Some universities will go bust

[GinForBreakfast]

Reported in the Times today. It must be so worrying for students joining or returning in September/October.

My question is around the regulator, who knows where the issues are. What should they be telling students and when? It seems cruel, especially to young people, to withhold information. It has financial implications as well - people moving, paying deposits etc.

being lectured in halls with 100 students for £9000 a year

In 1980s in California I had 2x/week history undergrad lectures that had 800 students in them one semester. The model was that PhD students did small group tutorials, the PhD students were our main personal point of contact & did feedback, led discussions & marking for maybe... 1 hour/week? I also had math, geology & astronomy lectures in same model, but more like 200-300 in the lecture hall.

That Uni is in top 10 in world & now charges US $14782 (£11.4k GBP) for annual tuition to California students. $48,465 charge to out of state students.

100 in a lecture theatre sounds small to me.
£9k looks like a bargain to me. <shrug>

Whilst this might technically be the case, it’s misleading. It’s a loan by the taxpayer.

With the exception of cases where the student might become Ill or have another reason why they don’t work, most students will repay ant least the equivalent of the capital on their loans.

a significant number of those who don’t because they never earn enough ought not to have gone in the first place.

Careers in engineering can attract very fat salaries. There are lots of engineers in high paying jobs - defence, aerospace, medical tech, motoring, etc. all pay very well.

Again a lot of misunderstanding about how university funding works and what they are for. Obviously in the context of enabling young people to have careers that justify the personal debt they incur it's understandable that the focus would be on teaching.

Agree with everyone saying that universities are not schools and their teaching cannot be evaluated in the same way. They used to be places you had to go to get access to specific people, information, equipment and resources but the digital age has challenged that paradigm. This is why it's really important that students really need to be clear about what they want to get out of a university experience. For example some universities offer great co-curricular and extra-curricular innovation and entrepreneurship programs for people wanting to start their own businesses.

Degree apprenticeships shift the cost of teaching from the individual to the employer. It is possible to deliver these efficiently but generally that means larger cohorts, online delivery and a lot of self-study. So it's a brilliant offer but not for everyone, and isn't applicable to every job role.

The narrative coming out of government over the last few days is very clearly preparing the public for an announcement of a bankrupt university or two. I suspect there's a handful who are in crisis right now and the regulatory is in there deciding what to do next.

Private schools also have access to careers services,

😂😂
School based careers services are typically 1 or 2 members of staff and they are paid very poorly (even in private schools). Their role is incredibly narrow and limited and typically involves conducting 1:1 careers interviews.

University careers services are a different thing entirely and are often a directorate in their own right employing huge numbers of staff. Their remit is much broader and includes teaching and developing curriculum so careers consultants are often paid a salary which is equivalent to that of a lecturer.
They also include placements, employer engagement, job shops, data analytics etc and will have a director overseeing the department who is paid a senior salary.

Not comparable really....

The careers services at many schools (including state schools) involves organising work experience placements, organising work fairs at the school with employers invited in to speak to students, specific employers invited in to speak to students about job roles, organising aptitude and personality testing (private schools) as well as one to one careers meetings. It is not different to what I received at university. Again undergraduate students are overpaying for the service they are getting.
Universities need to reduce their administrative costs not pass on ballooning costs to students. £46,000 average debt is already too much and the government is having to pay the cost for many students who don't earn enough to pay it back.

The careers services at many schools (including state schools) involves organising work experience placements, organising work fairs at the school with employers invited in to speak to students, specific employers invited in to speak to students about job roles, organising aptitude and personality testing (private schools) as well as one to one careers meetings. It is not different to what I received at university. Again undergraduate students are overpaying for the service they are getting.

I know exactly what careers support is available in both schools and universities. I've worked in both and my current job involves supporting careers professionals working in schools, colleges and universities.

University careers services are very different to schools. There are some common elements but a careers adviser working in a school is doing a very different job to a careers consultant in a university. The level of qualification required indicates this with university staff holding at least a masters and many becoming teaching fellows due to requirement to teach and develop curriculum.

Universities need to reduce their administrative costs not pass on ballooning costs to students. £46,000 average debt is already too much and the government is having to pay the cost for many students who don't earn enough to pay it back.

Universities have already stripped back their administrative costs to bare bones.
Careers support isn't administrative, it's a professional service which is student facing and supporting key strategic objectives linked to employability and student outcomes.

It's absolutely laughable to compare schools and universities careers services. The content and quality is on a completely different level at university.

Of the "£46k" debt remember that the amount attributed to fees is unchanged in over a decade. The rest is down to maintenance loan arrangements and across the board CoL increases. So stripping universities bare will only disadvantage the student, not reduce their debt.

So much misunderstanding....

Typically, not nearly as very well as the financial sector.

@user8464987632 Im afraid you are wrong and you don’t understand how this “bank” works. The IFS has decent research on this but in effect the taxpayer underwrites the loans and it now stands at £285 billion.

In 2022, 49% of students repay in full. Therefore the government has changed the system so they think 79% will repay over 40 years. The unpaid loan burden has already been given to the unis. It obviously cannot be clawed back from them or the students on different loan plans.

So the tax payer has funded the huge expansion of uni places with no repayment by nearly 50%. Just a huge ongoing debt as I’ve stated above. 79% will be better but if fees go up, that could change. I agree a cull of degrees would help based on earnings afterwards and a review of what actually needs to be a degree.

I don’t understand how the funding works well enough to opine on how to fix this.

I can see that this isn’t working. There is waste in this system that we all pay for. It’s unfair to universities, students and the tax payer. The main “waste” that can be decisively tackled must be the universities performing poorly in terms of student outcomes and research outcomes. They are draining resources away from the universities that are creating valuable knowledge and preparing students to make complex contributions to society and the economy.

We have over-shot in the sector. We need to wuit digging the hole. There will alway Be special pleading because there is no uni that doesn’t produce some value, it’s just a question of whether they are clearing the value hurdle of what is goong into them.

@missshilling You are comparing the very top of the finance sector though. Engineers who are fully qualified can work anywhere in the world. Some high flyers from the best engineering courses do get finance sector jobs but very many don’t. However it’s true engineering degree holders are needed in engineering and many get very good starting salaries.

@EmpressoftheMundane The IFS has the best description of how this works. Basically most unis are mostly funded by students. They fund their studies by loans. Taxpayer underwrites the loans. Everyone feels they are short changed!

I worked in tech for a while. I worked with large teams of highly qualified engineers. They were smarter than me, better educated than me, and often making less than me.

It would be crazy to make their degrees more expensive. We really don’t want to turn people off from doing a demanding degree that unlocks so much value fir the rest of us.

People often jump to the decision that we have "too many" universities, so we have to close some - preferably the "lower quality" ones. But it's not that simple. The "lower quality" ones are often the ones contributing significantly to social mobility, or supplying essential public sector workers, or acting as an anchor institution in their city/region. You can't reverse university status and suddenly make the delivery cheaper. It now costs more than £9,250 a year to deliver degree-level teaching.

Contracting the sector to reduce the strain on the public purse will mean fewer young people will go to university, very politically unpopular and again, likely to be detrimental to social mobility.

(I don't have the definitive answer by the way, but I know it's not a single-solution problem).

@GinForBreakfast That assertion isn’t necessarily correct. Often the grads not getting grad employment are the ones who needed the social mobility. It wholly friends I. Uni and where it is too. Lincolnshire has one of the lowest rates for grad employment. Lincolnshire people will find it more difficult then most to get a grad job in their locality. Would they find it as difficult if they were an electrician or plumber? Almost certainly not, Thry would probably earn more too.

Thst isn’t to say Lincoln should close but social mobility is best served by attending the best unis. Pottering off to a local one at the foot of the league tables isn’t the best for many. So some view should be taken on what works for social mobility. Not convinced all degrees do this or all grads would have decent jobs and be paying off loans. They plainly do neither. So it’s poor advice to say a degree helps everyone. It helps the most determined and well advised.

That's exceptional though, and presumably very niche and also presumably tailored to the firm's requirements and to include course materials etc. Your average small business isn't going to be able to pay that kind of money - I presume you're talking about big national/international firms!

Even some of the country's top tax consultants go on the lecture circuit charging only around £1k-£2k per day plus expenses and could be doing a course for 30-50 people. Yes, they're doing the same course in lots of places, not tailored/personalised, but still it's some of the best tax consultants in the country.

I’m not the one who is wrong. I work in this area at a very senior level and understand it well thank you. The taxpayer underwrites the loan. With the recent changes most higher earning students will now pay off the actual amount they borrow. What some might never pay off is the interest. Those earning mid level salaries are in the worst position since they will forever be playing catch up and the interest will keep piling on. Those who never earn at a decent level have their debt written off after the expiration date and the taxpayer “pays”.

@EmpressoftheMundane I meant to say - lots of people are described as “engineers”
but are not fully qualified engineers. I see this a the time on MN. It’s rife in tech. These people possibly have a degree but no further engineering qualifications or status. Yet they call themselves engineers. Doctors are not doctors without the full training and qualifications but any old techie can be an “engineer”. All MEng grads should aim to be Chartered Engineers. Then they can expect much higher earnings and should be leaders. Tech seems to be an area where no one bothers. If you were part of a design team at a senior level designing a bridge or a sky scraper you would be CEng. It matters.

@user8464987632 I don’t see you have said much different to me. We agree about the taxpayer. You’ve added in about mid earners. Yes. I agree. In all of this though, the unis get the money from the taxpayer first. We have seen 49% paid back. That’s poor. We don’t really know if this plan will take it to 79.%. However the sting in the tail is 40 years. So far fewer will have loans written off. It’s a better bet to get a good job and pay less interest. That’s where dc should be really careful. What job will they get? Are they ok paying this tax until they are 61 or 62? I suspect lots will go part time and there won’t be 79% paying it off. We shall see.

Students won’t like fees going up. They won’t like longer pay off years. Unis want more money. The taxpayer isn’t getting value for money and wants more plumbers and electricians to build those thousands and thousands of new homes promised! Not likely to be solved any time soon.

The ifs is a good source of robust financial info though.

We have seen 49% paid back. That’s poor. We don’t really know if this plan will take it to 79.%.

It's only poor if the original expectation was that 100% would be paid back. That was never the model though. When plan 2 loans were introduced the financial modelling that enabled the Treasury to implement it as a net zero model was that 60% would be paid back.

True the current modelling of plan 2 is less than 60% (hence plan 5) - but that may be reassessed given that the very first to take out plan 2 are only into year 12 of 30 years of repayments.

Not repaying the entire loan to the treasury is a feature not a bug.

Lincoln is 41st or 48th in the league table depending on whether you believe the complete university guide or the guardian guide, not remotely at the bottom of the league table and considerably above some institutions who should be better. When I was growing up in Lincoln we basically had the primary teacher training college at Bishop Grosseteste or we had to leave the county. The university has transformed the city and the local job market. The first cohort has just graduated from the new medical school.
I appreciate you could have picked any lower-ranked uni, but having a whole county, particular one with lower wages on average, without easy access to Higher Education does nothing for social mobility either.

To be fair to Lincoln Uni though @TizerorFizz the CUG has it ranked 48th. Out of 130. So comfortably in the top half.

now if there was a rank for strength of financial position I’d imagine it would rank somewhat lower.

whilst I don’t have any data to back this up I’d also suggest that the majority of Lincs grammar school DC who head off to Uni go out of county and in many instances don’t come back after graduation. Lincolnshire doesn’t really have much of a dynamic and well paying knowledge economy, so rather like Cumbria grad employment opportunities are not on par with major conurbations. Again a generalisation but more a place where people go to retire - which brings another set of pressures.

Why is not paying off the loans a feature rather than a bug? It’s banks earning the never ending interest, not the tax payer.

I don’t understand.

Banks earning the interest

what do you mean by that? @EmpressoftheMundane are you making a wider reference to government borrowings and government debt servicing costs?