Tag: ukhighereducation

Closing Open Doors

This is probably the final blog relating to Open Doors data on 2022 enrollment of international students for US universities and the more recent data published by individual universities for fall 2023. That makes it a bit longer than usual and it includes a small diversion into some recent commentary about online being the new international!

Beavering Away Or Bellying Up?

The yearly posting of detailed information from Oregon State University (OSU) offers timely data, good detail and easy accessibility.  Universities in the UK and around the world would do well to follow the model if they want to engage more effectively with the public.  It is difficult to have a serious discussion about trends or for politicians to make good decisions when information is more than two years out of date.

All that said, this year’s data reflects the continuing struggles of some well-regarded US universities and their pathway partners to recover after the pandemic.  The detailed numbers underline the perils of over-reliance on a single market and the reality that the US bounceback outlined by Open Doors fall 2022 data is patchy.  As noted in a previous blog, the data gives clarity on why pathway partner INTO University Partnerships (INTO) didn’t mention the university in its press release suggesting a “..huge surge in international student enrollment for its US institutional partners..”.

The total of enrolled UG and graduate students shows that OSU is making no progress in recovering the volume of international students lost since the pandemic.  There has been a small uptick in graduate students (+68) but undergraduate numbers continue to plummet with a decline of 16% year on year (-192).  While the year-on-year decline is slowing, OSU does not appear to have benefited in 2022 or from the reported increase in international enrollments indicated by the Open Doors Fall 2023 Snapshot.   

Source: Oregon State University Officer of Institutional Research

NB: INTO OSU students, excluding those on Academic English courses, are included in these totals

The driving factor for the decline is that the university was heavily reliant on Chinese students and has been unable to significantly grow numbers from India or elsewhere.  In its other historically stronger recruitment markets OSU is losing ground with Saudi Arabia, South Korea and Taiwan all in decline over four years.  What seems difficult to explain, given OSU’s quality and the supposed recruiting power of its private partner, is that the Open Doors state by state detail suggests two other Oregon universities – Portland State University and the University of Oregon – seem to have stabilized their overall number of international students in 2023 more effectively than OSU.  

Source: Oregon State University Officer of Institutional Research

It is also clear that the pathway proposition (INTO OSU) offered by INTO is not providing much momentum with a down year in 2022 and a net increase of just seven students in 2023.  Without a substantial shift in recruiting market dynamics it is difficult to see a path or a way (sic) to significant growth in the future.

Source: Oregon State University Officer of Institutional Research

The decline in INTO OSU’s numbers reflects even more clearly the past reliance on China (and to a lesser extent Saudi Arabia).  Taiwan now contributes more volume to the pathway than China.  The aphorism “you can’t buck the market” is often attributed to British Prime Minister Margaret Thatcher but it’s a warning to operators around the world that changing to meet shifting market conditions is critical to long-term success.

Source: Oregon State University Officer of Institutional Research

Is Online The New International?

An interesting rider to all this is the recent blog by Glenda Morgan in Phil Hill’s On EdTech Newsletter.  She asks the question, “Is Online the New International” and noted that “..by 2021 eCampus was the largest source of OSU’s tuition revenue.”  The suggestion in the newsletter is that US university focus on international student recruitment might be drifting, in the context of continuing pressure on budgets at state level, towards online recruitment.

The article contains a quote from Rajika Bhandari summarizing that, “Most students coming from India are at the graduate level. This has always been the case and likely will be for the foreseeable future.  Therefore, just from a recruitment and revenue perspective, they are never going to have the same impact on an institution’s bottom line as the Chinese undergraduate students.”  I first speculated on this in a UK context in January 2020 and have made the point on a number of occasions that the impact on traditional pathways was likely to be even greater.

The article leads to an interesting conclusion about “..the costs involved in physical campuses.” Anyone who has worked at a university sees how the emotional ties to the institution’s location are almost as powerful as the existence of labs, lecture theatres and student housing. One suspects it will take many years (or possibly a few university insolvencies) to change that mindset.

It’s thought-provoking stuff and may mean that some universities are already accepting the constraints on globally mobile international students as a revenue source.  This would leave some of the commercial operators who have no track record in either delivering or recruiting to online courses with a bleak future.  There may be a particular danger where academic English courses are concerned as James Madison University noted in its consideration of failure by Study Group to recruit to an Intensive English Language program.

Do Private Providers Make A Difference?

In October 2020 a Report by NAFSA, APLU and INTO made the claim that “Institutions with third-party pathway partnerships were 1.73x more likely to experience international enrollment growth…”.  The data analysed was across two historical periods – 2007-2015 and 2015-2018 – and there was a lot of weighty statistical explanation.  Against that background it is interesting to apply a simple comparison to see what has happened in recent years.

The graph below takes the Open Doors state by state enrollment numbers for three of INTO’s “present” comprehensive university partners (with pathways) and places them alongside those of three “past” partners who no longer have pathways with INTO.  The time series avoids the peak pandemic affected years of 2021 and 2022 but show prior performance and how the bounceback might be happening.  Washington State University (WSU) and Colorado State University (CSU) ceased being pathway partners in 2021 and 2022 respectively but are direct recruitment partners.  The University of South Florida claims to have terminated the pathway partnership in April 2022 but a legal battle is ongoing and is the subject of several earlier blogs.

This data appears to show that past partners WSU and CSU had declining numbers before the breakup and that being direct recruitment part has shown no benefit in terms of growing numbers post pandemic.  On the other hand, the split and no ongoing direct recruitment relationship does not seem to have stopped USF from driving its international enrollments significantly higher in 2023.

The “present” comprehensive partners shown all have pathways but allow INTO to recruit directly to certain university programs.  There is a satisfying upward curve to the University of Alabama – Birmingham (UAB) curve and George Mason University (GMU) also appears to have bounced back strongly in 2023.  It is all the more perplexing that Oregon State University has been in decline since 2017 and looks to be the worst performer among the six.

It would seem fair to say from this data that a comprehensive partnership with a pathway is no guarantee of growing enrollments, that being a direct recruitment only partner appears to have relatively little impact on performance and that it is entirely possible for a university to drive enrollment outside of any relationship with a pathway/direct recruitment partner. While there was little doubt that INTO helped OSU make rapid progress in international recruitment for several years until about 2016 a lot has happened since then.

None of this is to suggest that the Report by NAFSA, APLU and INTO was incorrect in its analysis.  However, it is reasonable to believe that the changing international student source markets, growth in competition and other factors should make institutions negotiate hard if they are looking at these relationships.  Building a business or a growth strategy on data that is five years old and past glories is probably not a good idea.  

Source: Open Doors State Facts and Figures

It is also increasingly clear that pathways are unlikely to be the answer, with further evidence from UAB showing that the INTO pathway courses have struggled to recover after the pandemic and that Academic English is showing almost no signs of revival at all.  This reflects the situation at GMU reported in a previous blog and the minor increase of seven students for OSU shown in the graphs above.  This pathway picture appears to be repeated across Study Group and Shorelight pathway partners.

 Source: University of Alabama at Birmingham Office of Institutional Effectiveness   

NOTES

As alway, the analysis in this blog reflects a genuine attempt to interpret and consider the implications of data from public sources. It is recognized that there may be minor underlying differences in the way the data is collected. The source of the data is given so that readers may make their own judgements and if an authoritative source makes contact the author will make appropriate amendments.

Image by Gerd Altmann from Pixabay

Oh, What A Beautiful Morning

The sun rises on a new week and there’s a fresh batch of news from INTO University Partnerships including overdue accounts being filed, a direct recruitment partner announced and what looks like a departure at Executive Team level.

Territory folks should stick together2

The INTO University of East Anglia LLP Annual Report for the year ended July 2022 arrived with Companies House about a month overdue.  At first glance there seems little reason for the delay and the average student numbers were only slightly down on the year before.  A little deeper digging shows a breaching of “certain covenants” on the CLBILS loan and a number of restatements of prior year financials.

The restatements have taken the prior year (to July 2021) Operating Loss down from £4.6m to £1.8m with the bulk of the difference being a reduction in Administration Expenses of £2.6m.  The notes indicate that this reflected a decision “..that amounts payable to members for contractual services such as marketing should be included within Members’ remuneration charged as an expense..”.  A similar change was made in restatements of 2021 at INTO Newcastle and INTO Stirling but not, as far as I can see, at INTO City, INTO Queen’s or INTO Exeter. 

The COVID-related CLBILS loan is for £7m with HSBC and requires payment of £1m in November 2023 and the final balance to be paid by December 2023.  The Annual Report notes that this is “within the cash flow projections”, with both partners signing a letter of support to enable the LLP to continue to fund its liabilities as they fall due.   The University of East Anglia, which has had its own financial troubles in recent years, has not posted any Council minutes thus far in the 2022/23 academic year so it’s difficult to know if there are any further insights to be gained from its governing body.

This all means that INTO UEA ended up right in the middle of the pack for 2021/22 recruitment at INTO’s UK Centers but still at around half of its pre-pandemic enrollments.  There’s quite a lot riding on the Autumn 2023 intake with another mouth to feed at the newly formed INTO Lancaster Limited.  Just as a small rider on that point it seems as if this entity has been incorporated as a wholly owned INTO entity so it remains to be seen if it another co-owned joint venture.    

Where the wind comes sweepin’ down the plain3

Back in the USA, INTO has just announced a new partnership for direct recruitment with the University of Oklahoma.  This is the second agreement in the US in 2023 following the partnership with Montclair State University announced in July.  Before that, the most recent partnership was with University of Massachusetts Amherst to recruit to 17 master’s degrees, back in September 2022.

Perhaps the May 2023 publication of claims that there was 52% growth in applications for INTO Center-supported programs and 201% growth in direct entry applications has stimulated interest.  Whether this has translated into equal or similar growth in enrollment should become clearer as partner universities publish their data for Fall 2023. In competition terms, the three additional partners are a limited response to Shorelight’s growing higher education smorgasbord of 65 universities offering undergraduate courses and 39 offering masters courses (excluding American Collegiate and non-US campuses).

The court case between INTO and the University of South Florida continues to move along.  Factors include a Hearing on 10 October 2023, to consider “University of South Florida’s Motion to Dismiss INTO University Partnerships Limited’s Supplemental Pleading”4, INTO’s voluntary dismissal of “..Counts XI and XIV of the Supplemental Pleading to the Second Amended Complaint”5, and an appeal by INTO to the Second District Court of Appeal.6

INTO appears to have refreshed its legal team for the Appeal with three lawyers from Susman Godfrey joining INTO’s roster as “foreign”7 attorneys.  Perhaps it is indicative of the stakes, as Susman Godfrey has been named Vault’s #1 litigation boutique in America every year since the award’s inception in 2011.  All of those developments come ahead of a mediation event led by Joseph H. Varner, III, scheduled for 29 September8.

Many a new day9

All this is happening as the INTO Executive Team continues to slim down.  Chief Product Officer Namrata Sarmah who joined in January 2022 is the latest face to disappear from the company’s website leaving a team of seven heading up the organization.  Other developments at INTO have been reported in recent blogs and it does look as if the company is tightening belts and battening down hatches while continuing to invest in University Access Centres and await developments, including Manchester Metropolitan University’s tender for an embedded international student centre.

NOTES

Impossible to resist an Oklahoma theme to the sub-headings.  The “Sooner State” boasts the American Bison as its state animal and the Oklahoma Rose as its flower but the words all belong to songs from the first Rodgers and Hammerstein musical Oklahoma! which premiered in 1943.

  1. Oh, What A Beautiful Mornin’ is the first song after the overture
  2. “Territory folks should stick together” is a line from Farmer and the Cowman
  3. “When the wind comes sweeping down the plain” is taken from the title song, Oklahoma.  For reasons I cannot explain the musical has an exclamation mark and the title song does not!  In 1953 the state legislature chose it as the state song.
  4. Filing # 181397864 E-Filed 09/08/2023 12:06:23 PM
  5. Filing # 180352287 E-Filed 08/23/2023 02:46:41 PM
  6. Filing # 179426524 E-Filed 08/11/2023 08:31:57 AM
  7. Florida Supreme Court RULE 2.510.FOREIGN ATTORNEYS (a) Eligibility. Upon filing a verified motion with the court, an attorney who is an active member in good standing of the bar of another state and currently eligible to practice law in a state other than Florida may be permitted to appear in particular cases in a Florida court upon such conditions as the court may deem appropriate, provided that a member of The Florida Bar in good standing is associated as an attorney of record.
  8. Filing # 179194479 E-Filed 08/08/2023 03:23:11 PM
  9. Many A New Day is a song title from the musical.  Some describe it as an anthem of female indepence.

Image by Tom from Pixabay

Soft Power Is No Big Stick

The Higher Education Policy Institute (HEPI) has made its Soft Power Index a regular “silly season” news story that fits into the university admissions period to give some positive news for education correspondents.  It is, however, another example of how the sector’s smugness and tendency to self-congratulation diverts it from serious business such as reputation, student satisfaction, graduate employability and shifting global power.  The Index’s use as an “..influential resource….regularly quoted by Government Ministers and in official documents..” suggests senior political decision makers are equally willing to suspend their critical faculties.  

The claim that educating “world leaders” leads to having soft power is scarcely credible.  It is difficult to believe that a Prime Minister, Finance Minister or central Banker, usually in post at least 20 years or more after graduation, is going to make decisions in favour of the country where they spent a year of their higher education.  The Index does not gauge whether their experience was sub-optimal or might have given first hand insight into the tendency to treat international students like convenient, globally mobile cash machines.

In “Soft Power as a policy rationale for international education in the UK: A critical analysis”, Sylvie Lomer, offers a thoroughgoing critique of the entire concept.  She notes that the linking of a student’s attendance to them being well disposed to the UK is “..next to impossible to empirically prove, and the existing evidence is equivocal at best”.  She argues that “..unsubstantiated assumptions in the soft power rationale reveal that the assumptions of the last century are still in play, representing international higher education and students in an outdated power relation predicated on Cold War politics.”

A summary might be that the notion is out of date, lacks evidence and is based on exploitative power relationships.  Over and above that that the HEPI list itself has some inaccuracies and questionable views about country leadership and executive authority that make it even more unreliable as a measure. Yet all of this makes the front page of UK national newspapers and is seen as a cause for celebration.         

UK May Have Width But Not Weight

Even if it were true that senior decision makers were likely to do favours for the country of their alma mater, Nick Hillman’s claim that, “The number of world leaders educated in other countries…is a good proxy for the amount of soft power held by different countries.” seems wide of the mark.  It is like suggesting that having the leaders of Vannatu, St Vincent and the Grenadines and Dominica1 (combined GDP of $2.3bn) well-disposed to trade deals equates to more soft power than having South Africa2 (GDP $418bn) onside.  The size of the benefit or advantage conferred must surely be one measure of any form of power.3

South Africa is mentioned here because it has the lowest GDP of all the nations in the G20.  This brings us to the second problem with considering the HEPI Soft Power Index as a “proxy for..soft power”, which is that the list of UK educated “leaders” does not include any of the current political leaders in the G20 countries.  Those who would point to Emperor Naruhito of Japan by way of rebuttal should consider that Article 4 of the country’s Constitution defines his role as entirely ceremonial and representative, without even nominal powers related to government.

The G20 is referenced because it is commonly known as “the premier forum for international economic cooperation” and its members represent “around 85% of the global GDP, over 75% of the global trade, and about two-thirds of the world population.”  While some other countries and organizations are invited to G20 events the members lead the substantive work throughout the year.  Any reflection on “soft power” should be weighted to consider where that power brings economic and political clout.

US Is Not Much Better

Before anybody in the US gets too excited about its own array of world leaders, it’s worth noting that the HEPI list contains a glaring inaccuracy in suggesting that the leader of South Korea has any education in the US.  Korea Net, the official voice of the Korean government, carries a biography that has President Yoon Suk-yeol3 firmly in Seoul National University for his BA and MA*.  Unfortunately, the HEPI list (below) suggests that Hassan Sheikh Mohamud leads both Somalia and South Korea which is clearly a typo but adds an erroneous addition to the US numbers.

That leaves the US with Rishi Sunak, Prime Minister of G20 member the UK, an alumnus of Stanford University.   There is no doubt that the UK has been keen to do a trade deal with the US since leaving the European Union but that probably has more to do with the economic benefits than Sunak’s year in the “Golden State”.  Sadly, the feeling was not mutual and the UK Prime Minister has accepted the Atlantic Declaration as the best available solution although short of a fully-fledged trade deal.

Royal Flush

One of the more annoying features of the Index is that it indiscriminately incorporates members of various Royal families around the world as leaders of the country.  A little analysis would show that several cannot be assumed to carry any real authority.  Emperor Naruhito, whose book suggests he thoroughly enjoy his time in the UK, might be a fan of the country but as noted above his potential to influence decisions is seriously circumscribed.

Other UK Royal alumni who might usefully be removed from the list are the King of Lesotho, Letsie III, who is the country’s head of state but serves a “largely ceremonial function”, no longer possesses any executive authority and is prohibited from actively participating in political initiatives.  King Harald V of Norway has executive power but “..is not politically responsible for exercising it.”  After a controversy the Constitution of Luxembourg was amended so that Grand Duke Henri of Luxembourg no longer has to “sanction” laws for them to take effect.

The US list has far fewer members of Royalty than the UK.  However, King Felipe VI of Spain may be a useful supporter with most Spaniards apparently wanting him to play a greater role in politics and Albert II, Prince of Monaco, also appears to have genuine executive authority and may be worth his place. .

The list could also do with tidying up so that the disproportionate number of small countries with two leaders listed do not distort the overall measurement.  HEPI have noted that they do not list King Charles III of England as head of state of 14 Commonwealth countries so it’s unclear how some other decisions have been made to list two leaders.  It may be as simple as a way of inflating the UK figures.

Looking At the G Force

Taking Wikipedia’s list of the 61 key representatives at the G20 – country leader, finance minister and central bank “governor” – it appears that 17 of them (28%) have some overseas education at undergraduate or postgraduate level.  Three of the leaders, six of the finance ministers and 8 of the central bankers with US experience leading the UK by 11 to six.  The most international of all seems to be Chrystia Freeland, finance minister of Canada, who has undergraduate experience in the US and postgraduate experience in the UK as well as having been an exchange student at the University of Kyiv , Ukraine.

Another issue to remember here is that the G20 has its own power divisions with the G7 – Canada, France, Germany, Italy, Japan, UK, US and European Union – meeting separately of BRICS (see below). The D-10 Strategy Forum has all of the G7 plus Australia, India and South Korea and is a further inititiative adding complexity to any suggestion that an individual decision makers personal preferences can make a difference.    

More BRICS In the Wall

The growing strength and membership growth of the BRICS bloc could be further bad news for the notion that the UK and US are able to exercise soft power due to offering a superior schooling and student experience.  In 2001 a Goldman Sachs economist suggested that the original four members of BRICS would dominate the global economy by 2050.  The five current members account for 41.5% of global population and c32% of global GDP (PPP).   

None of the leaders has any higher education outside of their home country and only South Africa has a connection with the UK in these senior posts.  One of these, Lesetja Kganyago noted the limitations of soft power in his 2023 Michel Camdessus Central Banking Lecture to the International Monetary Fund, when saying that post-apartheid, “Foreign investors all loved South Africa, but they would not invest based on warm feelings.”  It summarises the core problem with the “soft power” argument – you can love somewhere but decline to put your money where your heart is.

The addition of Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates to the BRICS bloc may bring a few more UK educated faces to the table but also potential problems.  It is argued that “British-Argentine relations will be stifled so long as the UK refuses to engage in discussions about the future sovereignty of the Falkland Islands.”  The UK Home Secretary has recently stated that Iran is the “biggest threat to the UK” which seems unlikely to win friends and influence people.

Summary

It seems entirely possible that high quality higher education can be a powerful force in developing “soft power” through areas including collaborative research, meaningful exchange of good practice and genuine, shared initiatives offering mutual benefit. But time is running out for developed western countries that believe they can exploit countries by simply offering scholarships to smart students.  The BRICS5 initiative is a clear sign that the old world order is being challenged and that countries who have been excluded or manipulated are rethinking their engagement with traditional powers.

NOTES

I undertook an analysis of the HEPI Soft Power Index last year and this blog extends the research and critique to a broader set of country leaders. The research for the current blog was undertaken during week ending 27 August, 2023. Authoritative comments on errors of fact are welcome and will be noted.

The title of this blog reflects US Vice President Theodore Roosevelt’s speech in 1901 where he described the ideal foreign policy as “Speak softly, and carry a big stick”. “Big stick” diplomacy came to reflect backing up discussions with the unspoken threat of military power. It is arguable that in a world where economic links are critical they are usually the dominant “big stick” in negotiations.      

  1. The UK does have “provisional application” trade deals with Dominica and St Vincent and the Grenadines through an overarching deal with the CARIFORUM trade bloc of 14 countries.  Most recent figures show UK trade with St Vincent and the Grenadines was worth £42m and Dominica trade was worth £424m.
  2. UK trade with South Africa is under the SACUM trade bloc of six countries.  Most recent figures show UK trade with South Africa was worth £10.3bn.
  3. I recognize that GDP is only one measure of a country’s relative importance and it is used as an example. In The Power of Nations: Measuring What Matters, Michael Beckley notes “GDP has been described as the leading indicator” and “the Zeus of the statistical pantheon,” because governments, organizations, and scholars around the world use it to gauge states’ raw capabilities.”
  4. Han Duck-soo is the Prime Minister of South Korea and attended Harvard University.  The role of Prime Minister is subordinate to and appointed by the President.
  5. The BRICS membership is not unproblematic and some have suggested it is a “China club”. Nonetheless, there are clear attempts to engage more actively with the Global South in a more inclusive way.

Image by Bieniu94 from Pixabay

Rulings, Filings and Finances

There have probably been better fortnights for INTO University Partnerships (INTO) than the last two of July 2023.  Losing a decision in the court case against the University of South Florida (USF) and missing financial filing deadlines for both INTO University of East Anglia and the parent company are not calculated to bolster confidence or impress existing and potential partners.  Rumours of another round of redundancies and outsourcing also reflect the challenges facing the business.

Truth and Wisdom

Following a hearing on 27 June, Circuit Judge Darren D. Farfante has dismissed Count V of the Second Amended Complaint filed by INTO against Defendants Jennifer Condon, Karen Holbrook, Nic Trivunovich, and Ralph Wilcox.2  In simple terms, the judgement noted that “…sovereign immunity bars Count V of the Second Amended Complaint against the FC Directors as pled.”  The Plaintiffs, INTO USF, Inc., INTO USF LP, and INTO University Partnership Limited, “…subsequently advised the Court that they will not amend and dismissal of Count V of the Second Amended Complaint should be entered for purposes of appeal.”

While the plaintiffs could choose to re-engage on this point if the case ever goes to appeal the position is that after months of assertions that the USF Joint Venture Directors had “breached their fiduciary duties”,3 that particular strand of the matter is closed.  It is difficult to believe that the legal pursuit of individuals hasn’t left some scars on both sides and it may have put the issue of personal liability into the minds of university joint venture board directors elsewhere.  Rulings in one state may not be directly applicable to another but they may offer a sense of how closing a similar joint venture could play out elsewhere. 

Hard on the heels of the judgement USF moved to “..dismiss IUP’s Supplemental Pleading4 with prejudice.”5  This appeared to be substantially on the grounds that Sovereign Immunity also “..Bars Counts X, XI, XII, XIII and XIV”.  The filing also states that that “…opposing counsel (i.e. INTO’s counsel) has not requested that the undersigned stipulate to the filing of a second amended complaint” which seems to suggest the judge will now determine the outcome on these Counts.    

It may be that forthcoming discussions will lead towards a settlement of some sort with notification that a Mediation Conference has been scheduled for 29 September, 20236.  One might think that both organizations would be glad to see an end to such a public dispute.  As always, the author of this blog does not claim any legal expertise and advises readers to seek detailed information to form their own opinions9. 

History Man to Remains of the Day

The decline of INTO’s first joint venture at the University of East Anglia (UEA) is a saddening tale for anybody involved in the successful early days of the initiative.  The rhetoric was largely about the game-changing nature of long-term public-private partnerships but for those involved in the reality of international recruitment the immediate opportunity for increasing enrolments was clear.  INTO has removed the UEA case study from its corporate pages but the early days were genuinely transformational.

While the crisis at the University and the departure of its Vice-Chancellor has broader causes the situation has been exacerbated by a significant decline in the enrolment and financial fortunes of the joint venture.  The late filing, for the second year in a row, of the joint venture’s financial statement due on 31 July, 2023, means it is not possible to know whether enrolments fell even further in 2021/22 but the direction of travel has been downwards since 2015.  It is also likely that this has contributed to UEA’s declining revenue from international students.

It seems reasonable to believe that the late filing may be due to broader discussions about the future of the joint venture relationship.  New vice-chancellor, Prof David Maguire, is on record as saying that the immediate future is about “survival of the fittest” and it is difficult to see a compelling case for preserving the joint venture while cutting back on schools of study that have formed the institution’s history and sense of self.  At a time when reports say 400 positions – equivalent to 10 per cent of the workforce – have already been lost at UEA through redundancies, severance and resignations, the extent to which the university should continue to help prop up a loss-making commercial venture must be in question.

There may be an alternative argument that the joint venture brings opportunities for direct recruitment to help UEA out of its current problems.  Whether to stick or twist and whether it is wiser to be the history man6 or look with confidence towards the remains of the day7 is a very real choice.  Given the length of the joint venture contract originally signed and what appears to be a lack of performance it will be interesting to see if UEA would consider the USF route to resolution.

Patet omnibus veritas8

INTO’s financial accounts to July 2022 noted that its cash position during the year had declined from £20.5m to £9.4m year on year and that it had “revised EBITDA covenants agreed with its bankers to February 2024”.  It’s difficult to know what is going on under the surface but rumours of further cutbacks are circulating and it seems plausible that there is a squeeze to cut costs early in the financial year that began on 1 August 2023.  The urgency may be sharpened by developing views on enrolment numbers because, as with many education businesses, a significant portion of revenue will be baked in quite early in the year.

A previous blog suggested some of the issues that the incoming CEO, in February 2023, might want to consider.  The Executive Team has already been slimmed down a reduction in higher salaries is to be expected when the 2022/23 results are published.  On the other hand, expenditure on opening University Access Centres seems to be continuing, there is a new partnership to launch at Lancaster University, the recovery of pathway operations in the US looks patchy and there is the spectre of more stringent visa controls in the UK ahead of 2024 recruitment.

In the US, the recent addition of a recruitment only deal with Montclair State University makes little headway in the struggle to recover and compete after several years of joint-venture closures and the acceleration of direct recruitment partnerships by main competitor Shorelight.  In the UK, the partnership with Lancaster University brings a high tariff institution to the party but Study Group didn’t seem able to keep Lancaster happy so the pressure to perform is certain to be on. There does not seem to be any news of further progress in Australia. 

INTO must also be waiting with bated breath on the outcome of the Manchester Metropolitan University International Study Centre tender.  There is rarely a dull moment, which may be why they have been a bit too busy to file their Confirmation Statement to Companies House.  Or it could be that there is even bigger news to come.

NOTES

  1. Truth and Wisdom is the motto of the University of South Florida
  2. Final Order: 07/24/2023 02:59:36 PM Electronically Filed
  3. Filing # 167652717 E-Filed 02/27/2023 07:53:06 PM (point 137 and others)
  4. Filing # 175778804 E-Filed 06/21/2023 09:45:06 AM
  5. Filing # 178214351 E-Filed 07/25/2023 05:09:59 PM
  6. Filing # 179194479 E-Filed 08/08/2023 03:23:11 PM
  7. A small homage to Malcolm Bradbury, author of The History Man (1975), one of the most evocative novels about university campus life of the era, who became Professor of American Studies at the University of East Anglia in 1970 and launched the MA in Creative Writing course.  The course has been attended by several eminent authors including Kazuo Ishiguro who won the Booker Prize in 1989 for his book Remains of the Day and went on to be awarded the 2017 Nobel Prize for Literature.  My best wishes to all colleagues and friends still working hard to make UEA a success again.
  8. “Patet omnibus veritas” is the Latin version of Lancaster University’s motto.  It translates to Truth Lies Open to All.
  9. The background to the court case between INTO University Partnerships and the University of South Florida has been outline in several previous blogs. As before the terms INTO and University of South Florida are used as short forms for the range of corporate plaintiffs and defendants. Full details and all public documents reference in this blog can be found through https://hover.hillsclerk.com/html/case/caseSearch.html the Hillsborough County Clerk of Courts search facility. Insert 22 for the year, CA-Circuit Civil for the Court type and 006001 for the case number.

Universities Shouldn’t Cry Until They’re Hurt

One of the most notable features of the past week has been the higher education sector’s outrage at the Prime Minister using the phrases “crack down” and “rip-off” to talk about university courses the Government believes do not offer value for money to taxpayers or students.  They should take the advice given by one of my older and wiser relatives who counsels “don’t cry until you’re hurt”, because this announcement looks a classic case of political sloganeering rather than direct action.  

There is plenty more of this to come as election season looms and every piece of self-righteous university outrage will play out against a backdrop where 30% of the public are “broadly uninterested” in universities and 11% do not view them in a “positive light”. Levels of confidence may not have fallen as low as in the US, where Gallup polls suggest they are in near terminal decline, but it is not always easy to find supporters. For those suggesting it’s not fair that higher education is besmirched for political gain it is worth repeating a dictum from a lecturer in negotiation skills – fairness is a concept of and for children.

Just wait for the howls of protest if/when a further surge in dependent relative visas emerges after the Autumn 2023 intake and a Government in full-campaigning mode (or jostling for post-election leadership challenges) responds.  The sector will, again, be easily positioned as self-seeking and irresponsible in the context of election messages about controlling borders and reducing immigration.  There seems little reason to believe that the Labour party will throw itself in the way of such arguments.    

Bleeding hearts1 but…

Vice-Chancellors are not above their own tough talk with, just this week, the incoming UEA Vice-Chancellor David Maguire quoted as talking about “Darwinian dimension” and “survival of the fittest” in the context of cutbacks at the university.  The vice-chancellor of Oxford, Louise Richardson, talked of a “mendacious media” and “tawdry politicians” when salaries of vice-chancellors were challenged.  It is relatively rare to find VC’s using anything but code and anodyne responses when speaking publicly but those who have worked closely with them know that in private many are more than willing to make strident comments about colleagues, academics, and any organization that disagrees with them.

Hypocrisy is rarely a good look so it is probably time for the sector to decide whether it is going to engage assertively and openly in the cut and thrust of public discourse, suffer in silence or actually do something positive.  If it’s the former, there is a need to get their messaging more focused and populist if they are to have any chance of succeeding.  Mendacious and tawdry are probably not quite right for  discussions at the school gate, on the campaign doorstep or down the pub.

Crying Wolf2 but…

The truth is that the Government’s has had limited success in seeing any of its higher education ideas through and the sector has won at least one major victory in the past few years.  In 2017, ApplyBoard’s ubiquitous Jo Johnson, when UK Minister for Universities and Science, gave a speech to UUK focusing on “accountability and value for money”, “grade inflation”, “vice chancellor pay” and “accelerated degrees”.  Perhaps his abiding popularity with the sector is that everyone is still talking about the first three (with at least one measure arguably much worse) and by 2021 the Complete University Guide could only list eleven universities offering the fourth.

Another good example, this time involving the Office for Students who will be charged with the “crack down”, comes from Gavin Williamson’s time as Secretary of State for Education.  In 2019 he wrote to the OfS asking what steps they could take to ensure “..international students receive the employability skills they need and are supported into employment, whether in their home country or the UK.”  The further thread in the letter was that it was “…critical to ensure the OfS makes public transparent data on the outcomes achieved by international students…such as it does for domestic students.”

This was so ineffective that by early 2022 and even in the face of criticism from the sector HESA, who were charged with getting relevant outcomes data, had decided to stop telephoning students outside the EU to discover international student employment or any other status.  The Head of Data, Foresight and Analysis at the OfS indicated that the OfS was content because “the current cost of this is not proportionate to our current uses of the data” and confirmed that the target response rate had been cut to 20%, compared to 25% previously.   The aforementioned Jo Johnson was reported as being “amazed” and quoted as saying  “Vice-chancellors should provide resources, this is an £18 billion [US$24.5 billion] to £20 billion [US$27 billion] annual revenue business we are talking about.”  The VCs did not respond.

As we are reminded by Aesop’s Fables it is just possible that the wolf will eventually eat the sheep but higher education should be careful about becoming a Cassandra that never have its prophecies believed.

The Truth Doesn’t Hurt…

B. C. Forbes is credited with completing the phrase, “…unless it ought to.”  To an extent the higher education sector seems to have got caught in a doom loop where it sees a problem (even if only in public perception), ignores it or tries to talk it down, then gets caught on the back-foot and is pained when savvy politicians raise it in robust terms.  It is worth considering whether public opinion (for which one might read taxpayer) is ever so totally wrong, or elected representatives so dim, that the sector can totally ignore them or claim there is no foundation for concern.

There is some acceptance of poor quality courses by the sector, as in the UUK President’s recent statement that there are a “…very small proportion of instances where quality needs to be improved.”  It is, perhaps, more telling that the UUK Chief Executive’s statement the following day did not even allow that minor acceptance and preferred to shield the sector behind the OfS as its regulator. A different approach might be – what is the sector doing to ensure students are not mislead about potential outcomes, how are they calling out any examples of quality shortfalls, or, just maybe, standing firm and offering evidence that no examples exist?    

If the sector is persuaded that the OfS is the answer to its problems it would do well to listen more closely to what that body has to say.  Just eighteen months ago the OfS published a consultation on minimum acceptable outcomes for students and CEO Nicola Dandridge said, “They are..designed to target those poor quality courses and outcomes which are letting students down and don’t reflect students’ ambition and effort.”

It seems a straightforward expression of the view that such courses exist and so the current Government position should come as no surprise.  Given the Williamson example above, politicians may be equally concerned about the ability of the OfS to affect change and have chosen to ratchet up the pressure on a populist issue.  The sector is responding as if it has just been caught of guard by a surprise uppercut when the blow was telegraphed a long time ago.

NOTES

  1. Anticipating possible outrage at the use of this term I note that I am aware of its history. I use it here as a common turn of phrase and have no political agenda.
  2. In the original Aesop’s fable only the sheep were eaten by the wolf.  It is only in later English-language version that the shepherd boy is also consumed.

Image by Mohamed Hassan from Pixabay

FROM FUTILITY TO UTILITY

Collins Dictionary tells us that, “If you say that something is futile, you mean there is no point in doing it, usually because it has no chance of succeeding.”  It is difficult to think of a better description of a student scanning the Times Higher Education or QS World Rankings or any of the multiplicity of other rankings that have proliferated from those organizations.  They don’t really tell students anything useful about whether the institution is right for them as an individual or whether it will allow them to fulfil their life and career ambitions.

All the evidence suggests that the primary motivator for going to higher education is to enhance job prospects. Chegg’s survey across 21 countries, INTO’s research with agents and Gallup surveys are among indicators that for both home and international students a degree is largely a means to an end. That is not to say that people don’t want to study something they enjoy – just that the degree is the aim.

Most existing rankings are, however, just an attempt to monetize industry data for commercial ends and the sector collaborates, possibly because it’s the way things have always been done.  The rankings, as someone said, “Xerox privilege” by reaffirming existing hierarchies and usually allow institutions to manipulate their data, sometimes beyond the point of criminality.  For the institutions they are vanity projects which lead to dubious internal resource allocation, avoid hard questions about graduate employability and distort the decision making of Governments, funders and students.

Utility, on the other hand, is “the quality or property of being useful” and we may be beginning to see the glimmer of some media developing data to be genuinely useful to students.  It is a timely and smart move because we are nearly at the point where AI will give students the opportunity to have near total, instant and absolutely personalized university search capability at their fingertips.  That should send a shudder through ranking organizations that are wedded to a business model and presentation based on early 2000s thinking.

Money magazine’s Best Colleges 2023 may point the way.  It still has a vapid “star” system to allow colleges to be ranked but the database begins to say some useful, student oriented, things about Acceptance Rate, tuition fee (both headline price but more importantly average actual price) and graduation rate.  Imagine if that database approach married itself, in the US, to the work of a company like College Viability, LLC which gives an insight into reasons which a college “…may not be financially viable for the time required to earn a degree from that college.”  Then, add to the mix comprehensive information on the graduate outcomes and career payback from specific degrees – the Princeton Review Best Value Colleges gives a flavour but still ends up as a ranking with limited coverage.

In the UK, the growth of private universities and the significant difference in tuition fees at graduate level between public universities makes the approach equally appropriate.  Such a database would begin to answer the most pressing of student needs – will I get in and with what grades, am I likely to graduate, and what are my career and earning prospects thereafter?  There could be plenty of further nuance added, including grades required, accommodation, measures of student experience and so on.

All of this could be done without the need for a grading system.  The problem with rankings is that the company doing the ranking sets an arbitrary test which institutions do their best to pass with a high grade.  This entirely excludes the student from having any input into the criteria but the results are then presented as an aspirational or emotional nirvana for them to consider.

A smart organization would be ensuring that their data collection is driven by the real world needs and concerns of students. It’s time to remove the worthies who make up the Advisory Groups and Panels for the major ranking organizations and find ways of engaging directly with potential students. The outcome would be relevant, dynamic and have utility for millions around the globe.

It would also be a driver for universities to engage more effectively with the issue of graduate employment both through on-campus services and establishing strong data on careers and jobs. Colleagues including Louise Nicol of Asia Careers Group and Shane Dillon of CTurtle have been demonstrating for years that smart use of technology even makes it possible to leave antiquated, email driven surveys of graduates behind in collecting the data. The answers might even begin to convince Governments around the world that universities are engaging effectively and adding value to economic growth and sustainability.

McKinsey and many others have written about personalization of the customer experience in retail with much of the impetus being given by technology.  The insurance world has seen the rise and rise of aggregators and there is talk of the “personalized insurance engine” that gives a fully automated customer journey.  Potential students are hungry for better decision making option and education needs to catch up fast with the opportunities that exist.

Image by Steve Buissinne from Pixabay

Election O’Clock Tick, Tock

For visa policy, the year ahead will be shaped by a Tory party that is a bit like end of season Tottenham Hotspur – out of Europe, on their third manager in a year and worried about what life looks like without their star striker.  Sunak could face and lose three by-elections before the party conference so going route one with radical action on visas could become an attractive diversion.  The party may even, just like Spurs, chose to appoint a fourth manager in an attempt to be in contention in 2025.

UK Home Secretary, Suella Braverman, having been thwarted by the Cabinet on more far-reaching student visa reform last time round, could start her speeches with the words, “I shall fight on. I fight to win.”  Conviction politics and evoking the spirit of Margaret Thatcher have always gone down well with most parts of the Conservative party and if she has aspirations for the top job it’s not a bad ploy.  With the clock ticking down to a General Election just 20 months she has every chance of being centre stage.

Some universities have made quite extraordinary increases in international student numbers in recent years and should carefully weigh the consequences of their choices this Autumn.  One plausible scenario is that institutions will be suckered into maximizing recruitment from affected countries in September ahead of the clampdown on dependent visas.  The resulting visa figures would be more than enough for the Home Office and worried Tories to bay about irresponsible recruitment and seek a further round of constraints. 

Pitched against populist right wing politicians fighting for re-election and a public that is largely disengaged from higher education the sector becomes increasingly vulnerable.  However cynical or wrong-headed, an MP can claim the authority of having been publicly elected to represent the views of constituents which is more than any vice-chancellor can say.  They will be listening to people like Eric Kaufmann who spoke at the first National Conservatism conference and likes to remind Tories of the view there is no election victory in increasing immigration.

More Than This or Hold the Line?

Despite all the happy talk and positioning by the higher education sector, MP’s may believe that there is little evidence of public support, let alone a mandate, for significantly more international students. 

Even the sector’s own research commissioned by UniversitiesUK from Public First suggests that the public does not support a rise in international students.  The answer to question 15c, which has been largely misrepresented by the sector as indicating the public favours growth in numbers, shows that 46% would accept the same number and 21% want fewer.  It seems reasonable to argue that this means that 67% of the public do not support a continuation of the rise in international students that we have seen in the past few years.

YouGov tell us that concern over migration has been climbing for a year – from 53% up to 57% say that immigration has been too high for the last ten years and 17% say it’s about right which indicates 74% want immigration the same or lower.  A politician attuned to the data and public opinion will be questioning unfettered growth in international student numbers.  This is particularly so when the surge in growth is driven by countries where the biggest influence on a study abroad decision is “Immigration policies of destination countries” above even job opportunities and quality of higher education.

Money For Nothing

The sector’s fightback is summarized by ApplyBoard UK Advisory Group member (and director of HEPI) Nicholas Hillman who is reported as saying, “If people want to oppose the presence of international students, fine, but they should only do that if they know the benefits they bring and do so with their eyes wide open.”

The glossy launches and expensive research making that economic case are presumably an attempt to open those eyes. But when respondents were told by Public First that the sector contributed nearly £28bn to the UK economy a majority (57%) still said they wanted the same number or fewer international students. One suspects that the obsession with making the economic case, at a point when some headlines reflect how much universities are raking in, is aligned with self-interest and possibly even morally shabby.  

Lord Bilimoria, the co-chair of the All-Party Parliamentary Group for International Students, suggests there should be an aim of 1 million international students in the UK by 2030. ApplyBoard’s Jo Johnson considered, with unusual circumspection, 900,000 or more as appropriate.   Neither seemed to engage with the polling evidence that the majority of the public do not support such growth.

Where Is The Love?

While the sector’s tendency to pitch a case based on the economic value of universities seems reasonable it doesn’t cut to the heart of people’s suspicions that are partly driven by the drip, drip of years of stories about fat cat vice chancellors, dissatisfied students, Mickey Mouse degrees and grade inflation.  Unfortunately, the sector, when challenged, is Wildean in suggesting it has nothing to declare but its genius when a little more humility might go a long way.  It is difficult for the public to trust a sector that doesn’t accept its fallibility.

There are other deep-seated problems for universities in the recent Public Attitudes to Higher Education 2022 research by UPP Foundation/HEPI. Among the figures, 58% don’t think university prepares people for the real world and 52% think society values a university degree too highly.   27% are sceptical or negative about universities and 30% are broadly uninterested which indicates that more than half those surveyed actively oppose universities or think them irrelevant*.

Another drumbeat is whether universities are turning out students with qualifications that fit them for the workplace let alone justify the level of debt.  The current Prime Minister is on record as saying that he wants to “take a tougher approach to university degrees that saddle students with debt, without improving their earning potential.”  A former Prime Minister’s son says degrees are “irrelevant” and Reed Recruitment says,  “It looks like traditional graduate jobs are going out of fashion.”   

Sha la-la-la-lee

That’s the sound of the higher education sector sticking its fingers in its ears while complaining to an uncaring universe. 

What the public hears from universities is that home students should be charged more, that the loss of EU applicants has been a tragedy and that the sector is a major contributor to Britain’s soft power around the world.  This plays into a population facing the largest hit to living standards since records began in 1956,  taxpayers underwriting student loans to a record tune of £205bn, and no obvious evidence that soft power is helping secure trade deals.  Sceptics might even suggest that if UK higher education is so highly regarded then EU students would, whatever the price, always choose Ipswich over Paris and Canterbury over Rome.

The sector’s efforts to promulgate its message often looks like a self-interest, or perhaps self-help, group.  Chris Skidmore’s, International Higher Education Commission, is the latest example and doesn’t appear to have anybody without a vested and sometimes commercial interest in recruiting more international students.  Among the grandly titled “founding commissioners” the ubiquitous Jo Johnson from ApplyBoard makes an appearance, along with seven VCs and three CEOs of sector pressure groups, with Oxford International Education Group claiming they support the Commission under the banner of corporate social responsibility(!).

This is, of course, the Chris Skidmore who co-wrote a book, with those paragons of political, economic and personal credibility Kwasi Kwarteng, Priti Patel, Dominic Raab and Liz Truss,  which claimed, “”Once they enter the workplace, the British are among the worst idlers in the world.”  He was Minister with responsibility for universities for five months which was, for the record, longer than Jo Johnson who managed six weeks.  Would it be a great surprise that the public took their protestations with a pinch of salt?

Where there may be some hope is Johnson’s recent acceptance that “…there is a weakening consensus in British politics on the benefits of international study in our system…We need to acknowledge that and understand why it’s become weaker and what the sector needs to do to reinforce support for international study and its contribution to the UK.”  It’s unfortunate that he then chose to talk about “false narratives” because although these do exist it would have been more refreshing to see the sector accept that it is not without fault.  Disparaging public opinion as being driven by fake news is a tired and demeaning stance that should be replaced by open engagement and dialogue.

NOTES

  1. The headline is derived from U2’s first single on Island Records “Eleven O’Clock Tick Tock”.  They played it to start and end their gig supporting The Photos at the Marquee in July 1980 which is when I first saw them😊.
  2. “More Than This” is a 1982 song from Roxy Music.  “Hold the Line” is a 1978 tune from American rock behemoths Toto whose name apparently comes from the Latin phrase for “all encompassing” and not the dog in The Wizard of Oz.
  3. “Money for Nothing” is a 1985 song from Dire Straits that is distinguished with a great riff but also Sting singing backing vocal, “I want my MTV” to the same melody as The Police song “Don’t Stand So Close to Me” (which is why Virgin insisted on getting a percentage).
  4. 1972’s “Where is the Love” by Donny Hathaway and Roberta Flack is sublime and not to be confused with the Black Eyed Peas song of the same name which is just quite good.
  5. “Sha La La La La Lee” is a 1966 number from the Small Faces and a great reminder of what a force the late Steve Marriott was.  He recorded the song when he was 19.

* I am conscious that the UPP/HEPI research had some good news such as “77% agree universities are important to research and innovation; and 57% agree they are important to the UK economy as a whole”. However, it was startling that the “Broadly Uninterested” segment was so large that the authors had to acknowledge its presence but “focus the majority of our exploration of the segments on the other groups”.

Image by Davie Bicker from Pixabay

INTO The Interim

Back in June 2021, INTO University Partnerships (INTO) appointed Olivia Streatfeild as its first woman CEO, and in June 2022 she became the first woman Director.  There were plenty of strategic decisions to make as the world struggled out of a debilitating pandemic and INTO reflected on a five-year period when it had lost six joint ventures and struggled to maintain enrollment volumes.  Just two years later agents have been briefed that long-term Andrew Colin lieutenant, John Sykes, is stepping in as Interim CEO.

As well as being a main board director and a “co-founder”, Sykes has been part of the operational, decision-making Executive Team throughout the last decade.  While the presumption might be that this will mean continuity it will be interesting to see how many of the Streatfield decisions stick.  Here are some other issues that might need attention.     

Beware the Fog On the Tyne

INTO’s engagement with Newcastle University has had its shares of ups and downs.  Since 2016 the average number of students enrolled in the INTO Newcastle center has varied from 1142 in the best year down to 627 in 2021/22.  The fluctuation in Operating Profit reflects the sensitivity to student enrollment.

NB: The Operating Profit excludes significant exceptional items in 2016, 2017 and 2018.  The 2019 and 2021 figures are as adjusted in the INTO Newcastle University LLP Annual Report.

In 2021 the LLP’s Annual Report noted that the joint venture based in Newcastle has moved to majority ownership of 51% by INTO.  The joint venture launched in London in 2015 as INTO Newcastle London and long term readers will know the shifting sands of the INTO operation in Middlesex Street, including the links with Josef Mifsud whose whereabouts remain unknown.  INTO Newcastle London came under the sole control of Newcastle University in late 2020 and while the changes in controlling party mean any intercompany transactions are no longer reported by INTO, we do know that in 2020 the JV was a indebted to INTO to the tune of £5.4m.

A small sideshow is that Newcastle University awarded a year-long contract starting in January 2023 for ‘The Provision of International Market Research and Business Development – USA’ including ‘in-country liaison, advice and marketing activity to support the University’s strategies.’  Perhaps surprisingly this was not entrusted to INTO’s US team but to Foothold America Inc.  To be fair Newcastle had already been awarded two contracts to INTO worth around £1m, starting August 2022 and November 2022, for similar work over three years in South/South-East Asia and China respectively.

Magic Kingdom or Repo Man

The US was once seen as the land of opportunity for pathway operators but it’s become increasingly harder work and INTO’s exposure is second only to Shorelight. The legal battle between INTO and USF is likely to be disruptive, time consuming and expensive and it continues with the next hearing scheduled for 10 May and a new round of discussions with a mediator to come.  All the while, legal arguments are being made about the extent to which the USF Directors may or may not have been in breach of their fiduciary duty to the joint venture.

If that’s not enough of a headache, 2023 has seen the end of the joint venture with Illinois State University added to the closures at Colorado State University (2021), Marshall University (2020) and Washington State University (2022).  The operation at St Louis University became wholly owned by INTO in 2021 and despite added firepower on the business development side in the US there does not appear to have been much progress in adding many new partners – either joint venture or direct recruitment.  Meanwhile, the enrollment decline in continuing operations at flagship joint ventures like Oregon State University are evident.

Source: Oregon State University Office of Institutional Research

The company’s own research suggests that only 34% of China, HK and Macau agents surveyed think they will send more students to the US in the coming year which, by implication, means 66% will send the same or fewer.  The struggles of the last few years have also seen US joint ventures stacking up increasing levels of debt to INTO with every single US joint venture showing higher debt than the year before in the 2022 Annual Report.  It is difficult to see the way forward.             

Happy Mondays or The Fall as Manchester Decides

In July 2019 the University of Manchester awarded a five-year contract to INTO’s wholly owned Manchester operation for “Managed Service Provision of Pre-Degree Programmes for International Students”.  It has probably been a significant driver of the INTO Manchester performance over the years and 2021/22 saw the operation roar back to achieve record recruitment and profit.  The contract was for 300k and the contract period ends in July 2024.

Alongside that is the tender for an embedded study center with recruitment opportunity with Manchester Metropolitan University (MMU) which is currently a partner of INTO Manchester.  It’s arguable that over the years MMU has done less well in terms of international enrollment than the popularity of the city suggests it should.  Both Kaplan (at Liverpool) and Navitas (at Swansea) have shown their willingness to become involved in capital projects as joint ventures so competition for the business could be hot.

If another provider wins either the University of Manchester business when it becomes due or the Manchester Metropolitan tender the consequences could be serious.  If it all goes wrong for INTO, the office by the Brighton seaside might echo to Morrissey lyrics like ‘Hide on the promenade, etch a postcard/’How I dearly wish I was not here.’

UK OK OR KO?

It looks like recruitment numbers are perking up in the UK but recovery is patchy with INTO UEA looking to be on life support as the university and the joint venture struggle with competitive realities.  While INTO University of Exeter enrollments withstood the pandemic reasonably well there has been little evidence of recovery in the recently released 2021/22 Annual Reports of joint ventures with Stirling, Queen’s or City .  While the HE sector in the UK has seen record international student recruitment over the past two years it does not seem to be feeding into pathway numbers.

Source: Joint/Venture Wholly Owned Annual Reports and INTO University Partnerships Annual Reports (NB: INTO UEA does not report for 2021/22 until July 2023.  For that reason the 2022 Total enrollment shown excludes the JV and is not wholly comparable with previous years.)

With Australia re-asserting its competitiveness, the US open for recruitment, Canada thriving and some evidence that increasing numbers of Chinese students are looking elsewhere for higher education it’s unlikely to get any easier.  INTO’s recent win at Lancaster University was good news for them but the QAA reports indicate that in 2018 it only had around 280 students and sector feedback is that Study Group found it hard going.  Whatever happens, the UK situation carries plenty of risks.

Sticking to the Knitting and Counting the Beans

The Interim CEO may want to look at some ratios and data from the INTO University Partnerships Limited Annual Reports available at Companies House.  The first confirms that the US contribution to turnover reflects the decline of the business.  Whether it can or will come back is an open question but I doubt it’s something to bet the house on.

A second issue worth thinking about is that data on staff attributed to the Group makes interesting reading.  Group staff costs in 2021/22 were more than 50% of turnover while in 2018/19 they were only around 38%.   It is possible that the categories have some underlying nuances and there have been job cuts in recent months but it seems a good starting point for operational efficiencies. 

Finally, in 2020/21 the number of employees earning over £100k a year was 40 while in 2021/22 it had grown to 48 – that’s 20%.  The number earning over £275k was four compared to one the year before.  For a business with revenue that was lower than 2019/20 that needs some unpacking.

The Big One

Perhaps the biggest strategic question is about the future ownership of the business and how quickly Leeds Equity would welcome some return on the £66m investment they made a decade ago.  The appointment of two relatively high-profile non-executives to the Board might suggest some intention to seek new external investment.  It’s also possible that Andrew Colin could take the business back into 100% sole control.

The final intriguing possibility, given the volatility and possible consolidation in the sector, is that this could be the moment where the business is sold.  Back in 2018 there were widespread reports that the business was up for sale with a price tag of £300m and in a sector full of rumours there have been unconfirmed suggestions that Navitas was showing interest shortly before the pandemic.  Taking on Lancaster, getting Manchester right and sorting out Newcastle would certainly strengthen the hand in any negotiation.

NOTES

Links are provided to publicly available information where possible.  Speculation and rumour are noted as such.  As always, the author would be happy to receive authoritative clarification on any specific points and will note any amendments.

Just some small notes on a few of the sub-headings:

1. Fog on the Tyne is a 1971 album and a single by Lindisfarne.  Footballer Paul Gascoigne provided vocals on a reworked single version that got to number two in the charts in 1990.

2. Magic Kingdom is a theme park at Walt Disney World where “fantasy reigns” while Repo Man is a 1984 film with a strong underlying commentary about the “last defense of capitalism” and “no sense of purpose”

3. The Happy Mondays and The Fall are Manchester bands.  The Happy Mondays were part of the Madchester sound of the 1980s and were named for the day their unemployment benefits arrived – “the day for getting off your face” as bassist Paul Ryder explained.  With 31 studio albums in 40 years (1979 to 2017) The Fall gloried in DJ John Peel’s description “they are always different; they are always the same.”   

Image by Gerd Altmann from Pixabay 

Fade Away or Speculate

With businesses being sold, some chances of consolidation and some new information being available it seems a good moment to have a look at the fortunes of the major pathway businesses.  There is also the chance to speculate on how the future might look for some of them.  It’s all by way of a contribution to the thinking in the higher education sector and the author, as always, is happy to have authoritative responses that bring clarity, correction or corroboration. 

Shorelight

As reported in July 2022, Shorelight seems to be all in on developing an aggregator-style approach to direct recruitment partnerships.  It looks as if another flagship Pathway partnership has been lost with the University of Mississippi no longer featuring on the website at all.  The partnership was launched in September 2018 with Shorelight CEO, Tom Dretler, saying “Our programs would not be thriving as they are today without our partnerships with top-tier universities like Ole Miss that provide international students with access to high-demand degree programs.”  Maybe they’ll miss Ole Miss…

It’s difficult to say with certainty how well the direct recruitment business is doing or how financially rewarding it is.  An investment-oriented perspective comes from Huron Consulting Group who took a $27.9m stake in Shorelight during 2014 and 2015, which rose to $40.9m in 2020.  The original maturity date for the early investment was 2020 which was pushed out to 2024 when the additional investment was made. 

The Huron Consulting Group Inc. annual report for the year ending December 2022 shows that the maturity date has been pushed out to 2027 which suggest they are not expecting it to be repaid any time soon.  Other news from the filing was that the “fair value” of the holding was reduced year on year from $65.9m to $57.6m.  Tracking the percentage difference between the investment holding and the “fair value” suggests that after a peak in 2018 it’s been pretty much downhill ever since.

INTO University Partnerships

It’s difficult to know where to start with INTO but there is a sense of something in the air.  The public spat with the University of South Florida1 appears to have seen the legal arguments reopened2 with a continuing pursuit of individuals from the University for Breach of Fiduciary Duty3.  More recently the company’s first ever partner, the University of East Anglia in the UK, has seen its vice-chancellor resign and a suggestion that the joint venture won’t be returning profits for distribution until 2029/30.

A single outpost in Australia seems bound to come under pressure from the super-dominance of Navitas after their purchase of Study Group’s interests in Australia and New Zealand.  Study Group’s retrenchment and the potential for a strong competitor emerging if Oxford International Education Group succeeds in a bid for Cambridge Education Group could bring increased pressure on the pathway business in the UK.  There seems to have been no progress in new business development in the US and the partners there show little sign of a post-pandemic boom.

All this comes after an upweighting of the INTO Group Board with two senior directors in Annalisa Gigante and Tamsin Todd and the addition of Nick Adlam whose LinkedIn profile indicates he also works for Andrew Colin’s Espalier Ventures Limited4.  It is not uncommon for companies to strengthen their board before looking for new investment or possibly to secure a public listing of some sort.  Perhaps the Alternative Investment Market, once described as a ‘casino’ by Roel Campos of the US Securities and Exchange Commission is a route.  

It’s pure speculation (no pun intended) but an IPO for a part share of the business could offer Leeds Equity an exit while bringing some new cash for INTO to revitalise its business.  It’s the sort of audacious move that might appeal to the company’s lead shareholder.  AIM also seems to offer the flexibility on governance and regulation as well as the access to capital that might be appealing.5         

Study Group

Amid all the talk of it being “consistent with the strategies of both companies” it was difficult not to believe that Study Group’s sale of its Australia and New Zealand operations to Navitas was that of a company in needs of cash.  We know from Study Group’s 2021 annual report that covenants on its term loan debt were set aside until 2024 and that Ardian provided a capital injection of £40m in February 2022 on top of an investment of £17m in February 2021.  Adjusted EBITDA of £14.4m was down from £25m year on year.

All that is on top of the loss of Lancaster University which comes just a few years after Leicester University jumped ship to Navitas back in 2019 and suggestions that CEG has been more successful when competing for high ranked university partners in recent years.  The signing of Teesside University in the UK in 2021 was a bright spot but the logic of picking up a direct recruitment partnership with Florida Atlantic University, which split with Navitas in 2019, seems strange given recent history in the US. The business in the Netherlands has also been closed as a result of “changes in international student recruitment regulations”.

Insendi is sometimes touted as the brightest star in the Study Group playbook and of 54 university partners on the company website at least 21 are with the online platform only.  There is no doubt that it has had some decent names with elements of Imperial College and Johns Hopkins on the roster.  But given the ongoing pressures on OPMs and reports of a “rocky time” in the sector the future seems less than certain.

CEG, QA Higher Education and Oxford International Education Group

The “for sale” sign has gone up around CEG and there were suggestions in 2022 that QA Higher Education might also be up for grabs.  It has been flagged that Oxford International Education Group may well be in the hunt and winning CEG would take them to 13 pathways in the UK but a further prize would be the ten online CEG partners. While CEG has been successful in securing new university partners in recent years there have been suggestions that the commercial terms require very strong recruitment to be sustainable, so any deterioration in UK visa conditions could make life difficult.6 

News around QA Higher Education has been more muted and the recent appointment of a new COO, Kit Tse, who held a similar role at Oxford International Education Group, might suggest that they are in it for the longer haul.  The real question, if so, might be whether there is scope for significant future growth in the UK when universities without commercial pathway partners are finding recruitment fairly straightforward.

Kaplan

The good ship Kaplan seems to sail steadily on its way while others roll, pitch and yaw in choppy seas.  The Annual Report and Financial Statements suggest a relatively untroubled (or at least well managed) COVID period with revenue rising from £116.5 in 2019 to £133m in 2021 and profit going from £7.2m to £12m.  It’s a solid portfolio with something for everyone but there may be a moment in a later blog to have a look at each of the underlying pathways to see who may not be doing so well.

Summary

The scope for consolidation in the sector seems to be clear but the froth and excitement created by record-breaking enrollments in the UK and a bounce-back in the US could also tempt unwary investors to enter the market.  They may want to cast their minds back to the period in the early 2010s when over a billion dollars was invested in pathway on the back of a belief that the US was the new El Dorado.  Parthenon Group’s statement that, “We anticipate that growth will be constrained only by the pace at which private providers can develop the market” did not age well.

Global competition continues to increase, source markets continue to evolve and the uncertainties of Government policy continue to be an existential threat to any expansion ambitions.  Anyone who has brought two businesses together will also tell you that for every synergy there is a clash of ego and culture while for every opportunity there is a bedevilling and unforeseen challenge.  It all makes for a moment when operators probably have to choose to step back and fade away or show the appetite for risk and speculation.     

NOTES

  1. This has been extensively covered in previous blogs (starting August 2022) with the lead case being closed in January 2023.  Court Filings indicate it was reopened on 16 February 2023.  A future blog will look at the circumstances and any continuing action.
  2. SRS Reopen Event shown at the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida Complex Business Litigation Division. 
  3. Filing # 167652717 E-Filed 02/27/2023 07:53:06 PM in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida Complex Business Litigation Division
  4. Espalier Ventures is 100% owned by Andrew Colin with INTO University Partnerships Limited making up 99% of its turnover.
  5. It is only fair to say that in 2015 Marcus Stuttard, head of AIM, reflected that, “If AIM was just a casino it wouldn’t have lasted 20 years.”  The obvious riposte might have been that the oldest licensed casino in Nevada turned 90 in 2021 because there will always be gamblers!
  6. This is a summary of discussions with third-parties and there is no direct evidence that terms are more onerous than some others in the sector. The general point is that universities are more experienced in understanding pathways and are likely to be more demanding given the number of pathway options available.

“We Rely On Own Goals”

Reports suggest that the University of East Anglia (UEA) is in “financial turmoil” and facing a £30m deficit this year rising to £45m within three years.  Clive Lewis, MP, for the constituency in which UEA sits has spoken of the university being in a “death spiral”, is seeking a meeting with the Education Minister and calling for a possible public enquiry.  A deeper dive offers some thoughts for other institutions on leadership, governance, cutting losses and getting the value proposition right. 

Matching Reward and Responsibility

Vice-Chancellor David Richardson, who tendered his resignation last week and left with immediate effect became a university Pro-Vice Chancellor in 2011 and Vice-Chancellor in 2014.  He had been at the university for over 30 years and taught in the famous Lasdun Teaching Wall for much of his career.  It would be difficult to suggest that he is not an insider and has no culpability for long term decision making about the institution and its future.

For that experience the rewards were substantial.  Richardson’s emoluments have increased by around £90,000 since he took office in 2014.  In 2019/20 when the “…mean paid basic salary for the heads of all [university] providers was £219,000”, his salary was 23% higher at £270,000 so exceptional performance was to be expected.  Salary and benefits are also only part of the story with pension contributions rising even more quickly in percentage terms over his tenure to achieve total emoluments of £343,000. 

In addition, the University reported that from 2018 to 2021, when he might have been expected to be focusing solely on the institution’s increasingly perilous financial situation, he was earning an additional £13,000 a year as a non-executive member of the Norfolk and Norwich University Hospital NHS Foundation Trust board.

Another point about the upward trend in his salary is its comparison, as a multiple, to that earnt by others in the University.  The multiple grew every year with the exception of 2021 when the Executive Team “volunteered a 10% reduction in salary for the first six months of 2020-21 with the vice-chancellor volunteering 15%.” The figures suggest the vice-chancellor more than made up for it the year after and just before resigning.

NB: Measure is the multiple of the vice-chancellor’s basic salary on the median pay of staff (excluding student workers who could be paid through a third party) where the median pay is calculated on a full-time equivalent basis for the salaries paid by the provider to its staff.

Most would say that Richardson was well paid and had a long-term understanding of the university, its potential and its challenges.  As far as I can see the resignation announcement and personal statement on the university website contains no sign of accepting responsibility for its financial collapse or the impact on those who had been his colleagues for, in some cases, decades.  When Chair of UEA Council, Dr Sally Howes stated, “I’m sure I speak for the whole community when we thank David for his commitment and service to UEA for these many years” it is abundantly clear that she does not capture all views on his tenure as VC.  

Seeking Good Council (sic)

Richardson was supported on the University’s Executive Team by six pro-vice chancellors, a provost and deputy vice-chancellor, and four senior administrators.  It is not entirely clear how this overlaps with the key management personnel who the Financial Statements describe as “..those ten individuals having authority and responsibility for planning, directing and controlling the activities of the University.”  What is clear is that in 2017/18 there were nine of them with £1,296m compensation and by 2021/22 there were 10 with compensation of £1,813m.

Other key figures in terms of oversight were Dr Sally Howes, the University’s incoming Chair in August 2021 who became the first Chair of the University’s Council, for at least ten years and possibly ever, to receive remuneration (recorded as £30,000 in the 2021/22 Financial Statement).  On making the appointment the University noted that she brought “… a wealth of experience in strategic roles in the UK space industry.”  Mark Williams had been Treasurer on Council since August 2016 and was previously a partner at Deloitte, one of the UK’s big four professional services companies, so was far from a newcomer.

There were, arguably, quite a few people who had taken positions of responsibility to lead the University.  However, anyone familiar with higher education will recognize the issues raised in a 2020 report “Universities Governance: A Risk of Imminent Collapse” and the urgent need for reform.  It’s summary notes points like, “Council members and VCs rate themselves highly, but in reality are cumbersome and fail to devote adequate time to critical governance issues” and “The office of Vice-Chancellor (VC) has gained tremendous power, while its counterbalance – the university council – is poorly-structured and outdated in approach.”  

Pathed with Good Intentions

The signs that UEA might be sleepwalking over a cliff seem apparent on reviewing the Financial Statements.  In 2018 and 2019 David Richardson and Mark Williams signed off the Business Review including the sentence, “The University remains confident that it has in place adequate funding to support the operational and development plans, and to provide a reserve for managing financial risks, over the next three years.” 

For 2020, 2021 and 2022 the wording changed to, “The University remains confident that it has in place adequate funding to support the operational and development plans, and to provide a reserve for managing financial risks, over the next five years.” (my emphasis).  It is difficult to understand what drove this change in the timescale of their confidence at a point when the world was going through, then recovering from a pandemic where everyone’s future was in turmoil.  Their confidence proved to be ill-placed.

Some of the Council minutes are equally concerning in retrospect.  In November 2021 they report that the “Chair indicated that there is no end-to-end responsibility to management of risk.  It was Council’s responsibility to set the risk management appetite.”  The following sentence, “VC indicated that risks will be managed more closely in future” but a later revelation that the internal audit had found areas for major improvements for the second year suggests a lack of attention to critical detail.

At the next meeting in January 2022 a note from the Audit Committee comments, “concerns about red risks was noted and concerns were expressed about risk management and the extent to which it is embedded in the organization.”  Perhaps prophetically given current circumstances Council “..suggested that staff morale might be considered to be added to the risk register.”  In just three months the approved budget deficit set at £20.8m for 2021/22 had increased to £25m.

There is a sense in going through the set of  2021/22 Council minutes that the risk of failure and a diminishing hold on core management disciplines was being flagged but repressed.  There does not appear to be much sense of mounting urgency over critical issues and while the danger of over-optimistic forecasting is flagged the abiding confidence in having “adequate funding” overwhelms it.  Whether this was just happy talk, an attempt to obscure reality or simply a failure to comprehend is unclear.  

Basics In a Bind

Meanwhile, the basics of running a decent university seem to have been forgotten.  At a point in time when many universities have adjusted their recruitment strategies to secure significant financial advantage UEA seems to have been stranded as a high-priced, non-Russell Group outpost of misguided thinking.  International student income in 2021/22 was lower than in 2016.

Just by way of comparison it is worth considering, say, the University of Leicester’s performance.  In 2016 the income from international students was £52m but in 2022 it had reached £71.8m.  Leicester is of comparable quality optically at 29th in the Complete University Guide compared to UEA’s 27th , it is non-Russell Group and its fees for international PGT are generally higher than UEA.  There seems to be a failure of international recruitment strategy at UEA that management should have addressed.       

Meanwhile the University performance on Research Grants and Contracts has been flat for five years and while the Home Full-Time Student increase looks strong the university notes in its 2021/22 financial statement that it “…fell approximately 8% short (2021:17% short) of entry targets..”.  Taking these alongside the failure to tackle international student recruitment and the continuing decline in the real value of Home student fee tuition suggests an inability to control key revenue lines effectively. 

NB: Research Grants and Contracts are University only to provide a like for like comparison over the period.

Along the way, the joint venture with INTO University Partnerships fell into serious difficulties with losses accelerating and the path to profitability seeming to extend from three years in the 2019/20 Statement to five years from 2021/22.  In 2019/20 the words used were, “..there will be no distribution in respect of 2019/20 nor for the next three years (my emphasis) whilst the joint venture recovers and builds up surpluses for distribution” which implied a distribution by 2023/24 at the latest.  In 2021/22 the words had changed to say, “…there will be no distribution in respect of 2021/22 nor for the next five years (my emphasis) while the joint venture recovers and builds up surpluses for distribution” which suggest no distribution until 2029/30.  The slippage in forecasting recovery is baffling when for the privilege of maintaining the relationship UEA has also become co-guarantor for half of a loan of up to £7m to the joint venture. 

Challenging Times or Chumps in Charge?

Nobody should underestimate the difficulties caused by the pandemic but it is clear that many institutions responded quickly and effectively to changed circumstances.  It should not be a surprise to universities that international student dynamics were always likely to favour Russell Group universities for brand conscious candidates while those from many growth markets are more interested in lower cost tuition and accommodation.  You can’t buck the market and shouldn’t consider your aspirations and ambitions as any guarantee against the cold reality of competitive markets.

Suggestions that problems and costs associated with the Lasdun Teaching Wall have exacerbated the situation are far from new.  However, the 2006 Conservation Development Strategy for the University of East Anglia noted the issues and that solutions would “…require the expenditure of resources by UEA.”  Whether university leadership failed to respond sufficiently at the time or later is a matter that the possible “public enquiry” espoused by local MP, Clive Lewis could consider.

Either way, the recriminations will go on.  In a relatively small community like Norwich the prospect of compulsory redundancies after a £13.5m loss in 2021/22 had already sent shock waves through the city.  The rapid escalation of the scale of loss from £37m in three years to £45m undoubtedly requires action that will be far more draconian than if the problems had been isolated and acted upon earlier.  It is troubling that the lack of confidence in University leadership extends to the interim Vice-Chancellor who has been part of recent decision making.

A UEA Council Minute of November 2021 suggests the VC should bring forward a summary to each meeting of “what was keeping the VC awake at night”.  With the decision to resign we might never know the answer to that question but the difficult times ahead will cause many academics and administrators to rethink their own futures.  It may also be interesting to see if the Education Minister is kept awake at night by the HEPI article in September 2021 suggesting, “Why the Government should never bail out a university” and the past rhetoric of the Office for Students.

NOTES

  1. The headlines is from a quote by ex-Norwich City manager Daniel Farke responding to claims of complacency in October 2020. They were promoted that year. Then relegated the next season with Farke leaving in November 2021.
  2. Financial information about the University, Vice-Chancellor emoluments and other compensation are taken from the University Financial Statements
  3. Information about INTO UEA is taken from the annual returns to Companies House.

Image by Arek Socha from Pixabay 

Amendments

On 2 March the reference in the third paragraph from the end to the constituency MP was amended to Clive Lewis (from Charles Lewis).