Top risks for higher education

Risks related to regulation and government policy continue to be a major concern for higher education providers, finds our latest review of higher education providers’ strategic risk registers. Providers also say that government funding decisions may have an adverse impact on their institutions’ financial health, course offerings, and the quality of provision. 

Providers have a clear commitment to ensuring quality in academic programmes, not least because quality is tied to student satisfaction and perceived value for money. Yet there remains uncertainty as to just how "quality" fits into the wider regulatory environment and government policy, despite the government publishing its Interim Conclusion of the Review of Post-18 Education and Funding and the Office for Students (OfS) issuing new quality and standards conditions. 

Perhaps this uncertainty is unsurprising – at time of writing, we are still waiting for the outcome of the Department for Education’s Higher education policy statement and reform consultation, and of course we have a new prime minister (Liz Truss), a new Education Secretary (Kit Malthouse) and a relatively new Parliamentary Under-Secretary of State for Skills, Further and Higher Education (Andrea Jenkyns).

Creating a sustainable higher education finance system is likely to remain a priority for the foreseeable future. The growth in the population of 18-year-olds over the next two years allow universities to increase their student numbers. National student debt could grow if more domestic university students are entering the government’s loan book. There are concerns that costs will spiral without intervention. The Department for Education has stated that the, “value of outstanding loans at the end of March 2021 reached £161 million and it is forecast to rise to half a trillion pounds by 2043.” 

There are other areas of possible reform, though, including: 

• the reintroduction of student number controls; 
• minimum eligibility requirements; 
• reducing fees for certain subjects and levels; and 
• the prospect of a post-qualifications admissions system.

The student population will continue to access student loans. The 2022/23 academic year marks the fifth consecutive year that tuition fees have been capped at £9,250 a year, and we know fees will be frozen until 2024/25. However, rising living costs are affecting both students and institutions. Expenditure is surpassing income, and that could significantly impact the financial sustainability of many providers, and this will be amplified by any future government departmental budget cuts.   

The OfS has stated that the overall financial position of universities remains “sound” but that, “the environment remains challenging. To protect longer-term sustainability, providers will need to continue to adapt to uncertainties and financial risks. Financial challenges could affect individual providers differentially and each will have its own range of mitigating actions available.”

In an ever-changing regulatory landscape, managing new or evolving risk areas remains essential. There is still the fine detail and longer term implications of announced programmes to be considered, and careful modelling will be key whenever new reforms are announced.