Students want Government action if their university fails

The Higher Education Policy Institute (HEPI) has released the only dedicated study on what UK students think about the financial health of universities, Students back bailouts: Students’ views on the financial health of universities (HEPI Policy Note 11).

Rumours persist about institutions facing financial difficulties. But what awareness of this do students have and what do they think should happen to a university on the brink of closure?

The survey of over 1,000 full-time undergraduate students, undertaken for HEPI by the polling company YouthSight, shows:

• most students (83%) are confident their own institution is in a strong financial position;
• over three-quarters of students (77%) believe government should step in if their university were threatened with closure;
• more than half of students (51%) think fees should be refunded in the event of their university closing, while only one-third (32%) back merger with another institution;
• nearly all students (97%) want to know if their university is in financial difficulty – in contrast with current practice which hides financial problems from students;
• most students (84%) say they would have been less likely to have applied to their university if they had known it was in financial difficulty; and
• the overwhelming majority of students (89%) do not know what Student Protection Plans are, while even more have not seen their own university’s Plan (93%).

Rachel Hewitt, HEPI’s Director of Policy and Advocacy, said: 

“This research shows a worrying mismatch between students’ views of what should happen to a university in financial difficulty and the proposed action by the Office for Students. Despite the refusal of Ministers to countenance the idea, 77% of students want government bailouts for failing institutions. The Office for Students are focusing on Student Protection Plans, but almost no students know what these are or their role for failing institutions. 

“While there are legitimate reasons not to make public the names of those universities that are facing financial difficulties, students are very keen to have this information. However, should failing institutions be named, it would have a significant impact on recruitment at these institutions – 84% of students say they could be less likely to apply to a university in financial difficulty.

“Government and the Office for Students must urgently engage more with the views of students on this critical issue of financial sustainability in the sector.”

Nick Hillman, Director of HEPI, said:

“The rumours of a small number of universities being in financial difficulty are too persistent to ignore. No UK university has ever gone bust. So it would be a major scandal if it were to happen.

“In the new higher education marketplace, there is meant to be less direct intervention from outside. But, in our survey, just one student out of 1,048 respondents said nothing should happen if their university was facing severe financial difficulty.

“It remains implausible that any large university would just be allowed to shut up shop because of the harm this would cause to students, staff and the local area. Moreover, taxpayers have built up our university system so have a vested interest in ensuring their contributions have not gone to waste.”

UCU acting general secretary Paul Cottrell said:

“It is really encouraging that students want to see proper support for universities and, once again, we find staff and students on one side defending higher education. The OfS precipitating the demise of their local institution is not protecting students’ interests, quite the opposite.

“Allowing a university go to the wall has consequences far beyond just education – universities are often one of the key employers in the area and their impact on the local economy is difficult to overstate. The true cost of closure would be graduates holding degrees from a defunct institution, thousands of students unable to complete their course and the very real threat of all sorts of legal action.”

An OfS Spokesperson, said:

“This research provides a useful student perspective to the debate around the financial sustainability of the higher education sector in England. It is good to see a significant majority of students think their university is doing well financially. That is consistent with our current analysis; we do not have significant or widespread concerns about the financial viability or sustainability of the sector.

“All universities and other higher education providers which register with the Office for Students must demonstrate to us that they are financially viable and sustainable. There are currently 317 universities and other higher education providers on our register. Were we to have particular concerns about the financial sustainability or viability of a provider, we would impose a condition to their registration or otherwise intervene as a way of seeking to prevent a disorderly financial failure and to protect the interests of students. None of the providers we have registered have been issued with such a condition. But if that assessment were to change, we would intervene precisely to protect the interests of students. We have extensive powers to achieve that outcome.

“We have been clear that – as a regulator – we will not be providing bail-outs to providers who might find themselves in financial difficulties. Bail-outs would only provide a temporary and artificial life raft, would not be a good use of public money, and would not be in the long-term interests of students or the taxpayer.

“But we have been equally clear that we will continue to monitor universities and other providers for early signs of financial difficulties and intervene where necessary. We want universities with financial concerns to approach us early so that we can work with them to consider options to improve their finances, such as mergers of institutions or courses.

“All universities and other higher education providers must set out the steps they will take to protect students in the event of course, campus or institutional closure. It is clear from this survey that there is more to be done to ensure that students are able to easily access and understand student protection plans, which universities must publish.”

Wave 5 of the HEPI/YouthSight Monitor was answered by 1,048 full-time undergraduate students and undertaken between the 4thand 8th January 2019. Weights have been used to ensure the sample is representative by age, gender and university type. The margin of error is +/-3.09%, based on a 95% confidence level. Respondents received a £1 Bonus Bond gift voucher for answering these questions and others on a different topic. 

The Higher Education Policy Institute was established in 2002 to shape the higher education policy debate through evidence. It is the United Kingdom’s only independent think tank devoted to higher education. HEPI is a non-partisan charity funded in part by organisations and universities that wish to see a vibrant higher education debate.