Much is made of the higher education funding crisis – and we could well ask how we got here.
Universities will blame inflation and reduced government funding. But in truth during the last decade most universities have received an international funding windfall from international student recruitment, in the UK alone this is in the region of around £20 billion a year over the last two recruitment cycles .
It would be fascinating to know how all that money has been spent.
Realpolitik
Looking to the future, how universities are funded needs to change. It is highly unlikely any more funding will be forthcoming from the government, with many demands on the public purse and universities at the bottom of the list when it comes to priorities. It is hard to argue that compulsory education and health should not be prioritised over higher education post-pandemic, with higher education having received that windfall in overseas revenue over the last three years.
It is only reasonable for domestic tuition to rise with inflation. It may be worth starting this when inflation falls to below 5 per cent, and I appreciate that universities will have to absorb the lost value to date – that said it is to be hoped that domestic tuition rising in line with inflation is the reality students, universities and policy makers will face sooner rather than later.
Turning the page
But what if we shifted the narrative? Far too often students are referred to by the public, government, and even universities themselves as a cost – the cost of teaching them! We could instead see students as a university “asset” not a cost. If universities are to fulfil their social contract, there should be a direct link between those graduating from university progressing into employment, raising productivity, and therefore driving economic growth. In truth universities should be seen as economic growth engines, not education cost centres.
If universities were funded differently and students were considered an asset not a cost, huge revenue opportunities open up. Let’s take the model of how UK universities work with the National Health Service. Every year each NHS Trust contracts with universities locally for the numbers of doctors, nurses, midwives, physiotherapists and so on they need to fill the vacancies becoming available within the trust.
Why is this restricted to just the NHS? For example, the HM Revenue and Customs base in Nottingham, a major public sector employer, could contract with Nottingham Trent University and the University of Nottingham, plus other universities in the locality in order to fill their graduate vacancies. I would anticipate most vacancies there would be in accounting, business, and finance but there will be additional opportunities in things like communications, marketing, human resources, and information technology.
And why would a university restrict itself to working with just the public sector? Let’s take Greggs the bakers as an example – it is a UK company based in the North East of England and much loved by students and others as a place to buy a bacon sandwich and vegan sausage roll. Greggs may have most graduate vacancies in Newcastle Upon Tyne, so it could contract to recruit specifically from Newcastle and Northumbria universities, though other agreements could cover a need for talent country wide.
Amazon, while a US company, has a major presence in Manchester, in the Hanover building opposite Victoria station, so it could partner with universities in and around the Northwest like Manchester Metropolitan University, the University of Manchester, Salford University and the University of Bolton, for its graduate recruitment.
International partners
This brings me to the huge international opportunity for universities to partner with multinational firms and international companies, to provide their future talent pipelines, from both their domestic and international student cohorts.
This month thirty Malaysian employers will travel to the UK to exhibit at a careers fair to recruit Malaysian students studying in the UK back into jobs in Malaysia and the surrounding area. Each company spends thousands of dollars on this activity: advertising, exhibition stands, sponsorship in addition to flights, hotels, and subsistence in London. Would it not be a more effective use of their graduate recruitment budgets to look at their historical recruitment, in the same way a university would look at its international graduate destinations data, and partner with specific universities to provide a graduate talent pipeline now and into the future.
Only if higher education providers re-frame students as “assets” and invest in their futures by getting to grips with their own leading domestic and international graduate destinations using robust representative graduate outcomes data, will they be able to deliver on this revenue raising opportunity. Targeting employer engagement both at home and overseas is only possible if universities know which employers to focus on. Once they have a strategy there are more opportunities to raise funds as universities could partner with those companies employing their graduates at home and overseas for applied research, continuing professional development, continuing professional development, and short courses. All of which would generate revenue for the institution.
A missed opportunity?
Universities take just a few hundred pounds from companies to exhibit at careers fairs. This is in return for providing a valuable “talent pipeline” for the world’s leading companies. It is estimated in the UK graduate recruiters spend approximately £5,000, to recruit a single graduate. In the USA it is $5,000 and in Australia $6,200.
By seeing students as their primary assets and formalising the provision of this “talent pipeline” with targeted companies identified through their domestic and international graduate outcomes data, universities could work with companies on a commission basis – halving the cost of acquisition. The commission per graduate would paid directly to the university, for the value add coming from higher education.
Both the public and private sector would benefit by having a constant, reliable talent pipeline – at the same time as lowering the cost of graduate recruitment. Universities benefit by filling a significant funding gap between domestic tuition and cost of teaching with a new source of revenue. And, students are the main beneficiaries, with a higher likelihood of securing graduate jobs prior to graduation with leading firms.
I realise that the challenges funding universities cannot be solved overnight. That said it is within the universities “gift” to drive fundamental fiscal reform though innovation before they go cap in hand to government and ultimately the taxpayer, to bail them out of a financial hole.
