Education – Page 11 – View From A Bridge – management, education and personal thoughts

PIGS TO PETTICOATS TO PATHWAY PROBLEMS

INTO’s London-based joint venture with Newcastle University is the second of the pathway provider’s high profile university partnerships to come to grief at the Middlesex Street building near Liverpool Street station. The location was also the home of INTO’s venture with the ill-fated London Academy of Diplomacy, led by Joseph Mifsud who became infamous for his involvement in Robert Mueller’s enquiry into President Trump. It’s reasonable to say that the site has seen more than its fair share of false starts, big ambitions and strange bedfellows – there’s even a Princess at one point.

The timeline of occupants, the financial fortunes of the joint ventures and the variety of pre-university, undergraduate and master’s courses offered suggests that making a success of a London venture is tricky. There are many potential downsides to higher education investment in one of the most expensive cities in the world. When ambience fall short of a true campus experience, facilities are limited and university faculty are more committed to their home towns it can be particularly hard going.

A run through the various occupants of Middlesex shows that even well ranked partners with global reputations might find it too difficult or too expensive to make things work. The dates of operation are taken from public documents but may reflect a difference between an entity being incorporated and its first intake. Any authoritative updates are welcome.

INTO University of East Anglia, London (2009-2014)

INTO UEA (London Campus) LLP was established as a joint venture in 2009 to provide academic and language courses, primarily to international students, at a purpose built study centre in London. The intention was to offer pre-university courses along with “graduate and post-graduate courses taught by UEA academics”. But UEA’s 2011/12 Financial Statement suggested that things were not going to plan and noted, “Trading to date is slightly down on the original plan, reflecting a slower build up in student numbers than originally anticipated.”

The University’s 2012/13 Annual Report comments, “In light of the current trading performance of INTO London, and the fact that accumulated losses will not be recouped for some time, the University made a capital investment of £3,000,000 in the joint venture in August 2013.” An operating loss of £1.2m in 2011/12 had followed one of £2.5m in 2010/11 for the joint venture. By early 2014 UEA had decided to retire at the end of July 2014 to focus on delivering teaching and research, “at our superb Norwich campus,”.

INTO City, University of London (2010-Current)

INTO City began trading in 2010 and focuses on pre-university courses. By 2015 the joint venture had net current liabilities of £5.8m and its annual report noted “material uncertainty which may cast significant doubt upon the LLP’s ability to continue as a going concern.” Discussions were ongoing to reduce the charges from each partner, clarify governance and recapitalize the venture.

The outcomes suggest a rebalancing of risk and reward reflected in City’s 2018/19 Financial Statements which note that, “Prior to 1 September 2017, a 50 per cent share of the net assets and liabilities was included in City’s balance sheet and 50 per cent of its net income was reported in the consolidated income and expenditure account. Since 1 September 2017, City’s share of net income has been reduced to 15 percent.” Always worth remembering that universities are primarily interested in pathway providers because of the income they receive from students who progress to full degree courses. This may be a reason that City gives equal prominence on its webpages to the pathway arrangement with Kaplan International College

London Academy of Diplomacy (2010-2016)

In an impassioned blog in 2013, UEA visiting lecturer Barry Tomalin advocated, “Don’t Let Diplomacy Fail”, to students at INTO’s London Academy of Diplomacy (known affectionately as “LAD”). Under Professor Nabil Ayad, LAD had been with the University of Westminster, but from 2010 its degrees were validated by UEA and it operated out of Middlesex Street. Another INTO partner, the University of Stirling, took over validating the Academy’s awards in 2014 by which time Professor Joseph Mifsud was Director of LAD.

Brig Newspaper does a decent job of explaining the story of the “academic who attempted to connect the Trump campaign with Vladimir Putin” and INTO’s role with the Academy. It highlights that LAD was closed in 2016 “citing financial difficulties” and an article in the Diplomat suggest that the Academy had 150 students in 2014. Sufficient to say that the University of Stirling’s London-based activities arising from its joint-venture with INTO, whether with LAD or the short-lived Master’s program at a different site in the capital, no longer exist.

INTO Newcastle University London (2015-2021)

The Newcastle University London joint venture had an inaugural intake in 2015 and offered both pathway and degree courses. Opened by HRH Princess Eugenie, a Newcastle graduate, in October 2015, it held the university’s aspirations that, ”..in collaboration with INTO, our London campus is expected to grow to 1,200 students.” By 2018/19 the venture had grown to 504 enrollments but its operating losses had reached £2.4m.

Council minutes from the University indicate that discussions and negotiations about the future of the joint venture had been ongoing during most of 2019. By April 2020 the University’s Council noted “that there was a compelling case to suspend undergraduate recruitment in 2020 on the grounds of insufficient applications, and judged that the consequences of the COVID-19 pandemic would make future viability even less likely.” It seemed a short step from there to the recent announcement that the joint venture would close next year.

INTO London World Education Center (“WEC”) (2017-Current)

WEC is a wholly owned operation of INTO’s which began operations around 2012/13 and offers pre-university courses for international students. The student outcomes are accepted for consideration for entry by over 100 UK universities. The accounts for 2015/16 noted an expected move to Middlesex Street which would “represent a more desirable study location” than its previous home on Mile End Road but this appears to have been delayed until 2017/18.

Year one at the new location saw a rise from 123 to 157 students but 2018/19 saw a decline back to 126. WEC’s operating loss grew from £1.9m to £2.4m year-on-year across the two periods. WEC’s debt to other INTO group undertakings also appears to have risen to £8.9m in 2019 from £5.6m in 2015.

London – A Golden Opportunity or a Battle for Survival?

The chequered history of the Middlesex Street pathway operation matches the shifting sands of the location. The Street was known as Hogge Lane in the Middle Ages because pigs were fattened up in the surrounding fields to feed Londoners. Ryther’s famous map of 1608 records a name change, with Hogge Lane becoming Peticote Lane (with the spelling later being standardised to ”Petticoat”) as the area had become known for merchants’ selling second-hand clothes. Petticoat Lane Market became one of the most famous in London, but around 1830 prudish authorities thought it unseemly to have a thoroughfare named after an item of women’s underwear and it was renamed Middlesex Street.

Shakespeare is quoted as saying, “I hope to see London ere I die” and many universities and pathway operators have set their sights on the UK capital in the belief it is an irresistible magnet to international students. And Benjamin Disraeli, twice British prime minister in the 1800s, said “London is a modern Babylon” which suggests its history as an appropriate location for language-oriented pathways. It is certainly possible to see pathway successes in London, with an example being the Kaplan International Centre which continues to add to an illustrious list of partner institutions.

But with the fallout from Brexit, the potential resurgence of a more friendly US international student experience, and all the uncertainties of a post-pandemic world the future for London-based education is far from clear. Expensive buildings and accommodation, limited commitment from faculty to travel to London and low progression rates from a London pathway course to a distant campus are all obstacles to be overcome. It could be that legendary punk group The Ruts summed up the future for investors best when they sang, “Babylon’s burning with anxiety”.

NOTES

1. Information relating to joint venture finances is taken from the filings at Companies House (INTO UEA (London Campus) LLP (now INTO London Mdx Street LLP, INTO City LLP, Newcastle University INTO London LLP, and INTO London World Education Centre Limited.

2. Commentary on the ventures at Middlesex Street has been taken from official records but it is a complex history. Any corrections, insights or updates from sources that can be validated are welcome. They will be noted and credited on this blog.

Image by TeeFarm from Pixabay

US Pathway and University Enrollments Looking Grim

Early signs are showing the scale of decline in Fall 2020 international enrollments in the US and how pathway enrollments may be even more disappointing. Everyone has been expecting a deterioration in numbers and it comes after several bruising years where many pathway providers have closed operations. INTO University Partnerships and Shorelight are the dominant players in a troubled market and their partners at Colorado State University and Auburn University make it possible to drill down to pathway level.

It’s an early snapshot of what is likely to be happening around the US in Fall 2020 and also an indicator of what the pathway pipeline of international students looks like. It makes for sombre reading if you are a big player in the US pathway business and represents a financial blow on two fronts. Low enrollments make it difficult to run the pathway profitably or get any contribution to overhead. It also means several years of lower income the operator gets from its percentage of tuition fee per student in the university in succeeding years.

INTO CSU and Colorado State University
At Colorado State University (CSU) the overall international numbers have been dropping slowly for a couple of years. But Fall 2020 total enrollments dropped 22% year on year. Longer term pain may be signalled by the declining pipeline from its pathway partner.

Source: Colorado State University Institutional Research Planning and Effectiveness

Since Fall 2017 the number of undergraduate and graduate enrollments in the INTO pathway at CSU has declined by 54%, but in absolute numbers the drop in enrollments of 42 students (35%) from Fall 2019 to Fall 2020 has been the largest ever. Graduate enrollment declines are outpacing those of undergraduate students but both are falling sharply.

Source: Colorado State University Institutional Research Planning and Effectiveness

It’s worth remembering that INTO closed its pathway business with Marshall University earlier this year. This was covered in a blog back in March 2020, with the growing levels of inter-company debt between INTO University Partnerships and several of its US pathways explored in a May 2020 blog. Colorado State University was near the same inter-company debt level as Marshall, and it seems unlikely to get any better after this year.

Shorelight and Auburn University
Auburn had been showing healthy growth and outperforming most US universities for several years. But total 2020 Fall enrollments are down by 18% on 2019. Underpinning this is a 21% drop in Chinese students whose numbers have fallen from 1881 to 1489 year on year.

Auburn University Enrollments by Country – all colleges/schools, departments and primary majors

While an 18% drop in total enrollments might not be too bad a result in the current year it does not look as if Auburn will be able to rely on Auburn Global, the partnership between Auburn and Shorelight, for stability or future growth. There has been a 69% drop year on year (384 to 119) in enrollments on four key Auburn Global programs. Perhaps more troubling is that this number is driven by a 66% decline in the number of Chinese students enrolled in the programs (325 to 109).

Auburn University Enrollments by Country – Auburn Global – Academic, Extended, and Masters Accelerator Programs (First and Second term)

It’s reasonable to add that Auburn and Shorelight are working hard to promote an online option starting in October. This is positioned as offering “the perfect solution for international students who would like to earn academic credits virtually this fall”. Students can earn 9-12 credits on the Academic Accelerator Program and 7-8 credits on the Extended Accelerator Program. They will work through Zoom and pay the same price as on campus students.

Long term observers of the global recruitment business know that there is an ebb and flow to country performance but it cannot be easy for private pathway operators trying to satisfy private equity holders when a market looks to be in free fall. Huron appears to have backed its investment in Shorelight with a further infusion of $13m in the first quarter of 2020 but that was pre-pandemic. There seems to be a lot riding on the possibility of online delivery being attractive to students but that remains an unknown quantity.

By way of a contrast the UCAS data on UK university international undergraduate acceptances suggests students are already voting with their feet. International students placed in September 2020 were up 10% (4030) to 44300 with students from China up 27% to 12980. There’s still plenty of uncertainty around and the growing number of coronavirus cases on university campuses may bring the party to a grinding halt. But, for now, many universities are chartering planes to fly students into the country to bolster their chances of turning enrollments into attendance.

Image by Gerd Altmann from Pixabay

Canadian HE Pathways – An Open then Shut Case?

The recently announced ten-year contract between Ryerson University and Navitas raises questions about the fate of pathway discussions with the University of Western Ontario (commonly known as Western). The interest of both universities may also be indicative of emerging financial pressures that could make Canada a land of opportunity for pathway operators. But some recent closures suggest it’s not always going to be plain sailing in “the True North strong and free”.

Even before the pandemic, there was increasing pressure on university budgets in Ontario, Alberta and Manitoba. Alberta plans to reduce post-secondary institution funding by 20 percent over three years and Ontario plans to make up to 60 per cent of funding tied to performance-based metrics over time. This has echoes of the State budgetary cuts that forced many public US universities to consider, and in some cases work with, commercial pathway operations.

But there is evidence that even in Canada pathways groups will have to pick their partners wisely to achieve sustainability. Study Group’s partnerships with Stenberg College and the Center for Arts and Technology were announced in February 2019 but will not be admitting students after the Fall 2020 intake. They do not seem to have flourished despite Canada’s general popularity with globally mobile students.

Western May Need “Urgent Assistance” To Recruit

For anyone who thought that life was good for the university sector in Canada the specter of budget cuts and performance-based metrics may come with a touch of schadenfreude. There seems little doubt that Western has had to take the matter seriously and that its achievements in attracting international student interest have been limited. Fortunately for those who are interested the debate in the university is played out largely in public documents.

At Western’s March 2020 Senate meeting the President, when asked when the Navitas proposal might come to Senate, “indicated the timeline had not yet been determined. If the University needs urgent assistance to recruit students that could impact the timing of the proposal.” Western’s international enrollment has been patchy with their 2018-19 their international first year undergraduate intake being 855 compared to 508 in 2015-16 but then dropping back to 639 in 2019-20. Perhaps more troubling in terms of concentration was that 75% of the 2019-20 intake was from China.

A potential block to any deal was the reminder that, “Senate notes that the potential partnership with Navitas involves the academic work of the University, which explicitly falls under the remit of Senate in the UWO Act; and therefore the articulation agreement/partnership/credit transfer/affiliation agreement/ contract to engage in the academic work of Western must come to Senate for approval.” In the manner of university turf-wars a representative of the Operations/Agenda Committee then noted “that it would support details relating to the academic components progressing to Senate, with the financial arrangements not being within Senate’s remit.”

For those who enjoy the knockabout nature of university meetings the minutes are well worth a read and particularly so at S.20-59 where Question 2 noted that Navitas had agreements with Simon Fraser University and the University of Manitoba. The discomfort was evident, “should Western proceed with a partnership with Navitas when two and possibly three other Canadian universities have such partnerships (which will make us one of four Canadian universities for which those vaunted Navitas recruiters are recruiting, so not obviously set apart from the other Canadian universities)”.

Sadly, and perhaps because of the pandemic, no further Senate meetings have been reported this year so it is difficult to say whether discussions went any further. But Exhibit IV, Appendix 4 of the February Senate Agenda outlines the enrollment background and the shape of the Navitas deal being proposed. It’s also worth noting that Ryerson might have insisted that Navitas do not engage another Ontario partner in the near future so Navitas’s loss could be someone else’s gain.

The Bigger Picture and the Potential Trap

Anyone following developments in Canada will have seen the explosive growth in international student enrollments. That has been tracked by the desire of pathway operators to find a way into the market, and Navitas appears to have got a small edge. But the Ryerson deal and Western’s apparent need or willingness to engage may suggest we are seeing the thin end of a wedge that will see more Canadian universities joining with commercial partners to drive their international growth.

Movement in recent years has largely been in what may be considered secondary brands and non-degree bearing institutions. A recent announcement saw GUS expanding its Canadian network with the Trebas Institute but the Study Group experience noted above is a cautionary tale. Perhaps this is a good moment for all investors to pause and consider the history of pathways in North America.

Some believe, along with Marx, that history happens the “first time as tragedy, the second as farce”. The United States was considered the El Dorado of pathway opportunities for several year with over a $1bn of private money flowing into expansion and start-ups. The recent, rapid decline of pathway numbers, with more than ten closing in the past year, suggests that there is virtue in considering how to position yourself to be sustainable over the longer-term.

However, a resurgent United States could rapidly reassert its dominant position over Canada in terms of attractiveness to international students. It would not take much for a loosening of visa constraints, an improvement in post-study work availability and a more welcoming administration to turn things around. It is a reasonable bet that the change in post-study work opportunities in the UK has already slightly dampened interest in Canada as a destination.

Seasoned observers of international student mobility know that what goes round tends to come round. Just as the step back taken by Australia and the UK in the early 2010s helped fuel growth in the US it seems reasonable to believe that the current US situation is helping to drive interest in Canada and the UK. Quality universities will always recruit best under difficult conditions, so the right answer is to build a portfolio of decent brands and acknowledged specialist institutions while having a fall-back position for students who don’t meet those standards.

Image by Clker-Free-Vector-Images from Pixabay

US PATHWAY SECTOR FACES DOUBLE WHAMMY UNDER ENROLLMENT PRESSURE

It appears that the cull of pathway operations in the US has further to go. The Navitas website suggests that Global Student Success Programs at UMass Lowell, UMass Dartmouth and Florida Atlantic University have been discontinued. All of them throw up the message, “The Global Student Success Program is no longer accepting new applications..” * It’s the same story for Virginia Commonwealth University and the University of Idaho links.

Looking more deeply, the figures from UMass Lowell show a precipitous drop in Navitas enrollments from 187 in Fall 2016 to just 81 in Fall 2018. The numbers for 2019 aren’t available on the university site but a further dip seems likely. If these are permanent closures it brings Navitas down to three pathways in US from eight at its peak. Overall, the number of on-campus pathways in the US may have fallen to around 40 and its little wonder some are making a “pandemic sales pitch” that they are really masters of online technology.

With the pressure on US international enrollments growing year by year it’s difficult to see that there is a lot of good news to come. Rumours abound and are difficult to verify but in recent weeks I’ve been told of a pathway run by one of the big two operators at a top 200 east coast university that is looking at a 70% decline in enrollments year on year. It’s a very long way from the suggestion made in 2014 by Parthenon Group partner Karan Khemka, that “We anticipate that growth will be constrained only by the pace at which private providers can develop the market.”

We are seeing a wholesale realignment of the pathway sector but alongside that there may also be a double whammy as universities seek to renegotiate commercial terms in the light of changing market conditions. For example, the University of South Carolina Board of Trustee minutes from April 2019 make for interesting reading as they reflect on the changing nature of the university’s deal with Shorelight. The initial deal had been signed for seven years in 2015 and the proposal was to re-sign for another seven but with “better financial terms for the University”.

One big shift indicated was that USC would be allowed to keep 90% of the tuition paid by students in years following the pathway and pay Shorelight 10% of the tuition. Under the initial agreement the split was 83% to USC and 17% to Shorelight, so on an out of state, undergraduate student fee of $16,700 that’s a cut of just over $1,100 a year per student. It’s worth remembering that Shorelight noted early in their history that, “not only does the university not contribute anything upfront to get the program off the ground…but Shorelight reimburses the university for any expenses as it’s getting off the ground.”

The obvious question for traditional pathways is how they remain sustainable when the university is bearing none of the start up costs, and if the provider’s revenue share from students going into the university is being reduced. In a recent blog I looked at the growing inter-company debt between INTO University Partnerships and its US pathways where, the collective debt owed by five joint ventures open for at least five years, had from under $5m to nearly $15m. The closure of the pathway at INTO’s partner Marshall University came as enrollments fell and inter-company debt rose sharply.

While $1100 a student doesn’t sound very much the real point is that this becomes a loss of $110,000 a year if you have 100 students progressing and $330,000 over the lifetime of the cohort. Add to that the increasing cost of acquisition of each student as global competition increases and the basic economics of a pathway come under serious pressure.

It also raises the question as to how sustainable are the remaining pathway operations as the US faces another bleak year for international enrollment. A recent Open Doors survey reported 52% of US universities indicating a decline in enrollments for 2020. Navitas research with agents recently suggested that declining student mobility and growing unpopularity could see the US lose between 160,000 and 350,000 international students.

Alongside the well-known and longer-term internal issues facing students who might previously have seen the US as their preferred option there is little doubt that competition is playing an increasingly important role. The UK has made good headway and become a more popular destination this year which has led to an increase in undergraduate enrollment from China of 14% this year. Canada continues to provide an attractive option with clear routes to citizenship that have been particularly successful in attracting Indian students in recent years.

Supply and demand are powerful and remorseless market disciplinarians. The dash for growth in the US pathways came supported by over $1bn of private money flowing into the sector, but the economics of creating more and more supply at a point when demand was slowing have become evident. With global competition for students increasing, student mobility threatened and universities finding alternative means of reaching the market – particularly online – it’s probably a hard road ahead.

*As always I am happy to have authoritative corrections or clarifications and will record them.

Image by Gerd Altmann from Pixabay

No Easy Pathways – Even Before the Pandemic

As a relief from the global pandemic, it was interesting to take some time to look a little harder at recent developments from the Study Group, Shorelight and INTO camps. It’s a further reminder of how the US pathway sector was climbing a mountain even before the pandemic brought new challenges to international student enrollments.

Study Group

Study Group looks to be adding to last year’s closures in North America with pathways at both Royal Roads in Canada and the University of Vermont shutting down. Both institutions are still featured on the Study Group website but there is hard evidence in once case and strong rumour in the other. As ever, I’m happy to accept an authoritative response and correction if this is incorrect.

Minutes from Royal Roads Board of Governors meeting dated March 31, 2020 state: “The Study Group partnership was entered in 2011 to deliver preparatory pathway programs and expand international student recruitment into university programs. Following a formal review, a decision was taken to not renew the contract when it expires August 2020…….. A team will be struck in early 2020 to manage the transition to wind down the partnership by August 31.”

The change comes as Royal Roads posts some interesting statistics about its international student enrollment expectations. From 577 international student FTEs in onshore credit programs in 2018/19 they are forecasting 1,012 in 2020/21 – an eye-watering 75% growth. The expectation is spelt out very clearly “…with revenue increasing by $4.5M (35%) from $13.0M in 2019/20 to $17.5M in 2020/21.”

While there’s no institutional announcement, strong feedback from the market suggests that the Study Group relationship with the University of Vermont will come to an end later this year. The partnership started in early 2014 with the stated aim to ‘recruit approximately 140 international students per year with a two-term pathway sequence’.

The University doesn’t give exact details on the Study Group contribution but over the five years total Fall international enrollments rose to a peak in 2017 and fell back below 2015 levels in 2019. Non-degree international enrollments peaked at 171 in Fall 2015 and have declined since to 88 in 2019. It’s a story that’s been hear all around the US but it’s worth remembering as a sign of the times that this is a University ranked 121 by US News in 2020.

This follows Study Group’s announcement of three pathway partnerships closing in 2019 at the universities of Roosevelt, Widener and Merrimack and the closure of the Oglethorpe University pathway earlier in 2020. For those trying to keep up here’s the list (with closures highlighted in red) which includes DePaul and Hartford taken over from EC Higher Education in 2019.

Shorelight

Shorelight’s website suggests that since its first partnerships in the US in 2014, it has grown to 19 partners. The relationship with UMass Boston does not appear to be a traditional pathway (which seems to rest with Navitas). The American Collegiate (DC and LA versions) do not appear on the list of traditional, full-service partners and appear to be short summer programs along with a year-long undergraduate level course through UCLA extension.

Huron Consulting Group Inc. is a long-term investor in Shorelight Holdings LLC (the parent of Shorelight Education) with an initial investment of $27.9m in 2014 and 2015. Huron’s recent Form 10-K filing showed that in the first quarter of 2020 it invested a further $13m. The initial investments were zero coupon convertible debt instruments maturing on July 1, 2020 but that maturation date has been extended to 17 January 2024 which matches the date the new investment matures.

The pathway sector has seen a significant amount of investment in the potential of a strong US portfolio but the growing tensions are stark. In a recent Boston Globe article, Ben Waxman, chief executive officer of International Education Advantage, argued “International enrollment is going to plummet like a rock” due to the pandemic. In the same article Shorelight’s cofounder, Tom Dretler, said the company is still seeing increased interest from foreign students in enrolling in US colleges for summer and fall programs. He noted that universities will have to offer these students a more engaging online experience. Time will tell.

INTO University Partnerships (INTO)

Growing global and in-country competition were probably factors undermining the growth of early INTO success stories like Marshall University. The pathway at Marshall closed earlier this year and leaves INTO with 11 partners in the US. As noted in a previous blog, enrollment to both the pathway and directly to Marshall had been falling for several years.

A look at INTO’s most recent published accounts for the year to 31 July 2019 show that there may be more dark clouds on the horizon. Taking US pathways that have been open five years or more (including Marshall) it is noticeable that the level of debt owed by the joint ventures to INTO has grown from under £5m to nearly £15m. Colorado State University (CSU) and Drew are at or above the same levels as Marshall.

It’s probably a bit early to see the direction of travel for new joint ventures Hofstra, Suffolk or Illinois State. But St Louis University’s level of indebtedness has remained at around the same level for four years, and the University of Birmingham Alabama has moved from owing £895k in its first reported year to £4.96m in 2019. Washington State University has seesawed with a first-year indebtedness of £1.74m followed by a recovery but then a rise back to £1.34m in the latest accounts.

None of this has stopped company founder Andrew Colin from moving up 133 places year on year in the Sunday Times Rich List published this month. What’s interesting is that the Sunday Times valued the business (based on 2017/18 information) at £200m which would suggest that Leeds Equity’s 25% stake was worth £50m. That’s after a £66m investment made in 2013.

Of course, all of this is before the coronavirus and a global pandemic that has created havoc with traditional student choices and may alter global mobility forever. The US was in decline as a destination of first choice for several years before the virus, and there is little to suggest it has risen to the competitive threat. A recent IDP survey showed the US lagging behind on key measures as students are making their decisions.

There is already evidence that Canada and Australia are responding more aggressively to support international student recruitment after the peak coronavirus period. Even the UK had done more to revive its flagging fortunes and was looking towards a bumper intake in 2020. It leaves pathway operators and universities in the US in a very tough place.

Image by Arek Socha from Pixabay

This Time It’s Different Because…

While hoping for the best it is increasingly difficult to believe that the next two years won’t be very tough. The economic news changes by the day and there is still little certainty about the process for removing the various lockdown measures around the world. It is even tempting to not to write until the dust has settled.

A number of commentators have suggested that higher education is counter-cyclical in terms of student growth and refer to the experience of the ‘great recession’ of 2008. But I recently quoted Charlie Munger, vice chairman of Berkshire Hathaway who said of the current situation, “This thing is different”, and I doubt that previous global shocks a good guide to what might happen this time around. For home and international student enrollments this may even be a fundamental turning point.

This is not a counsel of despair. There are signs that many students are still keeping their options open before deciding whether to travel across country or overseas for study. But the backdrop to their decision making and the factors constraining countries, let alone universities, are far more complex than 2008.

….it really is Global

The 2008 recession for the G20-zone (85% of all gross world product (GWP) is often called a global recession which lasted from mid‑2008 until 2009. But while 2009 saw real GDP rates fall in virtually all of Europe, along with Canada and the US, the reality was that China, India, South America and almost all of Africa had GDP growth. The coming recession may be V, W, L or swoosh shaped, but it seems likely that every country in the world will have a dip in GDP this year.

China was never in recession throughout the period of what was called the ‘great recession’ but the first quarter of 2020 saw the Chinese economy shrink for the first time since 1976.

…Established Student Sources May Not Drive Growth

China’s GDP growth was at 14.7% in 2007 and remained above 9% until 2012. Its 20-24 year age group grew by 13 million between 2007 and 2011. These factors fueled international student growth through the ‘great recession’.

According to HESA data, between 2007/08 and 2011/12 the number of Chinese students in UK universities grew by over 33,000 to 78,715. The next largest growth was from India which grew just under 14,000 from 25,905 to 39,090 by 2010/11 before falling back to 29,900 as Government visa policies hardened.

In the US, Open Doors data indicates that 2007/08 was the first year since 2001/02 that international student enrollments had got above 560,000. By 2011/12 the number of enrollments had increased by a further 120,000. China contributed over 100,00 of that increase.

China’s university age population is stable but at lower levels than a decade ago and financial pressure on the middle class was already evident before the coronavirus. Add in the safety concerns and it is little wonder that the British Council found that Chinese students had a high propensity to reconsider plans for the coming year.

…Oil Glut and Increased Production Capacity

In the previous recession oil prices dipped rapidly but recovered within two years. This time round some benchmark oil prices have gone negative early in the pandemic and the global oil glut is considered by some to be similar to the 1980s when prices stayed low for several years. The impact is exemplified by Saudi Arabia’s reduction of $27bn in net foreign assets in just the month of March. Development of technology and the re-emergence of the US as a dominant producer seem certain to make it difficult to constrain production in a way that forces prices up.

It seems unlikely that, in the foreseeable future, any government will be able or willing to fund substantial scholarship schemes driven by oil wealth.

…Quality, Value and Availability of Online Degrees

In 2009 it is estimated that there were 5.5m students worldwide taking at least one course online, but by 2017 it was estimated to be over 6m in the US alone. By 2019, 98% of public universities and colleges in the US offered some form of online program and the University of Pennsylvania had become the first Ivy-league institution to offer a bachelors’ degree totally online.

In the ‘great recession’ the for-profit universities were at the forefront of online education. This time around there is, literally, a world of choice and great brand names available to students. Students wanting to get a degree do not have to incur the health risk, the uncertainty or the extra cost of an on-campus experience.

Online has provided a short-term response to the coronavirus but students may find it a cheaper and more convenient option for future study.

…Cost of Higher Education to Students

Analysis suggests that going to college in the US in 2018/19 was 25.3% (private) and 29.8% (public) more costly than in 2008/09 on a like-for-like dollar basis. Forbes has estimated that between 1989 and 2016 the cost of going to college grew eight times faster than average annual wages.

In England the introduction of £9,000 a year student fees didn’t occur until 2012. By 2019 average student debt on entry to repayment was £35,950 compared to £11,720 in 2009. Rising levels of debt have not, thus far, deterred students in England from going to university but it’s on their minds.

As importantly, universities have been obliged to spend significant amounts on attracting students from less well represented backgrounds. The government debt burden has also been significantly increased as the real cost of student loans was added in late 2019. Faced with the cost of combatting coronavirus and a global recession students, universities and the Government may be less willing to absorb these costs.

The cost of going into higher education has become increasingly difficult for any of the stakeholders to absorb – even before the pandemic.

….Attitudes Towards the Value of Higher Education Degree Have Hardened

UK and the US students have never paid more for their degree and there is some evidence that disenchantment has set in. In 2013, Gallup found that 70% of U.S. adults considered a college education to be “very important,” 23% felt it was “fairly important” and 6% said it was “not too important.” In 2019, those figures had shifted to 51%, 36% and 13%, respectively with even bigger negative shifts seen in the 18-29 age group.

Longitudinal evidence about student sentiment is harder to come by in the UK but this year’s graduating students will be the first under the higher English fee level to come into a world where unemployment is rising. UK unemployment following the ‘great recession’ peaked at just over 8% in 2011. It is likely that the job market will be tough for at least a couple of years.

The value of a degree has always been partly about having choices and career options. The rising cost of education and the gloomiest jobs market for a decade may make potential students rethink their decisions. The UK Government may be forced to reconsider whether Post Study Work visas are creating too much competition for scarce jobs.

…and New Options May Be More Attractive

A recession is likely to focus this argument on the ways a workforce is able to help a country emerge from recession. It is claimed by Upwork that the 20 fastest growing skills on their Skills Index do not require a degree. It notes that in 2018 Glassdoor said, “Increasingly, there are many companies offering well-paying jobs to those with nontraditional education or a high-school diploma.”

Non-traditional education options focused on work skills have grown rapidly and the lockdown may be driving more people in that direction. Udemy has already seen a surge of interest in its online courses, particularly in AI and machine learning. A trend towards skills-oriented learning, whether online or in short-courses, leading to a qualification may become better established.

The safety of university degrees offering shelter from the jobs market for three or four years come at a high cost. It seems possible that the new options available and the scramble to find work or avoid excessive HE costs will drive people towards focused solutions.

This is not an exhaustive list but flags some things which seem materially different this time round. The extent to which institutions are able to adapt and pivot to meet the needs of students and society may determine their ability to survive. There will always be opportunities for the flexible, the creative and those who can offer value for money and the promise of a better future.

Image by WikiImages from Pixabay

The Dwindling Party* – More Pathway Closures in the US

Pathways providers are cock-a-hoop about the UK this year but there’s a slightly embarrassed silence about continuing closures in the US. A quick spin through the websites tells us that INTO looks to be shuttering one of its early partners and Study Group has trimmed another from its stable. And there are plenty of discussions about where the axe might fall next (with one contender noted below).

INTO’s portal for students claims 13 US partners but according to the corporate website there are “12..in the US”. It’s not entirely clear which university was intended to be mysterious number 13, but a click on the number leads to just 11 partner logos shown. The missing partner is Marshall University in Huntington, WV.

The Marshall deal was signed in November 2012 with the first students entering the pathway in August 2013. It was the heady days of expansion in the US and the opening came the same year that Leeds Equity took a 25% stake in the INTO University Partnerships business for £66m ($105.8m). With Shorelight Education launched shortly afterwards there was a lot of private money betting that US expansion would guarantee international student growth for a long time to come.

But Marshall’s non-resident alien population and the strength of the INTO pathway have declined sharply in recent years. Institutional data showing early fall statistics shows a fall of 37.6% enrolled at INTO Marshall and 38.7% in the university overall (which implies that direct recruitment was falling faster).

Table One: Marshall University International Student Enrollments

With respect to Study Group, I reported on closure of three US Centers back in September but since that time yet another has disappeared from the list of logos on the website: Oglethorpe University. A visit to the University’s website confirms that the last intake was September 2019, and that the International Study Center won’t exist after May 2020. The partnership was announced in 2017 with President Lawrence Schall, stating, “As part of our globalization strategy, choosing the right pathway partner was important.”

Reasons for the closure are not easy to discern, as the Oglethorpe Fact book suggests significant improvement of international numbers year-on-year for 2019 entry. The number of countries for represented for first-timers had also increased slightly. Maybe the future did not look bright enough.

Table 2: Oglethorpe University International Enrollments

	Fall 2018 Enrollment	Fall 2019 Enrollment
First time, full time international	16	41
Full time traditional undergraduate profile	97	122

While walking through the pathway websites I also came across Cambridge Education Group suggesting that a pathway with Illinois Institute of Technology, first announced in early 2018, is still ‘coming soon’. When I clicked on the link for Illinois Institute of Technology Direct Entry I found an error page. Careless at best if this is an important relationship but perhaps indicative of more deep-rooted reconsideration. As always, I am happy to clarify this if I receive an authoritative correction and explanation.

It seems likely that the US will suffer even more retrenchment in international student enrollments over the coming year. The resurgence of the UK will almost certainly affect the US more than other locations, with the recently reported 93% increase in student visas from India just the early part of the surge to take advantage of enhanced post study work visas. Of course, the implications of coronavirus have yet to play out fully and that may mean that all bets are off.

*The Dwindling Party is a book by Edward Gorey where pop-up illustrations and verses divulge how, one by one, six members of the MacFizzet family, disappear during a visit to Hickyacket Hall, leaving behind only young Neville, who expects “it was all for the best.” It’s an interesting metaphor.

Image by Mediamodifier from Pixabay

SEVIS Report Suggests India Woes for US Higher Education

The January 2020 reporting from SEVIS* reveals a continuing decline in international student enrollments from Asia in the US. The figures also point to growing problems with higher education enrollments by students from India. Even post-study work program Optional Practical Training (OPT), which has propped up the recent headline numbers presented by Open Doors, may be struggling

Over the three-year period** from December 2017 the SEVIS Data Mapping Tool shows a decline of 70,194 student visa holders*** from Asia – a drop of 7.6%. The percentage of the total from Asia has fallen from 77.2% to 75.47% over the period. Tables 1 and 2 look at aggregate SEVIS numbers while tables 3 and 4 look at specific levels of study.

Table 1 – SEVIS Data Mapping of Asian Student Visa Holders December 2017 to January 2020

Source: SEVIS

Digging further into the data by country the latest numbers show particular reductions in the number of visa holders from China and Indian. The 2017 to 2018 loss for the two countries was just over 11,000 but this accelerated with a drop of a further 20,000 from 2018 to January 2020. Particularly troubling was the rapid decline in Indian visa holders where a 3,500 fall from 2017 to 2018 became a further decline of 14,200 to January 2020.

Table 2 SEVIS Data Mapping of China and India Student Visa Holders December 2017 to January 2020

Source: SEVIS

SEVIS also provides an opportunity to see which type of student visa holder has been most affected by the decline. There are a number of categories but the focus will be on students listed in the Doctoral, Masters and Bachelor’s category as these are most relevant to universities and colleges. China and India show quite different patterns with the latter suggesting a rapidly worsening situation for higher education enrollment.

Accelerating Decline from India

A breakdown of the India student visa holder numbers shows that the number listed at Master’s level fell by around 7,000 from 2017 to 2018 and then a further 19,850 to January 2020. A modest upswing of around 3,300 in Bachelor’s and, a more encouraging, 5,400 in Doctor’s complete the picture. If the Master’s level deterioration continues there will need to be continuing growth in other categories to take up the slack.

It has been noted in many quarters that the UK’s reinstatement of a benevolent post-study work visa regime is already providing attractive to students from India. Visas granted to students from India were up 63% year on year to September 2019. With the full implementation of the new regime for students starting their degree in Fall 2020 it is widely anticipated that this will be a bumper year for enrollments in the UK and may bring more challenges for the US.

Table 3 SEVIS Data Mapping of India Master’s, Bachelor’s and Doctoral Level Student Visa Holders (December 2017 to January 2020)

Source: SEVIS

China Stable But Pipeline May Be Thinning

The China breakdown is showing that the same three categories are reasonably robust but that there has been a decline in Secondary, Associate and Language levels. This is a development which might, over the longer term, impact on the pipeline of students moving on to higher education. With the range of potential US enrollment challenges relating to Chinese students growing there is plenty of reason to be concerned that Fall 2020 and beyond will be impacted.

While coronavirus is a rapidly developing issue that is likely to disrupt recruitment of Chinese students to all countries there is little doubt that recent rhetoric and actions in the US have also done damage that may be lasting. With friendlier tones taken by competitor countries and the availability of better value, good quality options for an increasingly economically pressed middle class in China it may be that even maintaining enrollment levels will be a struggle. While the decline in China’s 18-year old population has leveled out it will not return to the volumes seen in the last decade in the near future.

Table 4 SEVIS Data Mapping of China Master’s, Bachelor’s and Doctoral Level Student Visa Holders showing also combined Secondary, Associate and Language Holders (December 2017 to January 2020)

Source: SEVIS

As has been noted it is difficult to get to the underlying picture on enrollments because of the intermingling of different visa types and the particular issues related to the historical growth of visa holders doing OPT. The rapid drop in the numbers for India would, however, suggest that there is a degree of market movement and that US Consul General Joel Reifman’s thoughts on relations between the two countries needs some work.

If, as suggested by some commentators, the size of the decline in Indian Master’s students is partly due to them reaching the end of OPT and not being replaced by incoming students this might suggest that students are becoming used to selecting countries that offer a better path for work or citizenship. That does not seem like particularly good news for the longer term. There are plenty of competitors willing to offer alternatives.

Notes

*SEVIS is the web-based tool that the Department of Homeland Security uses to maintain information on non-immigrant students, exchange visitors and their dependents.

**The SEVIS data is not exact to the month on a year by year basis. The charts reflect the month of publication for the figures shown.

***The term ‘student visa holder/s’ is used to describe the aggregate numbers shown by SEVIS for the region, countries and/or levels of study shown.

Post Study Work May Change UK University Enrolment Growth Patterns

The BBC’s claim that ‘UK universities see boom in Chinese students’ shows a lack of subtlety in understanding the dynamics of growth at different institutions. The latest HESA data available at individual university level shows that just seven universities took 51% of the 16,990 student growth in Chinese enrolments between 2014/15 and 2017/18. But there are intriguing signs that the incoming surge of Indian students might bring a new dynamic to the market.

While China still dominates, the latest HESA data (for 2018/19 entrants) shows that Indian ‘first year entrants’ to the UK in 2018/19 grew by 42% (around 5,250) year on year with comparative China numbers up around 13%. We also know that in the year to September 2019 the UK saw continuing and notable increases in Tier 4 study visas to students from China and India with visas to Chinese nationals up 21% to 119,697 and those to Indian nationals up 63% to 30,550. Anecdotal evidence suggests that post-study work rights are driving applications from India even harder for 2020/21.

With numbers from India growing so rapidly it’s worth considering whether this might impact the growth opportunities of different institutions.

Reputation and Rankings Key to Chinese Enrolments

In the last four years, where data is available at institution level, seven universities achieved growth of over 600 Chinese student enrolments and growth of 50% or more in their Chinese enrolments. Strong brand and rankings focus in the China market mean it’s no surprise that five of the seven are Russell Group universities. The University of the Arts seems to have been able to develop a niche brand in a growing area of study.

Table 1: Universities Increasing Enrolment from China by over 600 and 50% from 2014/15 to 2017/18

Source: HESA

The obverse is broadly true as well. Lower ranking universities have, generally, found it more difficult to recruit students from China with the eight showing the biggest numerical losses being over 4,000 enrolments down over the four years. None of them are ranked above 40 in the Times University Guide 2020.

Table 2: Universities with the Largest Decline in Chinese Student Enrolments 2014/15 to 2017/18

Source: HESA

As an aside, it is interesting to note that the University of Leicester switched pathway operator from Study Group to Navitas during the course of the year. No doubt they will be hoping for a reversal of fortunes under their new arrangements. On the other side of things Cardiff University, one of the most successful in recent years as seen in Table 1, has just appointed Study Group so there would appear to be some pressure to perform. Sunderland and Hull may be wondering whether their involvement with CEG is delivering as needed.

Growth of Indian Students Less Ranking Dependent

We are awaiting the HESA data at institutional level for 2018/19 to see how the growth in Indian student numbers will affect the dynamics. If 2014/15 to 2017/18 is any guide it could begin to level the playing field with some lower ranked universities able to make ground. Between those years total enrolments from India grew by 1425 but the seven universities with over 150 additional enrolments grew their Indian numbers by an aggregate 1870.

Table 3: Universities Increasing Enrolment from India by over 150 and 50% from 2014/15 to 2017/18

Source: HESA

It is reasonable to note that the big losers in terms of enrolments from India were also at the lower end of the reputation and ranking scale. West London (-380). Staffordshire (-340) and Cardiff Metropolitan (-300) showed the most significant losses. But equally, there were no significant gains made by most Russell Group universities.

It is difficult to find any obvious cause and correlation in the grouping that has done well. One factor, for some of the institutions listed in the table, is likely to be the value for money they offer in terms of fees and other expenses. For students taking out personal finance it seems reasonable to assume that universities with lower fees, even if below the top rankings, may be attractive.

Another factor which may be worth considering is the relative strength of the Indian community in some locations. London (Queen Mary) is always a strong draw but the most recent UK Census information indicates that in 2011 there were significant communities in Leicester (De Montfort), Nottingham, Preston (UCLAN), Northampton and Newcastle (Northumbria). All that being said, it is worth noting that the University of Leicester lost 90 Indian students over the period – it may just be that De Montfort is eating its lunch.

Future Disrupted?

What makes it even more tantalising is the recently released top line HESA data on international enrolments in 2018/19. As one would expect five of the big Russell Group players have been top performers with Edinburgh, Kings College, Leeds, Sheffield and University College London each adding over 1,000 new international students year on year. Their gains account for around 25% of the overall 23,280 increase in total international student enrolments.

But the data also shows that East London (505), Greenwich (660), Hertfordshire (475), Nottingham Trent (470) and Teeside (490) all had faster year on year growth in international enrolments than Exeter (345), Warwick (385), Lancaster (60) and Newcastle (40). It’s a little early to call the outcomes and the figures are not available at institutional level by country of domicile. But there is just a hint that the return of post-study work visas has disrupted enrolment patterns and some lower-ranked universities may have the most cause to be grateful.

Notes:

The term ‘international’ is used here to described students paying international fees and excludes European-union students who pay the same fee as UK students.
The data in the Future Disrupted? Section is taken from HESA data:
1. HE student enrolments by HE provider and domicile Academic year 2018/19
1. HE student enrolments by HE provider and domicile Academic year 2017/18

Image by Gerd Altmann from Pixabay

Nine out of ten international students (might) prefer….

If governments and educational institutions are serious about differentiation, market segmentation and strategic marketing they should be wary of headline grabbing boasts driven by shallow or questionable research. It’s been a recurring and growing occurrence in recent years but is unlikely to lead to the type of self-analysis and improvement that will build competitive advantage. There are plenty of examples but a small sample relating to international students and taken from the four main recruiting countries is sufficient to show the problem.

A recent PIE article trumpeted the ‘overwhelming satisfaction’ that international student have with their experience in US higher education. The World Education Services (WES) survey, ‘Are US HEIs meeting the needs of international students?’ asserts that 91% of respondents are ‘overwhelmingly satisfied with their experience studying in the U.S’. But the report itself makes the point that the survey findings ‘may not be generalizable’ to the US international student population and may suffer from ‘self-selection and sample biases.’ There’s certainly plenty to question about how representative a sample of 1,921 self-selecting students can be.

This outcome has similarities to the recent UUKi Graduate Outcome Survey 2019 carrying the line that over 90% of graduates who studied in the UK were ‘satisfied or very satisfied with all aspects of their lives’ (UUKi Graduate Outcome Survey 2019). As noted in a previous blog the UUKi Survey is flawed for reasons that are as uncomfortable in terms of the ways universities engage with alumni. Only 6% of the total respondents were from China and, as a footnote confirms, “in the year 17-18, Chinese students made up 33% of the total non-EU student population…”.

Looking further afield Canada’s 2018 CBIE Survey indicated that ‘93% of students stated that they are either satisfied..or very satisfied’ with their experience. The sample size of 14,228 is noted as 4% of total post-secondary students in Canada so still a relatively small group. And the percentage from south and east Asia was only 45% compared to at least 70% of Canada’s international students coming from those regions.

Of the big four recruiting countries Australia’s DET 2018 International Student survey saw an impressive 27% response rate from international students. The outcome was that 89% ‘were satisfied or very satisfied with their living and learning experience in Australia’. Regrettably, there is no access to underlying data to determine how representative the sample is of the international population.

In their publicity material, however, Australia makes claims about its performance in comparison to others across the world. What is peculiar about these claims is that the margins are wafer thin with, for example, ‘satisfaction with learning’ showing as Australia 88.5% Other Countries 87.5%. And the comparison source is shown as *International Student Barometer (incorporating scores from hosting countries including USA, Canada, UK and New Zealand). The obvious question is – who else does it include?

Readers who are concentrating will have notice an interesting echo across all of the results – 91% (WES), over 90% (UUKI), 93% (CBIE) and 89% (DET). This suggests that there may be a self-fulfilling nature to these surveys with the international students who take part simply more likely to be satisfied. Those who found the experience less helpful may just be looking to get on with their lives after a poor experience that has left them struggling to find graduate level employment.

It’s a reminder of the minor marketing furore in the UK, where a well-known advertising slogan for cat food Whiskas was “eight out of ten owners said their cat prefers it”. After a complaint to the Advertising Standards Authority, this was changed to “eight out of ten owners who expressed a preference said their cat prefers it”. Perhaps student surveys should come with similar, upfront cautions about their relevance, authority and comprehensiveness.

Another manifestation of the problem is the tendency to cherry-pick data, draw misleading comparisons or ignore longer-term trends in the pursuit of self-congratulatory platitudes. This can happen with students surveys or enrollment counts. But it’s all part of the bland, self-congratulatory spin.

Nicola Dandridge, chief executive of the Office for Students, welcomed the UK’s 2019 National Student Survey with the words: ‘It is good news that overall satisfaction with higher education courses remains high this year.” The full statement recorded that satisfaction had risen to 84% from 83% the year before. No mention of the fact that in 2014 and 2015 the satisfaction rate was 86% and, on that measure, fewer students are satisfied than five years ago.

Some might argue that when the survey first came out in 2005 the overall satisfaction rate was only 81.3% and so there has been an improvement over the longer timescale. A reasonable response to that would be that universities are full of academics who are good at passing tests and that the Survey has been ‘gamed’ so improvement was inevitable. Institutions quickly worked out how to optimize response rates and manage academic behavior in ways that improved their rankings.

For those interested in more reading on the NSS, The Economics Network has done a really nice analysis of results across a number of dimensions, subjects and sector groups. As an example, the Russell Group of universities has, since 2015, seen a precipitous fall in positive responses to the statement, ‘Assessment arrangements and marking have been fair’. It fairs no better on overall satisfaction with scores of 86.5% in 2010 falling to just over 81% in 2019.

Finally, and as an example where enrollment data can be interpreted in ways that distort more worrying trends, there is official reaction to the latest Open Doors press release. As mentioned in several blogs and most recently in December it’s difficult to accept the headline that ‘Number of International Students in the United States Hits All-Time High’ with anything more than a sigh. Including OPT students who are doing post-study work and not directly contributing to universities either financially or academically seems an almost deliberate attempt to draw attention away from two years of decline in those enrolled.

It is reasonable to believe that the surveys mentioned and the individuals quoted are well intentioned, but the best organizations are obsessed with using research to find out what can be improved, and they realize the difference between the PR ‘puff’ and game-changing insights. Higher education decision makers need to be more demanding of student surveys and focus their thinking on students who are unhappy or who are not trying the product at all. They might also care to look harder at whether graduates are finding their degree has genuinely opened up better options, or whether they are benefiting from the ‘aftercare’ service implicit in alumni relations promises.

Colleagues elsewhere in the sector have also commented extensively on the ‘survey fatigue’ that is reducing response rates and undermining credibility. But there should be equal concern about the self-interest of organizations that accept the status quo even when it is manifestly inadequate. Far better to follow the line that made Bill Gates one of the richest people in the world – “Your most unhappy customers are your greatest source of learning.”

Image by Florian Bollmann from Pixabay