Can you explain the financial crisis in universities to me as if I’m a 6 year old?

I fully admit to not understanding the complexities of this but as the mother of a 1st year student at a fairly good uni, I struggle a bit to see why they struggle so much when I’m paying a fortune for a pretty grotty room. My daughter’s flat alone must make 1650 a week. And of course there are costs to be added to that but still……. I think there are 8/10 flats just in her block.

Happy to admit I’m missing the point though.

Home tuition fees have been stagnant for years but all costs associated with running a university have risen.

Many institutions are reliant on international students as they pay much higher fees, but markets are unpredictable/ competitive, they won't always get the numbers they need to make their budgets work.

Poor accounting and business practices.

@GinForBreakfast nailed it.

International students have long been a vital source of income for universities in order to balance the books - now more than ever.

Also -pre-fees - universities used to get direct government funding.

Not quite for a six year old, but for a 16 year old:

When you were at university the government was funding a much larger portion of costs directly rather than through tuition loans.

The Office for Students predicts that by the next academic year over 70% of British universities will be in debt. This does lead to cutbacks and cutbacks lead to industrial action.

Before the new fees came in it is true that a number of British university estates were somewhat run down and improvements were needed. Does this mean that everyone was expected to charge the maximum fee and that all or even most of the new building projects have been necessary and executed wisely? We all know the answers to those questions. So there has been greed, yes.

The universities are taking undue stick in respect of the anti-immigrant sentiment in the UK. Yes, Brexit, but it is also a big problem that students here temporarily are counted as immigrants and can no longer bring dependents. Very few UGs are affected by the last but they perceive it as hostile and Overseas numbers are down.

A silver lining of Donald Trump’s policies is that America may now be even more hostile. In practice Overseas applications are still open, with a few exceptions, so we could yet get a late surge.

The big, high ranking universities won’t fail.

Cambridge and Oxford will barely feel this. Russel group will be ok, although smaller programmes and modules might be cut and it will be very unpleasant for staff. Expect lots of industrial action. Anything below the Russel group is much more risky.

The reason it changed from 20y ago is that they are now not properly funded. The tuition fees from students have not kept up with inflation, the Government is unwilling to either fund them or allow them to raise tuition fees. And yes, the management is overinflated, overpaid, and stuffed full of failed academics.

I am not sure how this would affect the student experience. Most academics are still incredibly strong internationally and very passionate about their subjects. The incompetent managers don’t tend to go near the classrooms…

To be positive… having viewed a lot of unis in the past few year or two, many remain vibrant, inspiring places with amazing buildings and facilities that are much nicer than when I went! You just need to pick a course that the uni is known for and perhaps avoid the more niche. Doing tours and really talking to people there will help you work it out

The people who run universities have never run a business

Universities are now businesses

The end

Oh, and it's likely that some posters will say that it's the fault of greedy incompetent universities run by overpaid vice-chancellors. And that all young people should just become plumbers because everyone always needs a plumber. That's an attractively simple argument. The reality is complicated. If there was an easy solution, we would have sorted it out by now.

There's a long running thread on the Higher Education Boards. The website WonkHE is also a good browse, if a bit geeky. But essentially:

University fees and therefore funding for universities have not kept pace with costs and inflation. Income from fees is not enough to cover the cost of running all courses.

Universities carry other loss making activities such as research.

Universities countered this by recruiting international students at a higher fee. International student numbers are collapsing.

Brexit hasn't helped!

We are now in a period where universities are having to make efficiencies / contract / cut costs etc.

No one knows where it will end up. Public sentiment and public finances do not support more public funding for universities. Student debt is high and graduate salaries are stagnating (on average).

No one can really advise on what this means for your choices, and that of your children. Choosing where or whether to go to university is a complex decision based on very personal, specific factors.

Good luck.