University Tuition After Corona

Raed Altaf

BSc Economics, UCL

The rebuilding of our lives in light of the COVID-19 pandemic has raised some important questions in the field of higher education. With classes being largely online, we find ourselves asking if “Zoom lectures” match the worth of the tuition we give. Should universities continue charging the same tuition fees for the 2020/21 academic year, despite us not being able to access services such as libraries, office hours, student centres, etc.? Regardless of these concerns, universities will not be reducing their fees any time soon. These decisions are seen to be most unfair to students without adequate home learning resources and digital access, further exacerbating the argument that the education sector is only able to cater to an upper class. However, before jumping to conclusions about the intentions of higher education institutes, we must thoroughly examine the reason behind this problem. In theory, reduced tuition fees does sound like a dream come true - especially for international students. However, there are multiple factors which need to be considered before such a decision can be taken. So, why is your university not reducing tuition fees for the 2020/21 academic year?

Restrictions on their endowment funds

Let’s start off with the argument surrounding endowment funds. An endowment fund is a collection of discrete funds consisting of money and financial assets, which are mainly sourced from charitable donations. Typically, a university will allocate 5-10% of their endowment fund yearly to be used for the institute’s operation purposes. While the endowment fund can be viewed as a way to reduce tuition fees by offering discounts or to make up for lost revenue, the reality surrounding these funds are more complex than simply dipping into it like a pot of honey. According to Forbes Magazine, 90-95% of the average endowment fund itself is restricted contractually to be used for a specific purpose according to the donor’s wishes or the university’s long term plan. Although changes to the signed contract between the donor and instituition (known as a gift agreement) are possible, they may not be approved by the donor themselves, thus making it impossible for this financial resource to be tapped into.

A gloomy future

Now, let us assume that we can tap into the endowment funds for a proportion greater than 10%. Universities would still remain highly unsure of utilising this money, purely due to speculative reasons. According to a Moody’s Investors Service report, the outlook for higher education over the next year has gone from being stable to negative. The lack of international student enrollment, alongside the reduction in the use of auxiliary services such as housing, gym services, and parking will take a massive toll on university finances . Not only will this negative outlook potentially reduce investment inflows into educational institutions country-wide, but also lead to a reduction in endowment gifts.

Other investments

In addition to the negative outlook on the higher education industry, the timing of this pandemic coincides with some expenses universities had planned on incurring. According to Mark Corver, a former director of research and analysis at UCAS, as the demand for higher education increased within the United Kingdom over the past few years, universities found it extremely difficult to match supply. Despite 2020 being forecasted to see a 2% drop in the 18 year old demographic within England eligible to apply, universities throughout the UK began implementing expansionary programmes to facilitate the rising 18 year old population. Such investment decisions left universities financially unprepared for the sudden onset of this pandemic. Although they will not go to waste as social distancing protocols will be lifted soon, they did tie up certain funds which could have been used elsewhere.

Setting a precedent

Precedence setting in a situation like this could be fatal for universities struggling with their finances. Hypothetically, if one Russell Group university decides to lower its fees, not only will the other Russell Group institutes be expected to do the same but so will the non Russell Group institutes. Here is a statistic which shows the negative impact of such a situation.

If the average endowment for the 24 Russell Group universities is calculated, it comes upto GBP 647 million. Although this may seem like a decent endowment per university, however, the reality is nowhere near this average. Oxford and Cambridge’s endowments valued at a combined GBP 13 billion severely distort the average figure. In fact, York University currently holds an endowment of GBP 7.7 million, which comes up to GBP 639.3 million lower than the average we just calculated. Therefore, if one university with a much healthier endowment decides to lower its fees, it may have a negative impact on the others with lower endowments.

Going forward

While the aforementioned reasons shine some light as to why universities did not take the decision to reduce fees, universities must also accommodate students who are facing difficulties with online learning. The United Kingdom has become a hub for international students to pursue their higher education, with 2.5 million students currently studying in the UK. Access to digital resources such as the internet and laptops are luxuries, both within the UK and internationally. Therefore, alternatives must be provided by Universities, especially in light of the decision to not reduce fees. These can include alternative methods to learning rather than online lectures, extra office hours through phone-calls, revising coursework and examination requirements, as well as relaxations on required or marked attendance for international students. These recommendations just scratch the surface of where universities and higher education must focus their investment and research on. The COVID-19 pandemic may have restricted our way of learning, but this opportunity allowed us to prospect solutions that accommodate students and were otherwise unexplored.


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