Five key trends affecting the education sector has been saved
Five key trends affecting the education sector
The higher education sector continues to face significant challenges that not only require it to review its operations, but its product portfolio, to drive continued customer-centricity and ongoing profitability. A leading panel of higher education specialists, including Deloitte’s Julie Mercer, Head of Global Industry and Lead for Education, explored the upcoming challenges facing universities on the eve of UCAS releasing the 2017/8 student application data. Five key trends emerged, outlining the importance of wholescale industry reform to maintain the ongoing health of the sector.
The growth of consumerism
With the introduction of Longitudinal Education Outcomes (LEO) data, the government has directly linked the employment and earnings outcomes of graduates with their undergraduate degree and the higher education institution that they attend. This is likely to cement a growing sense of consumer entitlement amongst students, as they will be able to directly quantify the benefits derived or lost through the choice of their degree and provider.i
What is not yet understood is how the introduction of LEO will impact the Government’s industrial strategy. Potential students may be discouraged from undertaking particular professions and higher education providers may review their product portfolios based on employability statistics.
Shrinking profitability margins
Increasingly, the higher education sector is struggling to maintain profitability margins. Government pricing caps prevent universities from adjusting course fees to accommodate inflation, and even with potential increases in the cap for ‘strong performing’ universities under the Teaching Education Framework (TEF), this will be insufficient. This is exacerbated by growing consumer expectations, which require campuses to have state of the art facilities to remain competitive. As a result of increased fixed costs, universities are looking to reduce variable costs. This is resulting in an increased proportion of academic staff who are part-time, impacting on how desirable universities are perceived to be as employers.
In addition to accumulating a large student loan upon completion of their degree, 5.2ii% of higher education graduates struggle to obtain a graduate role. As a result, a degree apprenticeship, rather than the traditional higher education route, may become a far more attractive option for students. Not only will they complete their degree apprenticeship with no debt, but they will earn as they learn and will have a higher chance of obtaining employment upon completion.
Employers are similarly incentivised. From April 2017, employers with a pay bill over £3 million each year will be required to contribute to the apprenticeships levy. This will encourage employers to participate in the apprenticeship program to obtain maximum value from their investment, otherwise contributed funds revert to the government after a 2 year period.
As degree apprenticeships become increasingly important, in-house academies, currently reliant on universities to record degrees, may choose to become universities in their own right to enable them to accredit their own students.
Shifting industry requirements
Traditional roles within the local workforce are becoming redundant or altering significantly for a multitude of reasons, including functions becoming progressively automated or being moved offshore. This is causing an increased emphasis to be placed on life-long learning, to upskill a mature workforce, ensuring that individuals can competently perform their roles. This is a large group in need of immediate assistance.
As a result, the emphasis is shifting from knowledge accumulation to knowledge flows. As such, degrees that take multiple years to complete are no longer appropriate. Rather, employers and employees require access to partial degrees that provide them with ready and immediate access to required knowledge and skill sets. This has the further advantage of targeting an employer’s investment in an employee’s education.
Brexit – the great unknown
The impact that Brexit will have on the UK’s higher education sector remains unknown. Higher education institutes have started to identify the proportion of their staff on visas, to determine the impact that Brexit may have on their workforces.
The impact that Brexit will have on research funding also remains unclear. English universities have started to look into the possibility of opening campuses off shore to retain research funding.
Immediately after the Brexit vote, applications from EU students for UK courses fell, however looking ahead the falling value of the pound may make undertaking highly priced qualifications, such as MBAs, more attractive to international students which may in turn lead to an increase in demand for UK MBAs.
The Government’s Industrial Strategy looks to counteract some of the potential downsides of Brexit with a more proactive approach to industrial development in the UK. The associated policy reform in this area may present opportunities for higher education providers to review and realign their offering to those sectors with the highest growth potential. They may also collaborate further with businesses to develop a wider range of vocational routes from education to employment.
The higher education sector is facing a period of substantial reform in response to significant societal change. It will not be able to do it alone. This podcast is essential listening for those working with and within the Higher Education sector.
i HESA are also looking to introduce a new Distance of Leavers of Higher Education (DLHE) survey. This will capture outcomes data at the institutional level, further enabling students to quantify the benefits of various educational options
ii HESA, Graduate Employment: Percentage employed by level and mode of study 2014/15