More than a dozen universities in the United Kingdom is reported to have difficulties in its survival if the government does not come out with a bail out support. The Institute of Fiscal Studies in its study said that the higher education sector in the UK would have come across a long term loss between three billion pounds and 19 billion pounds.
“In our central scenario, 13 universities educating around 5% of students would end up with negative reserves and thus may not be viable in the long run without a government bailout or debt restructuring,” the report said.
The report said that the biggest losses will likely stem from a drop in international student enrolments. This may come to 1.4 billion pounds and 4.3 billion pound with a central estimate of 2.8 billion pounds. It also said that the Universities also faced loss of income from student accommodation, conference and catering operations.
The Institute of Fiscal Studies said that universities having a large number of international students and those with substantial pension obligations will be the most affected. The High ranking universities and postgraduate and music and arts institutions will be the most affected as they have more international students and pension obligations. The report also points out that least selective universities, which mainly depend on domestic fee income, will be badly hit if the higher ranked universities admit more UK students to make up for the shortfall in international enrolments.
It also said that the universities could go for cost cutting by saving on temporary teaching staff. However, the report notes that this could affect teaching quality.
The report said that the bailout aimed at keeping these institutions afloat could cost around 140 million pounds. “In comparison, a oneoff increase in teaching grants of £1,000 per UK/EU student would cost £1.8 billion but in our central scenario would only push three institutions above the line of zero reserves,” the report said. .
