comes under relentless market competition from Canada , Europe, Australia and the emerging destinations in Asia.

Closing Thoughts
Nobody who is looking from outside can full understand the dynamics of a relationship between University and pathway provider. Anyone who has been at the sharp end knows that personalities, department politics and academic apathy are all facts of life as is, from time to time, a revolving door of senior decision makers. An initial meeting of minds at the highest level is usually not enough for sustained success so the working relationships need to become rapidly embedded.

What is for sure is that the chances of maximising performance are vastly enhanced by realistic expectations, responsiveness to market and action on shared commitments. Universities need to see the pathway as being fundamental to their success and treat the provider as an equal partner with important skills. Providers need to be honest about what they can deliver and manage how their portfolio is balanced to meet targets and business plans.

And perhaps, given the age of the pathway model and the way the market is changing it is time to consider whether further innovation is needed. Over the years I have heard several major pathway players define their approach as ‘disruptive’ or ‘transformational’ but it is difficult to see how pathways are any different now to when they were introduced.

Notes and Corrections

Comments are always welcome and I think it is a good thing to note any corrections or amendments to the text.

30 April 2018 10.05amPDT – amendment to correct ‘Newcastle and Liverpool have partnered with Kaplan and INTO respectively..’. Correction to clarify that INTO partner with Newcastle and Kaplan partner with Liverpool.

PATHWAY, DEAD END OR TIME FOR A U-TURN?

August 2018 will be the fifth anniversary of Shorelight’s first partner, Bath Spa University in the UK, being announced with suggestions that the university would ‘see its overseas intake swell to around 2,000 students over the next four years.’. The four years would run from 2015/16 to 2018/19.

It seemed a good moment to look at the pathway market and what happens when relationships don’t  work out.  This is partly because we may be entering a period where the pathway sector has matured and circumstances make it ripe for realignment.  The stakes are high on all sides and the factors are particularly relevant to the UK and US where growth in pathways has been rapid and international student recruitment has been under substantial pressure.

As finances tighten university management is under more scrutiny and is likely to demand more in terms of targets and delivery from partners.  The consequences of a failing pathway are becoming increasingly difficult to hide as direct recruitment gets harder.  Providers have their own problems with unprecedented global pressures and ubiquitous competition.  Some may be reaching a point where optimising their portfolio is more important than simply adding or maintaining capacity.

In the UK a number of institutions have been following the University of Sheffield to see how the switch from one major private provider to another might work.  Loyalties are under pressure as university leaders who signed the deal move on and some pathway providers look to change hands after the glut of private equity investment from 2010 to 2014.  Pressure to perform has never been greater.

So, when a pathway becomes a dead-end there is every incentive for one or other party to make a U-turn.  Or, as Warren Buffett is quoted as saying, “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be a more productive than energy devoted to patching leaks.”  And it doesn’t really matter if it’s a long-term contract (where remedies for under-performance are usually written in) or time for a tender after five years.

IT HASN’T ALWAYS ENDED WELL IN THE PAST
There is, of course, precedent and although closures can be hard to trace I have listed below those that I have uncovered in my research.  New partnerships are usually heralded with a fanfare and people smiling as they shake hands on a deal done. Unsurprisingly, a veil is drawn over partnerships that end and those that are public are usually dressed in anodyne media responses.

For both universities and providers that is unfortunate.  Considering and addressing failure is a good way of learning and often more informative than the bright, shiny case studies which are so popular as sales tools.  In my time with two leading universities with private providers and as COO and CEO with two providers I saw many factors that can make or break a partnership.  These are worth sharing.

I make no comment on the reasons for the ending of the relationships noted (but have referenced reports where available). Neither do I claim that this list is exhaustive and I would be interested in any other examples.  For organisations contemplating partnerships an open and honest discussion with those who have tried and moved on is probably worth as much as hours of expensive contract development.

Study Group
i) Stirling University (Opened 2007- Closed 2013) Source: QAA

INTO
i) University of East Anglia London (2010-2014) Source: THE)                                                                         ii) University of Stirling London (Opened 2014 – Closed 2015?)                                                                                     iii) St George’s University (Opened 2012 – closed 2017 Source: St George’s University Annual Report

Oxford International
i) Canterbury Christchurch (Opened 2015 – closed 2017?)

Kaplan
i) University of Utah (Opened 2010 – Closed?) ii)University of Sheffield (Opened 2006 – Closed 2015)

Navitas
i) Western Kentucky University (Opened 2010 – Closed 2016)
ii) Edinburgh Napier (Opened 2011 – due to close 2018)

PRIVATE PATHWAYS MAY NOT BE ACCESSIBLE OR GUARANTEE SUCCESS
UK universities with the greatest decline in overall international enrolments in the past five years often have no pathway partner or are relatively late to the party. Several of the non-aligned universities here have been actively seeking providers but there is, inevitably, caution from providers about taking on institutions that do not have underlying strength.

It remains to be seen whether some of the new partnerships can materially alter the trajectory of underperforming universities.  Sector sources suggest that Oxford International and the University of Bedfordshire are parting company and the provider is not currently listing this university on its website.

Table 1 – UK Universities With Greatest Decline In International Enrolments 2012/13 to 2016/17

Source: HESA (enrolments), QAA and University/Company websites

And that brings me full circle to Bath Spa and Shorelight. HESA data (supported by the University’s Annual Report narrative) showed strong growth in international recruitment from 2012/13 to 2014/15. In the first full year of the partnership with Shorelight (2015/16) there was a weakening of growth which was followed by declining international enrolments in 2016/17.  There is some way to go for the university to reach the anticipated 2,000 by 2018/19.

Table 2 – Bath Spa University International Enrolments 2012-13 to 2016/17

Source: HESA

Perhaps more troubling is that in December 2017 the THE reported that ‘figures available on (sic) Companies House show that Bath Spa Global – an international pathway college venture set up in 2014 in partnership with US firm Shorelight Education – has lost about £1.4 million in the three years to July 2016, while its parent company Bath Spa U has lost about £736,000 over the same period.’. The 2016/17 Financial Statement from Bath Spa showed international student income and numbers declining year on year and noted that the joint venture partnership, Bath Spa Global, ‘remains fragile’.  At the time of writing I can find no mention of Bath Spa University on Shorelight’s web-site and no current reference to Shorelight on the University’s site.

Winning And Losing In Global Recruitment

A lot is written about ‘winners’ and ‘losers’ in the race for international students. Putting some edges on that brings some surprises in terms of scale and the institutions in each camp. Between 2012/13 and 2016/17 the biggest eleven gainers in the UK ‘gained’ nearly 20,000 more international students while the eleven largest losers ‘lost’ approaching 19,000 students.

The outcomes show that mid-ranking, non-metropolitan, and less well-known universities can compete at the top table.  It is also clear that being part of an exclusive clique of universities is not, on its own, enough.  Good case studies abound for anyone wanting to grow enrolments in challenging times.

These conclusions are drawn from the Higher Education Statistics Agency (HESA) data showing international (non-UK or Other European) students enrolled by institution between 2012/13 and 2016/17. It’s a public record, self-reported by universities, and is widely used so it is one way of keeping score. I reflect on some of the complexities in notes at the end of the blog (and look forward to any corrections or challenges). When I worked for universities the time honoured response from planning offices to questions about student numbers was ‘how many would you like us to have’!

To give context HESA reported non-European enrolments between 2012/13 and 2016/17 growing from 299,490 students to 307,540 with a high point of 312,010 in 2014/15 (https://www.hesa.ac.uk/data-and-analysis/sfr247/figure-8).  This is a total for all levels, years and modes of study.

WINNERS ARE NOT ALWAYS AS EXPECTED
Unsurprisingly large, well-established, metropolitan universities with strong rankings are well represented in the top eleven gainers.  I was told that when  one Russell Group university began to consider its brand management its proud response to questions about key selling points was ‘we’re big and we’re old’. For some that may still be enough but they are far from the only winners.

At number eleven, De Montfort University (DMU) has shown that clear strategic direction, strong engagement at senior levels and powerful execution can make a substantial difference. As CEO of their pathway partner, Oxford International Education Group, I saw at close hand the strong commitment to internationalisation and collaborative working. Their overall success reflects the drive of James Gardner, Pro Vice-Chancellor for International and Ben Browne, COO, under the leadership of Vice Chancellor, Prof Dominic Shellard.

Their partnership with Oxford International, established in 2013, has also played a part with integrated degrees and 94% progression rates in 2015-16 (QAA Educational Oversight, March 2017) boosting enrolments. A good lesson for any university with a private provider as partner is to be found in the strength of working relationships between Oxford International’s founder, David Brown, and former-Director of Global Sales, David Anthonisz, and senior university figures, including Gerard Moran, Director of Academic Partnerships.

Table 1 – Top Eleven Changes in International Enrolment by Headcount 2012-13 to 2016-17
Source: HESA tables 2012/13 to 2016/17 (see notes at end of blog)

BUT ABSOLUTE VOLUME IS NOT THE ONLY GAME IN TOWN
One would expect some of the biggest players to rack up the largest volume growth. But significant gains can also be made by universities with more modest starting points. The top five in terms of percentage growth over the period (with at least 2,000 international students in 2016/17) is a different way of considering potential. Table 2 has representation from England, Wales, Scotland and Northern Ireland and demonstrate that major English cities are not the be all and end all.

Table 2: Top Five By Percentage Growth of International Students – 2012/13 to 2016/17 (with total student volume over 2,000 in 2016/17)

Source: HESA tables 2012/13 to 2016/17 (see notes at end of blog)

The performance of Queen’s under the guidance of James O’Kane, Registrar and COO, and Isabel Jennings, Director of Marketing, Recruitment, Communications and Internationalisation, has been outstanding. I worked alongside them to develop an international enrolment strategy from 2011 to early 2013 and again as COO at pathway partner, INTO, in 2015. There were significant challenges to overcome in terms of location, reputation, data, programs and processes but these results show the potential for a focused, well-executed, long-term strategy to pay dividends.

This chart does not include some smaller institutions with growth stories. Falmouth University grew from 125 to 280 and the University of the West of Scotland by a startling 164.5% (405 to 1055) over the period. Cumbria, Newman, York St John, University of the Arts London, Birmingham City, London South Bank, Westminster, and Brighton – all ranked below 100 in the 2018 Times league table – have also added students over the five years. Each will have a different strategy but under tough competitive conditions every additional student reflects thought, effort and delivery.

FOR EVERY RAY OF SUNSHINE A DROP OF RAIN MUST FALL
The universities that have seen their enrolments decline by the greatest percentage lost 18,875 students. Some have had specific difficulties, such as visa challenges. Most are in the lower half of most league tables.

It is possible that the closing gap between the fee value of an international student and a home/EU student may have encouraged some universities to rebalance their community. But it is difficult to believe that many of these institutions set out to lose international enrolments to this level.

Table 3 – Eleven Largest Negative Changes In International Enrolment by Headcount 2012-13 to 2016-17

Source: HESA tables 2012/13 to 2016/17 (see notes at end of blog)

The most surprising is Nottingham University which has a well-deserved recognition for its international reputation and reach. Its Annual Reports for the period suggest a much smaller decline in international students from 6887 in 2012/13 to 6809 in 2015/16. The purpose of this blog is to reflect the data as reported through HESA but changes in reporting may have contributed to the overall scale of the decline.

Nottingham’s 2017 annual report also notes, ‘The University plans for a significant expansion of international recruitment, underpinned by the international foundation year, have been re-assessed and deliverable yet challenging targets have been agreed.’ Kaplan have been selected to support them.

In percentage terms Chart 4 notes those in the top 30 in the Times League Table 2018 that appear to have gone backwards over the period.

Table 4 – Universities in Times Top 30 Showing Volume Declines from 2012/13 to 2016/17

Source: HESA tables 2012/13 to 2016/17 (see notes at end of blog)

What this can mean for a university is illustrated by Table 5 showing income from international student fees over the period for three of these universities.  While East Anglia’s and Essex’s declining income in 2016/17 is not calamitous it results from a declining student body and stagnation/low growth in fee levels. The University of Dundee has, from a lower base, been able to implement significant tuition fee increases.

Table 5 – International Student Fee Income (£000s) 2012/13 to 2016/17Source: University Financial Statements 2012/13 to 2016/17

THERE IS POTENTIAL FOR ‘THE DISCONTENTED’
Large institutions with strong rankings and good locations undoubtedly have some advantages in attracting international students. But less-well known, geographically challenged universities are achieving significant growth by adopting aggressive, well-planned and brilliantly executed strategies. Equally, it is true that even being well placed in the league tables, a big player with an established reputation, or part of the Russell Group ‘club’ does not guarantee growth.

I have long held the view that, as Oscar Wilde commented, ‘the world belongs to the discontented’. The challenge for ambitious universities is to maintain a sense of productive agitation for improvement in their approach to international recruitment. Constant attention to every facet of the pipeline is critical in a competitive environment as is a data-led approach and careful targeting of potential students with relevant programs of study.

NOTES
1. ‘HESA student figures include anyone enrolled for more than two weeks on a higher education (HE) course that is primarily based in the UK, unless they are an incoming exchange student, on sabbatical, writing-up or dormant.’ More detail at https://www.hesa.ac.uk/data-and-analysis/students/whos-in-he
2.Individual HESA tables from 2012/13 to 2016/17 were used to compile data in a time series for all universities in the 2018 Times league table. Totals and percentage gains or losses were calculated from this.
3.HESA tables round data which leads to occasional abnormalities in totals but these are minor in context.
4. The largest institutions in the HESA tables not featuring in the 2018 Times league table are University of Wolverhampton, Cranfield and London Business School – these accounted for 3085 students in 2016/17.
4. This blog reflects the HESA tables as published. It is recognised that reporting errors or changes in reporting conventions may have occurred.
5. The numbers shown in University annual reports usually differ from the HESA data. There are a number of reasons, including timing of any ‘snapshot’ used for University purposes.

THE FUTURE OF INTERNATIONALISATION – MUCH MORE THAN A DEAD CAT BOUNCE

Altbach and de Wit’s suggestion, in University World News (23 February 2018), that ‘the era of higher education internationalisation…might either be finished or, at least, be on life support’ is troubling if true.  However, the examples chosen to support their case seem insufficient in number or weight for the prognosis given. There is, however, a need for ‘rethinking the entire international project of universities worldwide’ that recognises and embraces a new era of internationalisation.

Student Mobility – Slower Growth, Greater Choice

Higher education internationalisation over the past 25 years has been complex. Suggesting, as Altbach and de Wit do, that it ‘appears to have come to a rather abrupt end’ ignores that the undercurrents have always ebbed and flowed. Student mobility may be slowing but diversity of destination, quality of options and increasing student choice is as strong a signal of vibrant internationalisation as simple growth in numbers travelling.

Exemplifying the differentiated rates of growth is simple. US enrolments stagnated for a decade following the attacks on the twin towers in 2001 but enrolments grew rapidly between 2009/10 and 2014/15.

Table 1 – US International Student Enrolment Trends 1945-2015

Source: Institute of International Education (IIE), “International Student Enrollment Trends, 1948/49-2014/15,” Open Doors Report on International Educational Exchange (Washington, DC: IIE, 2015), available online.

By contrast global mobility saw remarkable growth worldwide from 2000 to 2010 but flattened out thereafter. Table 2 using OECD data illustrates this point. The US appeared to be catching up but must have been doing so at the expense of some other providers.

Table 2 – OECD – Growth in Students Studying Outside Country of Residency

Source: OECD Education at a Glance 2017: OECD Indicators Figure C4.a

What these graphs don’t capture is the retrenchment in Australia from 2010 to 2013 followed by rapid growth thereafter, the acceleration of enrolments in Canada from 2013, or the growth in other providers from non-traditional destination countries. At a more granular level there have been institutional winners and losers including some who have shown healthy growth even as their country has plateaued.

Perhaps Altbach and de Wit’s gloom is partly based on unrealistic expectations. Altbach, writing with Bassett, in Foreign Policy magazine (The Brain Trade, Foreign Policy, Washington DC pp 30-31, Sept-Oct 2004) suggested there would be 8 million globally mobile students by 2025. It was a prediction that found its way into OECD publications but appeared to have little or no data-based foundation. I explore this in more detail in an earlier blog.

A Thousand Cuts Rather Than A Fatal Blow

The current struggles of the UK and US are cumulative rather than, as suggested, wholly or even mainly due to short term factors such as Trump and Brexit. Government policies have an impact but are seldom the only factor and some well organised institutions have significantly outperformed their national sector. Overall , a resurgent Australia, a dynamic Canada and an increasingly assured Europe have taken increasing student numbers as overall growth has slowed. Even in the current year the January 2018 statistics show an 11% rise in applications to the UK through UCAS – despite Brexit coming closer by the day.

It is also possible that many in the US and UK were too slow to recognise or react to foreseeable market changes. The surge of Saudi students slowing to a trickle was predictable, Indian students found more welcoming and lower cost options, and declining oil prices damaged Science without Borders and other Government schemes. Greed in escalating the cost of study, lack of differentiation and insufficient investment in brand building compounded these problems.

Course Delivery In English – Carry On Regardless Or Ripe For Revolution?

Altbach and de Wit seem concerned about the future of English-language delivery. They suggest a growing backlash against delivering courses in English citing comments from the Netherlands, Denmark, Germany and Italy. While nobody doubts the sincerity of academics (I am less sure about politicians) who value tuition in local languages for cultural and social reasons the future of teaching in English is likely to continue to be propelled by market forces.

Study Portals reported in 2017 that in 19 European Higher Education Area countries there were 2,900 Bachelors Degrees taught in English. Globally, they reported in February 2016 that there were almost 8,000 courses being taught in English by leading universities in non-English speaking countries. For better or worse this growth was a response to the demands of the international market and the signs are that there is more to come.

Xiamen University opened the first overseas Chinese university campus, in Malaysia in 2017, and it is committed to teaching predominantly in English. There is extraordinary availability of English-language MOOCS (75% of the total in 2015 according to Class Central) and other online courses from international universities. Longer-term a $200 million fund established this week for opening and acquiring Chinese and English bilingual preschools in China is one signal of where the smart money is going.

Will TNE stand for Totally Negligible Expansion?

Altbach and de Wit also conclude – ‘Overall, it is possible that the halcyon days of growth in branch campuses, educational hubs, franchise operations and other forms of transnational education are over.’ They mention Groningen’s decision not to proceed with a branch campus in China but history of universities considering branch campuses is long on false starts and there is no doubt that remote operations are not for the faint-hearted. It is equally notable that as Groningen got cold feet the University of Liverpool announced a second campus with Xi’an Jiaotong University. It is expected to open in 2020 and grow to over 6,000 students by 2025.

Looking further afield universities from 12 different countries operate campuses in higher education “free zones” in Dubai. In 2016 those branch campuses and local institutions numbered 62 with a combined enrolment of 60,300 students, including 33,600 foreign nationals. For the future there are more than 550 English-medium K-12 international schools across the UAE with roughly 550,000 students aged between 3 and 18 in English-medium international schools.

Universities are, quite rightly, learning lessons from failed attempts at TNE but this is likely to mean that future developments are more sustainable. In terms of an internationalisation mindset it will be important to think creatively about the delivery channels, including online, that are available and how they might be creatively aligned in new ways.

A NEW WORLD ORDER

Altbach and de Wit comments regarding non-western higher education are disappointing. At best they lack generosity and, at worst, underestimate the role that these countries will play in a new era of internationalisation. They say China is considered ‘academically closed’ and ‘not the first choice for students’. India ‘lacks relevant infrastructure…struggles to shape its academic structure’. South Africa, Brazil and Russia get similar short shrift.

All higher education systems have challenges and difficulties but there is enormous ambition and significant leaps in quality and investment in many countries. And their ambitions are clear.


Source: ICEF Monitor and The PIE

In terms of desirability it is worth noting that in 2013 China was not in the top ten of receiving countries for students from Africa. In 2017, according to US News, it had overtaken the US and UK and was second only to France. The Times of India reported in 2018 that China had outstripped the UK in student enrolments from India. While Western students may not have a history of travelling overseas in large numbers to study but it seems reasonable to believe that as the world economy realigns there may be significant motivation for them to consider the options.

Internationalisation – Alive And Well But Different

The brute facts for the entire sector are that global demographics are changing and there is a realignment of economic and intellectual power between traditional receiving and sending countries. Technology has brought considerably more power into the hands of students and parents (as well as their advisors) in assessing their options. Where information is freely available and supply exceeds demand a strong value proposition, demonstrable quality, and relevance to customer needs are vital.

In the new world of internationalisation some thematic developments seem likely:
i) Distribution of international students and motivation of providers will change. As countries exceed their volume targets ahead of schedule they may slow growth to take a quality premium. Other providers, including non-traditional destinations, will seize the opportunities this creates.
ii) Power will increasingly lie with students and their advisers. Institutions that believe they merely have to ‘build it and they will come’ will be disappointed. Those who are responsive, flexible and delivering what the market wants will prosper.
iii) The propensity of students to break with tradition and travel west to east in larger numbers will increase. This may, over time, help to embed ‘internationalisation’ as a global phenomenon.
iv) Regional hubs will thrive and provide relatively low cost/risk entry channels for new competitors while branch campuses may eventually grow sufficiently powerful to become ‘partner’ institutions rather than subsidiaries.
v) Online delivery will present new and exciting opportunities for collaboration between institutions as well as bringing lower cost options to students.
vi) The notion of a student travelling abroad for four years to complete an undergraduate degree may become seen as antiquated. For many years institutions have been prepared to deliver in discrete components where a year or two in-country leads to a period overseas. The potential for staging posts involving all or some of distance learning, a regional hub, and a ‘sandwich’ or final year on the other side of the world seem possible.

Internationalisation in such a dynamic and competitive future requires an enlightened approach to accreditation and collaboration as well as a commitment to delivering what the student needs. There will be substantial rewards for those who show creativity and courage in finding and implementing solutions. Those who cling to the old ways or move too slowly will find their horizons substantially shortened.

China – Pigs in Pythons, Geese Laying Golden Eggs and the Sea Turtles

As we enter the Year of the Dog many international recruiters and university bosses will be anxious to know whether Chinese students will continue to follow the call to the traditional receiving countries.  The period after Chinese New Year usually signals the quickening of pace in the recruitment cycle but may bring a summer of sluggish, difficult dog days for conversion. Some may even wonder how things might change by the time of the next Dog Year in 2030.

It is no secret that China has been the rocket fuel driving international student enrolments for the past fifteen years. The statistics show that US and UK enrolments continue to become increasingly dependent. And while the Canadian beaver may be popular and industrious, and the Australian kangaroo is bounding ahead, they look increasingly vulnerable to any changes in the market dynamics.

Table 1 – % of Chinese Students in Key Receiving Countries

NB: Gathering data that is matched in terms of definitions and timescales is problematic. The general point regarding concentration of students is clear but the sources are shown for clarity.

The demographics of China do not seem particularly helpful. The pig has passed through the python in terms of the bulge in University-age students. There are 32million fewer Chinese aged 20-24 than there were five years ago. And in another five years there will be 18million fewer than today. Numbers stabilise and then begin to grow slowly but by 2029 remain below 2017 levels.

Table 2 – China DemographicsIt would be fair to argue that 76million people is still a very big audience to aim at if you are a skilled recruiter prepared to travel around second, third and fourth tier cities (handy definition at http://multimedia.scmp.com/2016/cities/ ) as the move to urban areas continues.

There is also the lure that the Chinese middle-class is growing rapidly. Surely the wealthy middle-class is the goose that will lay sufficient golden eggs to more than make up for the fall in population?  Well, maybe, but the concept of a ‘middle class’ seems quite slippery.

In 2016 McKinsey were reporting that, 54% of China’s urban households will be classified as “upper middle” class by 2022. Upper middle class sounds pretty well-off but is measured by McKinsey as household income of $16,000 to $34,000 a year. Just for comparison, the U.S. Census Bureau reported in September 2017 that real median household income in the US was $59,039 in 2016. If you have to pay tuition fees and accommodation in dollars relativity becomes reality.

To give this some further context Table 3 (below) shows the IMF and World Bank comparators on GDP per capita. The Geary-Khamis measure is an ‘international dollar’ that allows a comparison between countries allowing for local cost of living etc. The disparity between the US, UK and China on this measure seems stark.

Table 3 – Comparable GDP Per Capita (Geary-Khamis dollars)

IMF (2017) World Bank (2016)
USA                  59,495           57,467
UK                    43,620           42,609
China               16,624           15,535

Source: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

Average wage growth in China looks pretty impressive. Trading Economics/MOHRSS statistics show strong growth.  But a wage of CNY67569 is worth $10,643 in February 2018.

Table 4 – Growth in China Wages

The real question may be whether the burgeoning middle class will secure enough of the growing wealth of the country or whether the distribution of wealth will increasingly be skewed to a super-rich cohort. The New York Times in 2014 reflected on Professor Thomas Piketty’s book Capital in the Twenty-First Century. Critically, the author notes ‘…income from wealth usually grows faster than wages. As returns from capital are reinvested, inherited wealth will grow faster than the economy, concentrating more and more into the hands of few.’

Table 5 (below) suggests that a key question regarding the distribution of wealth to the Chinese middle class may rest on the extent to which China is more like France than the US and Britain.

Table 5 – Share of Total Income Change in Five Countries

Source: Capital in the 21st Century, Thomas Piketty

It may be, of course, that the growth in wealth is such that it will overcome the decline in demographics and the distribution of income hurdles. But a third challenge is how supply matches against demand in global higher education.  In this respect developments in China (as well as other countries in Asia) are likely to bring serious and sustainable competition to traditional providers.

A full analysis is beyond the scope of this blog but recent reports give some sense of the direction of travel as far as capacity, quality and value are concerned:

i) Universities in China have built capacity at a furious rate and as Establishing A Presence in China notes notes ‘at current rates….there will be a university seat for every child in China by 2030’. (OBHE quoted in THE)
ii) Xiamen University opened its first overseas campus, the first Chinese university to do so, in the Malaysian state of Selangor in September 2015. The primary tuition language is English. The campus intends to split its students body equally between Chinese, Malaysian and other nationalities.
iii) The Asian Universities Alliance, launched in April 2017 will boost Asia’s influence on the global higher education stage as well as supporting regional student mobility. Founding members span 14 countries and include Tsinghua University, Peking University, and the Hong Kong University of Science and Technology.
iv) Government investment in Chinese academic research is significant and quality has moved ahead quickly. An example, noted by the White House and reported in the Washington Post (October 2016), gives context in terms of research into artificial intelligence.

Table 6 – Journal Articles Mentioning Deep Learning

vi) The Double First Class Project is reportedly allocating 40 billion RMB ($6.04 billion USD) to a comprehensive project to bring 42 Chinese universities and courses at another 95 Chinese institutions to a “world-class level”.

The move towards a powerful higher education sector capable of serving its own people as well as many other international students seems well established. But, as my economics teacher at school used to tell the class – all decisions are economic. She was in a relationship at the time with the person who became my politics lecturer at College who would tell us – all decisions are political. Education is often just a side show.

In that regard it’s worth considering the initiative commonly known as ‘One Belt One Road’. As one of the largest infrastructure and investment project in history it reportedly covers more than 68 countries, equivalent to 65% of the world’s population and 40% of the global GDP. The extension of soft power through hard cash may become critical in determining the long-term movement of students around the globe.

A self-sufficient China at the heart of a global network will become an even bigger attraction for business and, inevitably, for students drawn to a global economic superpower that is investing so heavily and making travel easier and cheaper. Many Western universities have already ensured that they are partnered with well-funded Chinese institutions and despite the odd wavering over academic freedom we have reached a point of no return. It seems likely that there will be a genuine tipping point where the long-established flow from east to west will reverse.  The haigui, or sea turtles, may not need to travel (and certainly not in the volume of the last fifteen years), to secure the education they need for their lives and careers.

In that respect I find myself considering the words of Dr Monika Korte, the scientific director of the Niemegk Geomagnetic Observatory at GFZ Potsdam in Germany. She said, “It’s not a sudden flip, but a slow process, during which the field strength becomes weak, very probably the field becomes more complex and might show more than two poles for a while, and then builds up in strength and [aligns] in the opposite direction,”.

Dr Korte was talking to livescience.com in 2012 about the anticipated flipping of the Earth’s magnetic poles (What If Earth’s Magnetic Poles Flip? February 10, 2012). The article makes the point that the change is not instantaneous, that the period of change is difficult to manage and characterised by a significant weakening of the current magnetic field.  But eventually the needle points in a different direction. I suspect that is a pretty good metaphor for the Year of the Dog 2030.

8 million globally mobile students – a myth, based on a rounding error, sustained by wishful thinking?

When a number becomes repeated often enough as a fact it is often difficult to see past it. If it appears to be backed by credible sources like the OECD any sense of concern about authenticity diminishes. That is probably why the prediction of 8 million students studying outside their home country by 2025 entered the HE sector’s psyche. But the emergence of that number and its credibility as a prediction based on solid data is difficult to trace.

It’s important partly because of the scale of investment in the sector based on its potential for growth. Since 2010, over a billion dollars has been invested in private providers of pathway courses – examples include Providence, Leeds Equity, and Bridgepoint deals involving Study Group, INTO University Partnerships and Cambridge Education Group. Shorelight and Oxford International also become new entrants to the pathway landscape in 2013 and 2014 respectively.  The title image to this blog is a cropped slide from a presentation at a major, publicly-quoted, pathway provider’s April 2017 Investor Strategy Day.

Universities in traditional receiving countries have also built development plans around growing numbers of international students studying on campus. In the UK alone they are looking to increase international student fee income by nearly 30% in the three years to 2018/19 – a figure even HEFCE politely suggested shows ‘over optimism’. And the Daily Telegraph reported £5.3bn being sunk into purpose-built student accommodation in 2017, compared to £4.5bn the year before and a record £6bn in 2015.

The sector and those who write about it have often used the 8 million as a touchstone. In 2015 the University of Oxford’s International Strategy Office stated, ‘The global population of students who move to another country to study continues to rise…is likely to reach 8 million students per year by 2025.’ In May 2017 a NAFSA flier from one private provider stated confidently, ‘8M students to study outside their home countries by 2025’. The ‘2016 Top Markets Report on Education A Market Assessment Tool for U.S. Exporters’ from the U.S. Department of Commerce also stated that by 2025 ‘…eight million students will be globally mobile.’ 

Most authors quote the same source for the forecast – the 2012 OECD publication, AHELO Feasibility Study. But the OECD do not appear to have done their own data-crunching. The Study reads, ‘growth is projected to continue in the future to reach approximately 5.8m around 2020 (Bohm et al, 2004) and 8m by 2025 (Altbach and Bassett).’ (OECD, AHELO Feasibility Study Report Volume 2, p.24, 2012). The 5.8m reference is from the British Council’s 2020 Vision document (2004) which was underpinned by IDP’s Global Forecasting Model. 

The OECD reference to Altbach and Bassett is credited to an article called ‘The Brain Trade’, in a 2004 edition of the publication, Foreign Policy. In this relatively brief article the authors write, ‘a recent Australian study estimates that the total number of international students will increase to 8 million by 2025’. (The Brain Trade, Foreign Policy, Washington DC pp 30-31, Sept-Oct 2004). That would seem to rule out Altbach and Bassett as the original source although the article does not provide a citation to follow.

In Trends in Global Higher Education: Tracking an Academic Revolution (Altbach et al) for the 2009 UNESCO World Conference on Higher Education the claim is of an even greater acceleration in growth. Page 7 of the full document reads, ‘More than 2.5 million students are studying outside of their home countries. Estimates predict 8 million international students by 2020.’  Confusingly, the Executive Summary settles (on page vi) for saying, ‘Estimates predict the rise to 7 million international students by 2020.’

Neither the source of the 8 million or the 7 million are articulated but the source of the ‘Australian study’ seems clear.  Altbach, on page 25 of the main report, says ‘By 2025, research undertaken for IDP Pty Ltd in Australia suggests that roughly 7.2 million students may be pursuing some higher education internationally, an increase of 188 percent over the 2006 UNESCO estimate (Böhm, et al., 2002). The research in question is GLOBAL STUDENT MOBILITY 2025: Forecasts of the Global Demand for International Higher Education (Bohm, Davis, Meares and Pearce, 2002). But the question of how this relates to a prediction of 8 million globally mobile students remains unclear.

The answer may lie in a 2003 update of the IDP research. The executive summary (page 3) says that one key finding is that ‘global demand for international higher education is forecast to increase from over 2 million in 2003 to 7.6 million in 2025’.  It seems possible that the 7.6m was simply rounded up to 8m but the consequences are significant. In terms of financial outcomes 400,000 students equates, at a conservative estimate, to yearly fee income of more than $5bn dollars.

What is also striking is that, as noted in the British Council’s Vison 2020 report (2004) the IDP Global Forecasting Model, underpinning the 2003 research, was based upon the UNESCO 2001 World Education Report which relied largely on figures from 1996. Could it be that statements being made in 2017 about 8 million globally mobile students by 2025 are relying on a rounding error from a report using data that is 20 years old?

Table 1. Summary Graphic – How The 8 Million May Have Evolved

None of this is intended to undermine the work of the researchers involved. Forecasting is fiendishly difficult and those working in HE recognise the time delays and complexities which can make source material difficult to manage and interpret. We also recognise that circumstances can change rapidly and make even the most accomplished market analyst look foolish.

As we see in the most recent OECD graphic (below) the numbers enrolled overseas grew by only 400,000 from 2010 to 2015. This compared to growth of 1.2m additional students from 2005 to 2010. It seems likely that quality in country provision, and additional tuition options in English-language, as well as the growth of on-line delivery, is allowing students to study in ways that meet their career and personal aspirations at lower cost.

Table 2 : Education at a Glance 2017: OECD Indicators Figure C4.a. Long-term trends in the global number of students enrolled abroad (foreign students definition)

The extraordinary growth in the first decade of the 21st Century may become seen as the peak moment for increased international mobility. In 2012 the British Council predicted that mobility would plateau by 2020. More recently the British Council has predicted that that the annual growth for global outbound students is projected to average at 1.7 percent to 2027, dropping from 5.7 in the period 2000-2015. It is difficult at this point to see that those presentations which held Emo of Friesland arriving at Oxford in the 12th Century as the first in a wave of international students numbering 8m by 2025 will be correct.

Perhaps all this reflects the danger of International student enrolment being viewed as a cryptocurrency where the uninformed may make investments in the misunderstood for fear of missing a wave of future riches. As Warren Buffet memorably said, ‘when the tide goes out..you discover who’s been swimming naked’.

-Ends-