Tag: pathways

INTO Court as Joint Venture Sours

There are signs that INTO University Partnerships’ (INTO) relationship with the University of South Florida may be ending after a recent Court Evidentiary Hearing1 on 19 August 2022.  While no public record of a judgement has appeared, rumors suggest there are communications in circulation advising that enrollment to INTO University of South Florida (INTO USF) will cease.  If any authoritative source can provide an alternative explanation or clarification, I will be happy to correct any misunderstandings.

It is appropriate to note that both INTO and the University of South Florida still feature INTO University of South Florida on their websites at the time of writing (27 August). The INTO Study site for students also offers the opportunity to apply for courses at the university. This may be the result of a time lag or the possibility of further discussion and this blog is written in good faith to explore the background to the Court case and the joint venture’s history.

The underlying case for a university going to court to end a joint-venture pathway that was once among the most successful in the world deserves attention.  Publicly available court filings outline the case2 and material on the INTO Corporate and University of South Florida websites is used to summarize the history and other background about the joint venture relationship.  The source of further commentary is referenced through hyperlinks.  

Summary of the Case

A Court filing3 from USF Financing Corporation (USFFC) to the Thirteenth Judicial Court in and for the state of Florida Civil Division dated 15 July 2022 seeks a “declaratory judgment that the 2010 stockholders Agreement between USF FC, the Company4, and the INTO Defendants is terminated as of April 21, 2022.” The grounds are that the joint venture is “insolvent under both a balance sheet basis and inability to pay debts as they become due, and (b) has demonstrated a material adverse financial position where it could not perform all or a substantial part of its obligations..”.  The particular difficulties of pathway programs in the United States have been widely explored and the filing incorporates direct reference to my blog of February 2022 regarding the growing level of indebtedness of INTO’s US ventures.

With an eye on its responsibilities for “stewardship of public resources” the University of South Florida terminated the program in April 2022 and “initiated the process for the teach-out of the programs’ enrolled international students….”  The filing asserts that “The INTO defendants refuse to acknowledge the Stockholders Agreement termination and refuse to participate in the teach-out or develop the Plan to dissolve and wind-up the Company.”  There are a number of points made around the fiduciary duty of the three INTO appointed Directors of INTO USF Inc, to creditors and shareholders “once a company is insolvent” with a memo, the accompanying Exhibit G of the filing, asserting that “the INTO appointed directors have a conflict of interest.”

INTO University of South Florida

INTO partnered with the University of South Florida in 2010 and the case study on the INTO website asserts “extraordinary” enrollment and economic impacts.  The accompanying graph (reproduced below) suggests that even if this was true up until 2016/17 the ensuing years have seen a significant decline in enrollment to the pathway.  Enrollments look to have peaked at around 800 but have subsequently fallen by around 100 a year to stand at c300 (this would be supported by the USF Fact Books showing non-degree seeking international students declining by a similar amount).

Source: INTO Global.com

The Court filing includes INTO USF, Inc’s Financial Statement to June 30, 2021 (Exhibit E) showing a net loss of $3.276m that year and $206,000 the year before.  This is supported by the USFFC’s Financial Statements to 30 June 2021 which comment on “approximately $3.3 million of net loss incurred by INTO USF during the year ended June 30, 2021.”  USFFC’s share of INTO USF’s “net accumulated (deficit)” was shown as $1.794m.

As noted in the February 2022 blog “China Crisis for US Pathways”, since 2018 when INTO Illinois State University opened, “total level of indebtedness across all US operations has nearly doubled from £18m to £35m”.  This figure included the debts at institutions where joint ventures have now closed – Washington State University, Marshall University and Colorado State University.  The blog also reflects that INTO has become the 100% owner of what was previously a joint venture at St Louis University.

One feature of both INTO USF (the second INTO partnership in the US) and INTO Oregon State University (the first) is that they are listed in INTO’s Annual Report as Inc. and are C-corporations.  Informed opinion suggests that closely held corporations (which these appear to be) “have been held to higher fiduciary duty standards” and this may be reflected in the “conflict of interest” comment.  Later US joint ventures are listed as LLC’s where, “By agreement, parties can alter certain duties to expand, restrict, or eliminate fiduciary duties owing to either the LLC or the other members and managers”, which suggests there may have been advice leading INTO to pursue alternative structures.5

Summary

It is worth waiting to see any Court judgement and whether there is an appeal process but the filing and other financial statements seem definitive in outlining the decline of the joint-venture’s financial situation.  If the joint venture is closed it would leave INTO with six joint ventures in the US, as well as the fully owned St Louis University operation and the “comprehensive partnership” with Hofstra (which is not listed in INTO’s annual reports as having joint ownership). 

As well as the closures in the US there have been several INTO joint ventures shut down in the UK in recent years.  In addition, INTO has taken a controlling interest in the joint venture with Newcastle University and the financial arrangements at the joint venture with City University have changed.  As noted in a recent blog the yearly financial reporting for INTO University of East Anglia is shown at Companies House as overdue, for a joint venture under significant financial pressure.

On top of all that there are rumors of imminent changes at the top in the INTO Finance team and the return of a familiar face to the INTO North America team but that is for another day.

Notes

  1. Case number: 22-CA-006726 before Judge D.D. Farfante
  2. I am unaware of any written response by INTO University Partnerships to the case filed
  3. Filing#153460265 Efiled 07/15/2022 07:45:26 PM
  4. “the Company” is defined as INTO USF Inc which is the C-Corporation established in 2010 with stockholders USFFC and INTO USA LLC.  Its board has three nominees from INTO and three from USFFC.
  5. The purpose of this paragraph is to provide further information which may be relevant and the quoted elements comes from the source indicated.  There is no intention to give legal advice or guidance and readers are advised to seek appropriate counsel on company structures.

Image by Venita Oberholster from Pixabay 

US International Enrollments See the Light But Pathway Struggle Continues

It’s always a delight when there is a shaft of light that gives an insight into important issues like international student enrollment.  George Mason University (GMU) has made available a day by day view of preliminary enrollments1 which offers a near real time picture of what is happening at the university and its pathway partnership with INTO University Partnerships (IUP),  INTO Mason.  It probably gives a reasonable indicator of how US institutions and their pathways are faring as the pandemic unwinds and follows data points in the early part of 2022 including:

  • IEE Spring 2022 Snapshot where 65% of 559 institutions responding reported “an increase in their international student applications for the 2022/23 academic year”
  • a Wall Street Journal report showing the number of F-1 visas issued to Chinese students  dropped in the first six months of 2022 to 31,055 compared to 64,261 issued in the first six months of 2019
  • The Siasat Daily and others report that between January and May 2022 US consulates issued nearly 15,000 “F1 or student visas” to students in India – triple the number issued in 2022

Visa delays are still an issue but things are moving.  The question is how much and what are the implications.  GMU’s contemporaneous data gives some directions of travel.  There is still some time to go before official census data and the data does not provide country by country insights but the transparency is welcome.

Source data for the graphs below is on the GMU Office of Institutional Effectiveness and Planning website.  The graphs combines information on preliminary enrollment data for 2022 with year-by-year data from the normal census point in October of previous years.    

INTO Mason Pathway Struggles to Recover

Recruitment to INTO Mason has been struggling for several years and had dropped, before the pandemic, by 35% from 371 in 2017 to 241 in 2019.  Numbers enrolled halved during the two years impacted by the pandemic.  In a year where recovery might be anticipated the enrollments of 117 for Fall 2022 remain below those Fall 2020, less than half of 2019 and even further down on 2018.2

While the GMU data does not allow an analyse of enrollments by country it seems plausible to believe that declines in students from China contributed significantly to performance pre-pandemic and there is little sign of recovery.  It also seems likely that any growth in students coming to the US is largely made up of graduates who do not require pathway courses.  This would be consistent with previous suggestions that the changing market dynamics are likely to undermine the core pathway business model.

Note: Filter used was Fall enrollments, INTO Mason, US campuses, all students (Preliminary data for 2022 taken at 22 August, 2022 – shown as First day of classes)

Accelerated Growth in Direct Graduate Enrollment at GMU

Direct enrollment to GMU has taken a significantly different course.  From 2021 to the preliminary numbers in 2022, graduate enrollment has surged by 46% from 1641 to 2397.  While UG enrollment is still below 2019 the graduate growth has boosted overall enrollment of non-resident aliens to a six-year high of 3844.

This suggests that the opportunity to recruit has come in countries, such as India, where the majority of students are seeking a graduate course.  GMU presents the overall enrollment data in a way which includes INTO Mason numbers but it is clear from the graph above that the pathway cannot be responsible for the growth in recruitment.  There is no indication of the extent, if any, to which IUP’s direct recruitment efforts for GMU have supported this growth.   

Note: Filter used was Fall enrollments, ALL GMU US Campuses, non-resident alien. (Preliminary data for 2022 taken at 22 August, 2022 – shown as First day of classes)

Pandemic Escalates Debt Levels at Joint Venture

Each year, in its published annual report, IUP records the level of debt it is owed by its joint ventures.  In a single year near peak enrollment the INTO Mason joint venture did not owe anything but since then the level of debt has escalated and the first two years of the pandemic saw a significant growth in indebtedness.  A previous blog has shown the growing level of indebtedness of all of IUP’s US joint ventures (including the three that have closed in recent years).

Source: INTO University Partnership Annual Reports

A recent report from an IUP university partner in the UK suggested that the decline in its joint venture with IUP was so significant that there “will be no distribution in respect of 2020/21 nor for the next three years whilst the joint venture recovers”.  At INTO Mason the level of indebtedness appears to have grown by £1.5m a year in each of the pandemic years and there is little to suggest that INTO Mason’s enrollments this year will grow above those in 2020.  IUP has they have the opportunity to offset any problems in pathway performance with direct recruitment revenue streams but the scale of the challenge seems clear.    

No Miraculous Recovery

As noted in a previous blog, the changing international student recruitment picture is likely to fundamentally change the way that pathway operators develop sustainable revenue streams.  In the US, Shorelight has acted quickly to develop a direct recruitment partners and has significantly outstripped IUP in this regard.  With recovery in the traditional core market of Chinese undergraduates looking sluggish and increasingly unlikely to ever reach the heights of the growth years the strategic challenge is very real for all concerned.

There has been a longer-term malaise around IUP with recent changes at Board level and a developing “boots on the ground” strategy suggesting a shake-up is underway.  It comes off the back of a diminishing presence in both the US and UK which may be difficult to recover.  The route forward remains fraught with pitfalls and uncertainty.

The direction of travel at GMU reflects the more general emerging picture for the US. Graduate enrollments look strong but as the recent IDP annual report showed interest from China looks relatively weak. As suggested in my recent blogs, the new enrollment battleground is India and with Australia back in the game and hungry it’s going to be an interesting year.

Notes

  1. The Preliminary Daily Enrollment Reports and Dashboards carry data from 19 April 2022 to 25 August 2022 (as at 25 August).  Other Enrollments Reports carry an historical record taken at a Census date in October each year.
  2. INTO Mason accepts students at a number of intake points in the year but Fall enrollment is generally the largest intake and is the sole point of reference for this blog.

Image by Joe from Pixabay 

INTO THE OUT-DOOR?

Like most fledgling businesses, INTO University Partnerships (INTO) had some difficult moments in its early years. In March 2008,  Austin Mitchell MP raised the matter in a Parliamentary question why it had not filed financial records with Companies House and founder Andrew Colin said that the delay in submitting accounts was a “simple mistake.”  It’s not the sort of mistake you expect a £119m revenue company to be making 14 years later, so the apparent failure to file accounts on time for the joint venture with the University of East Anglia (INTO UEA llp) seems a reasonable moment for considering other possible reasons.

Companies House confirmed on 4 August that, “Upon checking the company record I can confirm that the LLP’s accounts for the period ending 31/07/2021 have not yet been received for filing at Companies House.”  This blog speculates without knowing the detail behind the late filing and it may turn out to be simply a matter of administrative failure.  Time will tell and I would be happy to provide an update if anyone with appropriate authority from the company or university contacts me with a plausible explanation.

At one end of the spectrum the failure may simply be down to bad planning and Companies House list fines starting at £150 for being a month late to £1500 for being six months over the filing deadline.  They do go on to say that “Not filing your confirmation statements, annual returns or accounts is a criminal offence – and directors or LLP designated members could be personally fined in the criminal courts.”  One would guess that it’s unlikely to get that far.

The delay does, however, raise the possibility that INTO and the University of East Anglia are in discussions about the future of the joint venture and are delaying the filing until a direction is clear.  It would require someone with appropriate accounting/auditing qualifications (which I don’t have) to fully explain the complexities of what needs to be declared in terms of timing (from balance sheet date to authorization for issue) and whether events are adjusting or non-adjusting.  Change would not, however, be unprecedented because recent history has seen INTO become 51% owners and take “significant control” of INTO Newcastle University LLP and new profit/loss sharing arrangements at INTO City LLP were noted in the 2020 accounts.

Slip Sliding Away

A previous blog noted the trajectory of INTO UEA’s student enrollments and the slide in the university’s international tuition fee revenue.  The parlous state of affairs at the joint venture was confirmed with the statement that there “will be no distribution in respect of 2020/21 nor for the next three years whilst the joint venture recovers and builds up surpluses for distribution.”  All that alongside a £7m loan guaranteed equally by both partners might be drivers of a discussion about the future.

The University’s Council meeting in October 2021 was advised by the Vice Chancellor that at that point it was falling short of recruitment targets by c1,000 students.  This might suggest that international enrollments were also not picking up and the feed through from the joint venture was not as hoped.  It all seems good fodder for the Council member who requested at the Council meeting the following month an executive summary of “what was keeping the VC awake at night.”

One other thing that might be on that list for both the University and the joint venture is that both look to be poorly positioned to seize the opportunities offered by India as the major growth market for the UK.  According to HESA data, UEA’s intake from India rose from 40 to 175 between 2016/17 and 2020/21 in a period when total Indian students in the UK rose from 16,900 to 84,555.  It is a period when UEA’s enrollment of students from China fell from 1,320 to 810.        

Winds of Change

The trail of INTO’s long term, joint venture model has been patchy and it has, arguably, not proved to be as responsive to university needs as the more traditional stand-alone pathway model.  In the UK five operational joint ventures have closed – INTO Glasgow Caledonian University (2020), INTO St Georges University (2017), INTO University of Gloucestershire (2019), INTO UEA London (2014), and INTO Newcastle London (2020).  In the US there have been closures at INTO Marshall (2019), INTO Colorado State University (2021) and INTO Washington State University (2021) as well as INTO St Louis becoming fully owned by INTO in 2021.

A recent blog noted the shift in Shorelight’s range of university relationships from joint-venture pathways oriented to direct recruitment.  INTO has not been as dynamic in making that move but the shifting sands and complexities are captured in the grid below.  This presumes that the University of East Anglia remains a joint venture pathway operation with the university.

 Joint Venture Pathway with UniversityPathways (wholly or majority owned)Direct Recruitment OnlyDirect Admit Affiliates*
US8128
UK5310
Australia1000

*Described as “American universities that offer more choices to international students who seek direct admission.”

The turbulence in international student recruitment is being felt throughout the sector and pathway operations are particularly sensitive to changes impacting the relatively small number of student that require extensive language support alongside academic study skills.  There are many examples of changing course portfolios, including International Year One, which reflect creative responses to new demands and developing visa scenarios to broaden the market for pathways.  It may be that the continuing need for flexibility brings an end to the long-term, deeply embedded, joint-venture vision that was considered by some to be an industry game-changer. 

Image by Clker-Free-Vector-Images from Pixabay 

Pathways Pivot for India?

E.M. Forster suggested we should “mistrust all enterprises that require new clothes”2 but Shorelight has restyled its website and is offering aggregator type filters which reflect a change of direction.  The filters help clear up what’s been going on with their portfolio and suggests that the pressures on their pathway offerings are causing them to pivot at pace.  The site gives a clear sight into the dash for direct recruitment partners that looks to be the increasingly popular modus operandi for all pathway operators. 

Searching suggests that a “groundbreaking new partnership”, signed with Mercer University in October 2018 who were described as “an exemplary partner for Shorelight” at the time, doesn’t even make the roster in 2022.  The pathway program in the fifteen year contract with the University of Kansas signed in 2014 seems to have come to an end just eight years later.  And the pathway with the University of Central Florida (UCF) heralded in 2013 as “another big win for the students of an institution that is clearly on the move” is also over.

Only nine university partners are shown offering the full service of undergraduate and postgraduate pathway option with direct recruitment in both.  Leaving aside the three American Collegiate offerings there are a total of 14 undergraduate pathways and 12 postgraduate pathways.  It’s a complex offering, including three which are postgraduate direct recruitment only and with some significant restrictions – the Johns Hopkins University choices appear to be for engineering programs only.

UG Direct Only11
UG Direct and UG Pathway Option (no PG)14
PG Direct Only3
PG Direct and Pathway Option (no UG)12
PG and UG Direct with Pathway Options in both9
UG and PG Direct Only (no pathways)12

For new readers, the American Collegiate offering is a “choice” program hosted by American University in Washington DC and with courses through UCLA Extension in Los Angeles.  The goal is then to transfer to an institution that will accept the credits.  American Collegiate Live offers online courses taught by UMass Boston and bearing academic credit with “full recognition” by 13 universities

The Past Is a Different Country1

When Elizabeth Redden reviewed the US pathway scene for InsideHigher Ed in 2018 she commented, “With a few notable exceptions, both Shorelight and INTO tend to contract with large institutions, and their partnerships tend to be larger scale.”  Those days seem long past with Shorelight’s burgeoning list including a long string of smaller, regional colleges.  INTO’s closures at Washington State University and Colorado State University also suggest the game has changed irrevocably.

For completeness, the current state of relationships3 on major pathway operator websites shows:

 Current Total US PartnersCurrent US With Pathway*Closed in US Since 2018**
Shorelight42183
INTO1193
Navitas317
Study Group958
  • *Excludes American Collegiate
  • **Pathway announced/operational but no longer shown

It is difficult at this point not to recall the ill-fated words of Karen Khemka, a partner with the Parthenon Group, who said in 2014, “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.”  It came towards the end of a period when private equity invested over a billion dollars in pathway operators but as I asked in a 2018 blog, “..has attention to the supply side of the equation ignored the challenges of changing patterns of demand around the world?”

Unless We Remember We Cannot Understand1

Curiously, the pathway operators inverted the equation when they were promoting the growing supply of students to meet the demand of universities in the traditional recruiting countries of the US, UK and Australia.  They quoted the dubious “8 million globally mobile students by 2025” mantra and largely ignored the potential growth of inter-country competition, relatively low cost of entry for new pathways, the rising cost of acquisition as agent and student choice grew, and the threat of substitute products through technology.  Ignoring one of Porter’s Five Forces seems poor business sense but shunning all five seems less than sensible when you are investing significant amounts of money.      

One talented US leader, running the American portfolio of a UK-based pathway operator, posed these fundamental questions shortly after INTO celebrated its £66m investment from Leeds Equity and Shorelight’s launch.  The company carried on regardless, although US losses mounted, the quality of partners declined and the UK operation stopped adding new partners.  As the Trojans found, it is unwise to ignore the insights and prophecies of a truth telling Cassandra.

Other observations that were rarely heard out or given sufficient attention included:

  • the home of the pathways in Australia and the UK were 13-year schooling systems where the Foundation year of a pathway completed a fundamental requirement. This gave an ideal opportunity for language tuition and academic skill development.  US universities already took students after 12 years schooling and those with larger international cohorts often had well developed ELIs to accommodate language needs;   
  • recognition that the bubble created by fast-growing demand from China, particularly at undergraduate level, was coming to an end as demographics changed;
  • understanding that the bounty of state-sponsored language students was fading fast and unlikely to be replaced;
  • for many US universities the attraction of students paying out of state fees was as attractive financially as international students and seemed more accessible as a market;
  • the best US universities could already recruit if they wanted to and so the opportunities to have great brand names on the website was always going to be minimal.

A Room With A View?1

While new recruitment markets are emerging they are quite different in character and nature.  The growth in students from India has led to a demand at post-graduate level, often without the need for significant English language or pathway academic skills.  It seems likely that Shorelight’s willingness to take on direct recruitment for less well-known institutions reflects the reality that those students are less brand conscious, looking for lower fees and are more focused on a qualification that gives them post-study work options.

It may be a model that is less stable and less lucrative than the pathway model appeared to be in the early part of the 21st Century but INTO and Shorelight have found the going very tough at many of their US pathways and need to do something.  As INTO launches its new strategy there may even be a longer term appetite for uniting forces with Shorelight in the US to become a super-dominant player.  Bringing the two groups together would offer a large direct recruitment portfolio, allow some selective reduction in competing or uncompetitive institutions, fill a gap in terms of online technology for INTO and should enable significant reductions in overheads.

All of these types of potential mergers are riddled with questions about existing financial arrangements, for example Huron Consulting has $40.9 million in convertible debt in Shorelight Holdings LLC maturing in January 2024, competing institutions and cultural fit.  But when the CEO of INTO is talking explicitly about “lighter touch, lower investment” (The PIE live interview, 11 July 2022) ways of having discussions with universities, it seems reasonably clear that there is a shared interest in building non-pathway relationships.  The real question will be whether the new era for organizations that cut their teeth on pathways can drive enough revenue and profitability to be worthwhile and whether consolidation offers added value.   

Of course, it may also be that the days of the recruitment behemoths are over.  Twenty years of pathways has created some highly skilled individuals with strong in-country contacts who could simply choose to go solo with a smaller portfolio of hand-selected university names.  Faced with a choice between being one of eight names in a portfolio or being in the bag of a sales team with 37, 48 or even 100 different products to promote, a smart university might choose to be in a select pack rather than a faceless herd.

Notes

  1. Shameless use of E.M. Forster book titles and quotes throughout the article.
  2. Apparently, Forster adapted this quote from Henry David Thoreau
  3. It is not always easy to interpret the websites of pathway operators and I am happy to accept authoritative and evidenced corrections and note amendments where appropriate

Image by yogesh more from Pixabay 

New Directions At INTO University Partnerships?

It’s nearly a year since INTO University Partnerships (INTO) appointed its new chief executive and there’s been an acceleration of senior changes with new heads of recruitment, product/digital and people appointed and the addition of a chief strategy officer post to the Executive Team.  It seems an open secret that another of the Executive Team old guard will leave in June and the leadership in the US looks to have been tweaked with some saying there are more change to come.  That’s five new faces in a year in an Executive Team of ten so thoughts turn to what happens next and what’s the state of the portfolio?

Anyone who has seen change in a corporate environment will know the Machiavelli quote and that “there is nothing more difficult to arrange, more doubtful of success, and more dangerous to carry through.”  They will also know the tendency of the old guard to still get together and slip around the side of the building every morning for the habitual cigarette break where they can gossip, moan and plot about the interlopers.  However, Greg Shea of the Wharton Center for Leadership and Change Management tells us that “change is not about consensus, it is about critical mass”, so 50% may be enough.

Access All Areas?

Rumours are swirling that the company is planning to launch a new go to market strategy in Asia, probably Vietnam, where one of the much-hyped University Access Centers (UACs) already exists in Ho Chi Min City.  According to the website UACs are under development in Bangkok, Bogota, Hanoi, Jakarta and New Delhi for launch by early 2022 and a further 15 planned by 2023.  In one of the big student recruitment debates currently raging, INTO seems to be putting significant investment into “boots on the ground” rather than relying solely on the efficacy of online, aggregators and virtual counselling.       

There is also talk of direct recruitment options maturing and becoming a key part of the sales strategy which seems a no brainer given INTO’s reduced number of pathway partners over the past few years.  Shorelight heard the starting pistol on the direct recruitment race in the US more than six months ago so there is ground to make up.  The UACs may, however, offer differentiation from Shorelight’s increasingly strident pitch as a “technology-enabled” business – when the word “technology” appears seven times in a three paragraph news announcement it must matter to them.

It also seems possible that INTO could be making a play for the ground that “global expansion experts” Sannam S4 Group has filled so well with its approach that makes “personal our number one priority”.  The UACs could make useful physical locations to pitch for market entry and expansion opportunities and the notion of “internationalisation strategies from concept to delivery”.  Having in country presence and a sales team on the ground was always core to the pathway operator model so it’s a logical extension to turn that into a full service pitch based on country expertise, where everything from market launch initiatives, TNE and campus management to returning graduate employability can be up for discussion with resource-constrained universities. 

The Great Divide?     

Time will tell how those possibilities play out but it is intriguing to think that INTO may also be taking a more radical look at how its UK portfolio* is managed to best effect by differentiating Russell Group institutions from the rest.  One potential reason for considering the Russell Group institutions (including the wholly owned Manchester operation which primarily serves the University of Manchester) as a separate entity is that their performance offers the best chance for recruitment growth.  Taking the pre-pandemic period the total enrollment growth of all eight INTO operations from 2016 to 2020 was 547 with the four Russell Group related pathway operations increasing by 672 while four non-Russell Group operations (which include the wholly owned World Education Centre) had an aggregate loss of 125.  

Source: INTO Center Annual Reports

A direct comparison between INTO University of East Anglia and Queen’s University Belfast in the five years pre-COVID emphasises the point.  It is startling to see the decline of INTO’s first ever joint venture and reflect that when 2021 reporting becomes available INTO Queen’s may have overtaken it in enrollments.  Taking the five years from 2016 to 2020 INTO Queen’s increased enrollments over 63% while INTO UEA declined by 25%.  Enrollment at INTO UEA has been declining almost every single year since 2015.

Source: INTO UEA and INTO Queen’s Annual Reports

While the University of East Anglia does not report its own international student enrollments separately, the impact of a declining pathway and no obvious direct enrollment growth to balance it can be seen by the fall of around £3m in international tuition fee revenue from 2018 to 2020.  The joint venture drew down a loan from the UK Governments CLBILS Scheme to mitigate cash shortages during the pandemic and the University’s annual financial statements for 2020/21 tell us each partner guaranteed 50% of the loan up to a maximum of £7m.  More chilling for the future is that the statements indicate that there “will be no distribution in respect of 2020/21 nor for the next three years whilst the joint venture recovers and builds up surpluses for distribution.”

Source: UEA Financial Reports and INTO UEA Annual Reports

End of the long-term Joint Venture?

The big differentiator for INTO in its early days was the notion that it signed long-term (usually thirty year) joint venture partnership deals with equal start-up investment and a 50% share in profits and losses with the university.  The UK portfolio now falls some way short of that vision with INTO Newcastle becoming majority owned (51%) by IUP and INTO City having a distribution that goes 85% to Newincco 921 Ltd (an INTO subsidiary) and 15% to City Foundation Limited.  Closure of INTO St Georges, INTO UEA (London), INTO Gloucestershire, INTO GCU and INTO Newcastle (London) have long rendered the multi-decade, higher education altering principles obsolete.

Even “The INTO Story” element of the company’s corporate web-site has lost the tale of founder Andrew Colin and, then, vice chancellor of the University of East Anglia, Professor David Eastwood, cooking up the joint-venture model as a mould-breaking idea.  Professor Sir David Eastwood (now knighted) has become Chairman of IUP’s Board and sits alongside two representatives from Leeds Equity Partners who described IUP’s “transformational…industry-leading, relationship-driven model” when they invested £66m in 2013 to become 25% equity stake holders.  At the time IUP claimed 16 university partnerships but nearly a decade later it is difficult to see more than 14 which fit with the original concept.   

There has been a similar tale in the US where joint ventures at Colorado State, Washington State and West Virginia have closed in recent years and IUP has become the 100% stakeholder in its venture with St Louis University.  It seems likely that, as the market has matured, the limitations of the model have become increasingly clear with competitors able to offer more agile, flexible or advantageous terms to institutions.  It is also arguable that, for the pathway operator, being tied to less attractive institutions in a fiercely competitive market for international students does not offer the growth prospects that so attracted private equity a decade ago.

For INTO, the pandemic may have provided the moment for a rethink and a pause for breath where the opportunities from a resurgent UK drive for international student enrollment could be assessed.  Fresh thinking on recruitment and delivery as well as a recognition that the portfolio is, if not sheep and goats, more a potpourri than a bunch of roses could bring results in the new environment.  Despite launching into a highly competitive world, it probably can’t be any less productive than the past few years.

Notes

*The US environment was considered in depth in China Crisis for US Pathways and Pathways to the Future for US Big Two

Image by Gerd Altmann from Pixabay

CHINA CRISIS FOR US PATHWAYS?

My early January blog on the two big US pathway operators focused on specific examples of INTO University Partnership’s (INTO) pathway problems without similar insights into some of Shorelight’s major partners.  There had been some insights into lacklustre performance at Louisiana State University, Auburn University and the University of Kansas back in October 2019 (Shine a Light on Shorelight) but an update is overdue.  There is also some news from INTO as it confirms new faces in senior management* and some fundamental changes in its relationship with university partners. 

In the US the most significant point is that INTO has become the sole owner of what was established as a joint-venture with St Louis University.  This follows the closure of joint venture operations at Marshall, Washington State and Colorado state over the past two years.  INTO’s annual report does not list any shareholding in the pathway at Hofstra University so it now has only seven joint-venture partnerships in the US.

The big question, given that all of the most recent US announcement from both INTO and Shorelight have been for direct entry partnerships, is whether the bubble has totally burst on pathways.  Without a significant return of students from China it is difficult to see that predominantly graduate growth from India is going to sustain them.  Looking at the way enrollments have panned out in Fall 2021 suggests this could be the direction of travel.

Shorelight Stumble at Auburn And American

American University is generally reputed to be one of the star performers in the Shorelight portfolio but the enrollments reflect the harsh realities of the pandemic.  The numbers indicate that enrollments in Accelerator/Collegiate/PSE courses were already in decline before Fall 2019.  Despite the limited bounceback in overall enrollments to the US reported by Open Doors in Fall 2021 there is no evidence the Shorelight pathways are seeing an upturn.  

Source: American University Office of Institutional Research and Assessment

The story continues when American University’s total Fall enrollments are reviewed.  Separate axis are used to reflect the significant difference in volume between Chinese an Indian students and the only upturn in Fall 2021 was in Indian graduate students (about 10 students more year on year).  The decline in Chinese undergraduates begins the year after the fall in Accelerator/Collegiate decline and suggests the longer term vulnerability that American University has to declining Chinese numbers. 

Source: American University Office of Institutional Research and Assessment

The combined enrollments in the first and second term Global Masters Accelerator at Auburn University shows similar characteristics but with even more significant declines in volume.  Total enrollment has fallen from a peak of 87 in 2017 to just 11 in Fall 2021 with the decline in Chinese students driving the outcome.  Attracting students from India to pathway programs seems unlikely to make up the shortfall. 

Source: Auburn University Office of Institutional Research

Less Spirit at INTO Saint Louis University

Saint Louis University has seen a significant shift in direct enrollment graduate numbers in 2021 with Indian students outnumbering those from China.  This does not, however, go far enough to counterbalance the decline in Chinese undergraduates over the past five enrollment years.  Evidence from other INTO pathway operations has shown that this plays out even more dramatically at pathway level because Indian graduate students generally have less need of the services provided.

Source: Saint Louis University Office of Institutional Research

INTO St Louis (INTO SLU) was first established as a joint venture in September 2017, becoming, at the time, the seventh INTO partner in the US.  Between the financial reporting in 2018 and 2020 the debt owed by the joint venture to INTO had grown from £1.8m to £3.5m and the current circumstances suggest there is little likelihood of it being repaid in the near future.  If pathways are not enrolling sufficient students they quickly become unviable and need significant financial support from parent organizations.  

INTO’s most recent Annual Report is coy on the matter and simply reports that “subsequent to the year end INTO’s shareholding in INTO SLU LLC increased to 100%”.  Having lost three pathways in recent years there was probably little appetite for losing another partner. The upswing in interest from Indian students may have tipped the balance to continue a pathway while getting exclusive rights for direct enrollment of international students.

Overall, INTO’s US operations all appear to be increasingly indebted to them with even USF slipping from creditor to debtor in the most recent report and accounts.  While it is reasonable to expect new businesses to take a while to get into profit INTO hasn’t opened a joint venture in the US since Illinois State University in 2018 since when the total level of indebtedness across all US operations has nearly doubled from £18m to £35m.

Source: INTO University Partnership Annual Reports***

The most recent accounts for INTO Illinois State University LLC (INTO ISU) make quite interesting reading with the financial deal including a Promissory Note with INTO North America which allows borrowing up to $6m in operating capital with an interest rate of 6%.  Another number that catches the eye is that marketing expenses were an eye watering 77% of tuition revenue. The pandemic caused the LLC to cease operations for a period of up to 23 months, effective August 1, 2020 (the “Deferment Term”) and it will be interesting to see what happens next.

China Crisis for Pathways?

It is no secret that the early growth of pathways in the US owed an enormous amount to English Language scholarship students from Saudi Arabia and the acceleration of incoming students from China.  As numbers of the former fell away pathways became increasingly reliant on the latter which made the COVID-19 situation particularly difficult.  The $64 million dollar (sic) (and maybe more) question is whether the future will see a significant return to those pre-pandemic conditions.

Looking on the bright side might involve pointing to the growth in Chinese undergraduate applicants to the UK (up 12% year on year in January 2022) for entry later this year.  A more negative view might be reflected in the range of reasons summed up in “How Washington’s hawkish China policy alienates young Chinese”.  Optimists could point to the recent ending of the “crackdown on Chinese research ties” while pessimists would suggest that the countries are “locked in a stalemate”.

Back in 2014, Peggy Blumenthal, a 30-years at IIE and a senior counselor to its then president, Allan Goodman, discussed the underlying issues with Science magazine and its worth a look.   China had devoted significant resources to build graduate capacity, more of the professors had been trained in the US and Europe, and even at that time “the added value of a U.S. graduate degree has shrunk in relation to a comparable Chinese degree…for the vast majority of Chinese students.”  It’s arguable that the quality of Chinese universities has increased further and that there has been little to significantly increase the lure of a Western degree.

What is also clear is that, as discussed in a recent blog, 2022 is likely to be the first year that all four major recruiting companies are competing effectively at the same time and there have been a number of increasingly powerful entrants to add to the mix.  There seems every likelihood of continuing international tensions and the potential for students to be “weaponized” by their home government as a form of economic and cultural sanction.

The most prestigious universities in traditional recruiting countries have little need to worry but the early signs from Fall 2021 are not particularly encouraging for universities or pathway operators that have relied on Chinese students paying high fees.  While the growth of graduate students from India might provide some direct recruitment solace for universities this is not going to resolve the issues facing the pathway sector.  Shorelight appears to have already set its sights on building a direct recruitment portfolio of institutions over and above any pathway interest but since the University of Arizona announcement in June 2020 INTO appears to have no obvious sense of direction to face the changing market dynamics.

Notes

*Tom Hands has recently joined as Chief Recruitment Officer. He has previously worked in recruitment positions for Study Group, Navitas and Kaplan. Namrata Sarmah joined at the end of 2021 as Chief Product Officer having previously been Senior Director of Product at ViacomCBS

**As ever, research is presented in good faith but with a recognition that classifications of courses can be complex. I am happy to receive any authoritative corrections (with explanations) and would record them as notes on this blog.

***A review on 1 September 2022 showed that the INTO University Partnerships Annual Reports for 2020 and 2021 carry different figures in reporting of debtor information for INTO Washington State University and INTO Illinois State University. In the Report to July 31 2020 the debtor levels are shown as £3.156m and £5.438m respectively while in the Report to July 31 2021 (which shows the prior year as a comparison alongside the current year) the debtor levels are shown as £1.873m and £3.365m respectively. The July 31 2021 Report appears to make this change due to a prior year restatement and the graph has been adjusted to reflect that. This does not alter the explanatory text in the paragraph immediately before the graph.

INTO AT WORK IN A LAND DOWN UNDER*

Rumours of INTO University Partnerships (INTO) striking a deal with the University of Western Australia (UWA) seem to be gathering pace**.  It’s certainly clear that Study Group’s operation aligned with UWA, Taylor’s College, is closing in December 2021 and is currently not accepting any more students.  Meanwhile UWA has announced the opening of UWA College, a new pathway institution, in February 2022 and it sounds as if this could be where INTO has landed its first ‘partnership’ in Australia.

The loss of UWA takes Study Group down to three university partners in Australia, according to its website, but it continues with its links to the top-ranked Australian National University and University of Sydney.  Navitas currently lists 11 Australian partners with only one from the Go8.  Just for the record that’s Adelaide which also appears on Kaplan’s list of three partners. 

INTO’s entry into the Australian fray makes it the newcomer and comes some years after casting eyes at the opportunities .  Discussions with La Trobe (currently a Navitas partner) were fairly advanced in the early 2010’s and there were other flirtations.  The questions – why now and why Perth – would lead to an understanding of whether this is opportunism, an emerging strategy for diversification or a desperate throw of the dice.

The company’s problems with losing partners have been well rehearsed in recent months but there seemed some logic to taking joint ventures accruing debts to INTO out of the portfolio.  While it is doubtful that all the decisions to close were driven by INTO, the remaining partners include some top names in the UK at a point when international recruitment is bouncing back.  Almost every pathway group has had to take some pain with closures in the US so INTO’s troubles there were not uncommon.

It still seems something of a leap to take on a new partner in a country where the company has no infrastructure and limited operational experience.  Even more so at a point when that country has a very uncertain path to being able to welcome international students back in the numbers it once enjoyed.  It’s also reasonable to say that Perth has not historically been the epicentre for international student growth in Australia and that enrollment has lagged behind the country’s impressive upward curve to 2019.

Sources: UWA Annual Report (showing student load) and Australian Department of Education Skills and Employment

While UWA is one of the Group of 8 of top universities in Australia but is also behind some of the more illustrious names in terms of global ranking and attractiveness to international students.  So, even when the borders reopen there is little to suggest that UWA will be at the front of mind for international students looking to find a top ranked university.   All the while, there is also the drumbeat of Australian politicians and pundits who are keen to see the 2020 reduction in international student numbers go down even further to reduce university dependence on international fees. 

 THE 2021 Global RankQS Global Rankings 2022% of international students (THE measure)
University of Melbourne313748
University of Sydney513843
Australian National University592747
University of Queensland624738
Monash University645843
UNSW Sydney674344
University of Adelaide11810829
University of Western Australia1399329
Uni of Technology Sydney16013336
University of Canberra18443636

Business Insider Australia and other publications have set out the broader risks to Australia’s booming international student market as its Government struggles to find ways to allow inward mobility.  UWA has taken the opportunity to roll out $40m in ‘structural cost cuts’, including ‘university-wide redundancies’ while flagging heavy investment in its campus.  All of this plays out against the background of continuing tensions between the governments of Australia and China with the latest spat over the Great Barrier Reef and complaints at the World Trade Organisation being just the latest examples.

It is fair to say that the jury is out on how soon and how robustly Australia will return to the international student recruitment party.  Those who have travelled the scene for many years know better than to write them off and they have overcome dips in enrollments before.  But the resurgence of the UK, the Biden bounce and Canada’s continuing surge means that the competitive market they face will be more challenging than ever before.

All in all the link up, if it is confirmed, seems out of context for a business that has focused so heavily on the US for the past five years.  The geopolitics of the enrollment potential are also difficult to divine at this stage and may make the partnership a harder sell.  It’s going to be interesting to watch and see if INTO find it the “land of plenty” or whether those making the decision will think they’d “better run…better take cover.”*

NOTES

* It’s sometimes irresistible to allude to the mighty Men At Work and their song Down Under which topped charts around the world between 1981 and 1983.  In September 1983 it was adopted as the theme song by the crew of Australia II in their successful challenge for the America’s Cup yacht trophy.

** As always, I would welcome any clarification or correction from an authoritative source at the University of Western Australia or INTO University Partnerships and amend the copy accordingly. 

Image by Katrina_S from Pixabay

INTO THE GREAT WIDE OPEN*

It’s always difficult to know when news is official and when it’s a false start and a case in point is the appearance then disappearance of a new Chief Executive Officer for INTO University Partnerships (INTO) over the course of a few days last week.  It would be invidious to name names publicly at this point but one day the INTO corporate website had a picture and biography then a day later it was gone.  It all happened so quickly that I was pleased to have a conversation with a colleague who had seen the website and could also name the individual.

There doesn’t appear to have been a press announcement about the appointment, but on Wednesday 16 June, the site also had INTO’s co-founder John Sykes listed as Deputy Chief Executive and VP of UK Operations so there seemed to be a nascent structure in place.  More curious is that all of INTO’s pages related to people – and they were extensive – went missing and remain so on Wednesday 23 June.  If you click on the link to Our People it takes you to a bland page about Global Reach – Global Impact, the Leadership Team area on Corporate Information is a desert and the Meet Our North American Development Team section is as blank as untrodden snow.

Any official and authoritative explanation is welcome and I’m happy to provide an update if it is forthcoming.  Perhaps the wider site needed a major refreshing but if so it would be reasonable to see the Marshall Student Center and Colorado State University imagery coming down because those joint ventures have closed.  Anyone who has had responsibility for keeping websites up to date know that it is not for the faint-hearted and requires constant vigilance.  Using collateral from partnerships that have ended feels a little like the corporate equivalent of carrying a torch for a childhood sweetheart. 

The claim of 30 university partnerships in the UK and US also does not square with the logos of nine US partners and nine UK partners.  The relationship with Chinese universities appears to have disappeared from the corporate site but the INTO student site still has opportunities for study at Nankai University.  It’s all pretty confusing.

Only time will tell if the lack of information about leadership reflects a new approach to privacy, a major update or a pending restructure of significant proportions but it’s a good moment to review the task facing a new CEO if or when they are appointed.  Partnership growth has stalled, online capability appears to be behind the curve and the main competition has forged ahead in both areas.  It seems a long way from the growth proposition that encouraged Leeds Equity Partners to invest £66m ($105.8m) for a 25% stake in the business back in 2013.    

Over the past two years INTO has seen the end of joint ventures at the University of Gloucestershire, Newcastle University London and Glasgow Caledonian University in the UK as well as Marshall University, Colorado State University and Washington State University in the USA.  The company invested in School Apply in early 2020 and closed it a year or so later.

The INTO Annual Report for the year ended 31 July 2020 was for a year before the full impact of the pandemic was felt on 2020/21 enrolments and suggested little growth.  Adjusted turnover (which removes discontinued operations) was up 3% to £202k while adjusted EBITDA fell 9.1% to £26m.  Overall, the intercompany debt from joint ventures to INTO had increased by around £8m to £44m with the Centre’s closing listed as debtors to the tune of around £11m.

After entering the pathway market with a ground-breaking joint-venture model at the University of East Anglia in 2006, INTO leveraged its model with great initial success in the US at Oregon State University from 2008.  There have been no new partners in the UK since the University of Stirling in 2014 and the most recent pathway additions in the US was Hofstra University announced in January 2019.  Shorelight adopted many aspects of the INTO model and has forged ahead to be the dominant partner of American universities since its founding in 2013.  Long-term players like Kaplan, CEG, Navitas and Study Group and upstarts like QA Higher Education and Oxford International have scooped up the most recent UK university pathway partnerships.

INTO’s purchase of SchoolApply may have been the start of a foray into the world of online delivery but it is no longer active and there is little evidence of significant advances in this area.  This is at a point where Study Group is moving forward with Insendi, Kaplan Open Learning has online partnerships with Essex and Liverpool, CEG Digital has an established stable of partners and even Oxford International has been making waves with its Digital Institute.  In the US, Shorelight has made a great deal of its delivery through the Shorelight Live platform and appears to be repositioning as a business delivering technological solutions to student problems.

One way of looking at things might be to suggest that the reduction in partnerships has been a deliberate step by INTO to clean up some joint ventures that had struggled to make headway in a competitive market.  The growing level of indebtedness from these joint ventures to INTO might suggest that they were not making adequate progress but it does seem as if several decisions were university driven.  The latest closures are part of history that includes the closures of partnerships with St George’s, University of London, and UEA London which undermines the original notion of long-term joint ventures providing greater stability than third-party pathway providers.

It’s something of a strategic head-scratcher and the loss of academic ‘supply’ comes at a tipping point where both the US and UK are demonstrably back in the game as far as international student demand is concerned.  The lack of a viable online option seems to put INTO at a disadvantage in delivering to a market where increased flexibility and option has become the norm and is likely to grow in future years.

Perhaps there is a mega-deal on its way and one might guess that Leeds Equity Partner would be pleased to find a way to realise some return after eight years of a holding position.  A possible merger with Shorelight to become a demonstrable lead player in the US seems a long shot but the operating models have some similarities and the online expertise may bring energy to INTO’s portfolio.  Or maybe this is the moment where a stable group generating solid if unspectacular EBITDA could be taken back into 100% ownership by INTO’s founder, Andrew Colin.

It’s all speculation but for an outside observer INTO needs to establish some renewed momentum if it is to fulfil the promise of its early days of innovation, creativity and energy.  There’s been substantial investment in talent at the top level and perhaps a new CEO is the final piece in the jigsaw.  Only time will tell.

Image by Anemone123 from Pixabay 

* Fans of the mighty Tom Petty will know that Into The Great Wide Open is co-written with Jeff Lynne and charts the progress of Eddie as he “went to Hollywood, got a tattoo”, “made a record and it went in the charts” to the time “their A&R man said, ‘I don’t hear a single”.  It’s the old story of “rebel without a clue”, to overnight success, to uncertainty when “the future was wide open”.      

Amendment on 1 May 2023: The earlier version of this blog suggested that Andrew Colin, founder of INTO, might take the business “private”. It has been amended to clarify that this was intended to suggest he might choose to take it 100% back into his sole ownership

Canadian Pathway Drive – Back to the Future?

Interesting times in Canada as Navitas and others try to muscle in on international student interest in the country’s lure of immigration and citizenship.  The latest to cross my desk is in Newfoundland and Labrador where Memorial University of Newfoundland (MUN) looks to be in discussions with Navitas.  A response to the proposition from the university’s alumni network is a little like being transported back to the union and faculty resistance to UK pathways in the early 2000s.

It’s also a good moment to look at the prospects for pathway growth in Canada over the coming years. This is about the likelihood of resistance by faculty being successful and the possibility that the private operators may get diverted. History has also shown that, for either side, short term gains and potential may not always convert into long term success.

A Canadian Problem or Opportunity?

The scant MUN’s Minutes of Vice President’s Council from October 2020 confirm that a Pathway Proposal feasibility with Navitas has been ‘endorsed’ by the Council.  A response by the MUN Faculty Association Executive (MUNFA) at the end of March 2021 highlights seven ‘concerns’ as a sighting shot.  To borrow from a son of Canada one side of the discussion might be “rockin’ in the free world” but the other are suggesting “there’s a warnin’ sign on the road ahead”1.

Drivers behind MUN’s interest may be varied but the economic case for international recruitment is likely to be high on the list.  From 2012/13 to 2019/20 it saw operating budget cuts of $39.5m along with further capital budgets being lost.  Since 1999 the provincial government has had a tuition fee freeze for students from the province but out of province and international students can be charged more.

Reports suggest this is a scenario that is also being played out in Ontario, Alberta and Manitoba as provincial government’s reduce funding for higher education.  The conditions are ripe for pathway operators to find partnerships from hard-pressed institutions.  Magnifying this attraction is the benevolent visa, work rights and immigration policies that has driven international student interest in Canada over recent years.   

The Past In A Different Country

The MUNFA arguments are all very familiar to anyone who followed the progress of INTO University Partnerships (IUP) in the UK as it took its new 50/50 partnership model into discussions with potential partners in the early days.  Much of the debate is played out in the media but another good source is the website of the University and College Union (UCU).  There may be something for all sides to consider in the arguments made and what eventually happened.

The campaign against IUP at the University of Essex is well documented and laid out in a triumphant Fighting Privatisation Toolkit summary.  It charts the story (from the UCU point of view) from first skirmishes in December 2007 to a university announcement in October that the teaching would be kept in-house.  But as American baseball legend Yogi Berra told us, “It ain’t over till it’s over” and in 2017 the University announced a partnership for a ‘pathway college for international students’ with Kaplan.

Defences were also mounted at other institutions and some university management, for example at De Montfort, even expressed trenchant views about the potential dangers of private providers becoming partners.  It was, however, only two years later (in 2013) that De Montfort, under ex-Vice Chancellor Dominic Shellard, teamed up with Oxford International Education Group for an international pathway college on campus.

It may be that INTO’s 50/50 partnership model with its associated terms was the real problem and later deals were modified to make them more acceptable to universities.  But it is also true that some institutions in the UK have successfully developed alternative approaches to providing pathways for international students.  Institutions that have moved so rapidly to deliver universal online education in the past year might care to consider how they apply that agility to accepting international students who are short of requisite language skills.          

Lessons from the US and UK for Canada

UK universities have, to a greater extent, fully embraced the pathway model with long established groups Kaplan, Study Group, Navitas and Cambridge Education Group having around 50 universities in their portfolio.  Newer players such as QA Higher Education, GUS and Oxford International are growing and well ranked universities continue to gravitate towards private partners with Aberdeen, Cardiff, Aston, Southampton and Queen Mary all finding pathway partners in the past two years.

In the US, however, the story is quite different with many pathway closures in recent years from Navitas (5), Study Group (6), Cambridge Education Group (4) and INTO (3) more than counter-balancing Shorelight’s slowing growth in new partnerships.  It’s always difficult to be certain from the outside what is driving a closure but it’s reasonable to assume that the decline in international students going to the US has made it less viable for the commercial partner to continue.  At its worst that exit leaves a university with no infrastructure, no foothold in the market for international students and potentially a poor reputation overseas that will be difficult to overcome.

There are material differences in the number of institutions and the private/public make up of the university sectors in the two countries.  It’s arguable that Canada is more like the UK in terms of numbers of institutions, it has a degree system that offers flexibility, and it is relatively inexpensive.  But the progress for the pathway providers has been very slow and success may not come quickly enough to ensure rewards.

Riding the Roller Coaster

As the world emerges from the pandemic there is almost certainly going to be a renewed appetite for student mobility but it is a quite different higher education landscape to just two years ago.  The US administration has changed, the UK has seen growth from India outpacing that from China, and Australia, while wounded, is looking for ways to recover.  Past performance is no guarantee of future results should be a watchword for pathways looking to Canada as much as caveat emptor should be a guide for Canadian universities talking to private providers.

Colleagues have speculated on Canada as being in the ‘squeezed middle’ as the US and UK open their doors more widely to students.  It may also be of interest that while the numbers of scholars in the US from China were lower in 2015/16 than 2019/20 the number from India was slightly higher.  There is also every reason to believe that the attractiveness of the US has already increased amongst potential students and this could pay big dividends as the country’s vaccination program increases pace.         

The historical evidence from the UK, and to a lesser extent from the dash for growth of pathways in the US, is that resistance from faculty and friends of MUN may succeed in the short term but is futile over the longer term.   It could, however, be enough for them to delay the seemingly inevitable because the private providers will turn their attention to other opportunities if the attraction of Canada begins to fade.  Universities that have already signed on the dotted line may find that, as happened in the US, pathways are as willing to walk away as they were to sign up in the first place.

Notes

1. Frank Sampedro/Neil Young, Rockin’ in the Free World lyrics © Wixen Music Publishing, Silver Fiddle.

2. 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