Who is costing the UK more in lost revenue

Elite universities fear a slump in lucrative foreign students due to the corona crisis

The universities are threatened with billions in revenue losses. In the UK, it is feared that the number of foreign students will fall by at least half in the coming academic year. That would tear a big hole in the budget: Last year, guests from overseas paid around seven billion pounds in tuition fees alone - 17 percent of the total income of the universities. Then there are the housing and living costs.

American universities are still keeping a low profile with estimates of student numbers. But even a 30 percent decline in foreign students would cost them $ 6.1 billion in lost tuition fees, calculates Jonathan Law, partner at McKinsey management consultancy.

There are more than a million foreign students studying in the US and around 500,000 in the UK. Most come from China, followed by India.

International students are very lucrative for universities: while British and EU citizens in Oxford have to pay a maximum of £ 9,250 tuition fees per year, non-Europeans pay up to £ 44,000 per year. In the USA, international students pay an average of one and a half to twice as high tuition fees as their local fellow students.

Students could study closer to home again

Knowledgeable observers are alarmed that this source of income is now threatening to dry up for the time being. "This turn in one of the booming sectors of the globalized economy will have catastrophic consequences for the finances of universities," warns Jo Johnson, former British education secretary and brother of the Prime Minister, in a guest article in the "Financial Times".

The corona crisis will mean that students around the world will study closer to home again - at the expense of universities in the USA and Europe.

These days, most of the students have received their answer as to whether and where they have been accepted. Now you have to agree and secure your place on the course with a deposit. But many are insecure.

According to a survey by the British Council of Chinese students who had plans to go abroad, only 27 percent want to hold on to them. 22 percent said they would probably not go abroad after all. 39 percent said they didn't know yet.

To make matters worse, in many countries the necessary English tests and proficiency tests have been canceled indefinitely. Student visas are also not processed in many places. This upset the normal process of enrollment this year.

On top of that, it is unclear whether the universities will even be able to reopen in autumn. The winter semester may have to begin with online courses, says Clare Marchant, head of the British admissions authority. For freshmen, some universities are already considering postponing the start of studies from September 2020 to January 2021.

London School of Economic and New York University likely to be badly affected

In order to secure international students for the winter semester, universities have to be flexible with their requirements and deadlines, advises McKinsey consultant Law. In addition to online courses, they could also partner with universities in the hometowns of the foreign students, thus offering face-to-face teaching.

Most foreign students traditionally go to universities that are high in the rankings and are located in coveted cities. The London School of Economics (LSE) and New York University (NYU) are therefore likely to be hardest hit by the crisis.

If not a single new student from abroad enrolls in the winter semester, the LSE would lose 49 percent of its tuition fees and 22 percent of its total income, calculates the think tank Institute for Fiscal Studies. The purely hypothetical calculation illustrates the extent of the risk.

Yet it would not be the prestigious universities that would suffer most from the absence of foreign students. Because the majority of their income comes from research, donations and foundations. So overall, they are less dependent on tuition fees than the second and third tier universities.

The most popular universities could easily compensate for any decline in international applicants with local students. Because of the lower tariff, they would still have reduced income, but at least their loss would be minimized.

Distribution battle between the universities

The renowned Massachusetts Institute of Technology (MIT), for example, does not expect the number of students to decline. Stu Schmill, head of the matriculation office, also points out that at MIT, many foreign students receive high financial aid because the applicants' financial situation does not play a role in the selection process. “We spend more on training the students than we get from them,” he says. "And that is especially true for international students."

If the wealthy top universities absorb more local students, the dispute between universities in the country intensifies. The student shortage would only be passed on from Harvard and Oxford - to the less prestigious and poorer state universities.

"The majority of the fee losses will be reflected in the public universities," writes Dick Startz, economics professor at the University of California at Santa Barbara, on a blog for the Brookings think tank. He is therefore calling for state support for the sector.

The British industry association Universities UK is also appealing to the government to increase government research funding in order to compensate for loss of fees. If the government does not act, some universities will not survive the crisis, warns association chief Alistair Jarvis.

In fact, the current academic year is already confronting universities with a serious financial question: Are students allowed to reclaim part of their tuition fees after they were sent home in mid-March and are only taught online?

Most colleges will reimburse dorm and food payments, but not the tuition itself.

More:The President of the Association of Leading Technical Universities sees the corona crisis as an opportunity. He hopes for a "huge digitization boost" for the universities.