The House of Lords Industry and Regulators Committee criticized the Office for Students for not giving sufficient attention to the financial risks faced by universities that have become increasingly reliant on international and postgraduate students.
British universities’ heavy dependence on international students to offset frozen tuition fees and rising costs has raised concerns, as highlighted in a report from the House of Lords Industry and Regulators Committee.
Neither the government nor the Office for Students – the higher education regulator – is adequately addressing this looming crisis, the report stated. The committee also contended that the Office for Students lacks independence and the trust of educational providers.
“[It] does not have the confidence of many of the providers it regulates. But it has arguably not acted in the real interests of students either,” Clive Hollick, chair of the committee, said in the report as quoted by The Independent.
The regulator purportedly failed to give sufficient attention to the financial risks faced by universities that have become increasingly reliant on international and postgraduate students, especially following the freeze on tuition fees for domestic students and the loss of European Union research funding.
The committee also disputed the regulator’s assertion that the sector’s finances were “in good shape,” as this viewpoint was not shared by the committee or its witnesses.
In 2018, the Office for Students took on the role of regulating higher education in England, overseeing 425 universities, colleges, and other educational institutions with the aim of ensuring they provide value for money to students, according to a BBC report. However, critics argued that it has not effectively addressed the financial challenges of the sector.
The government had frozen undergraduate tuition fees at £9,250 ($11,550) in 2018 to improve value for domestic students. It was later revealed that institutions are now operating at a loss when teaching domestic students and conducting research.
Former University of Hull Vice-Chancellor Professor Susan Lea, appearing before the committee, stated that educational providers were increasingly relying on international students to compensate for the funding gap for domestic students.
Citing data from Higher Education Student Statistics, international student numbers in the UK grew from 469,160 in 2017-18 to 679,970 by 2021-22. Meanwhile, statistics from the Office for Students from the previous year indicated that 22.3 percent of international students were from China. The report thus cautioned that “geopolitical shifts” could impact these student numbers.
In May, the Office for Students communicated with 23 providers with significant numbers of Chinese students, urging them to establish contingency plans in case of a sudden drop in international student enrollment.
Moreover, the report also underscored the government’s control over higher education providers’ main sources of income through tuition fee caps and immigration policies affecting international student recruitment. It urged the government to establish a stable, long-term funding model for the sector.
The committee then called on the Office for Students to engage in more frequent discussions with educational providers regarding their financial situations.
The report insisted the Office for Students hold providers accountable, including considering tougher consequences, to ensure prospective students receive clear information about their courses, long-term costs, and the blend of online and in-person learning. It also highlighted perceptions that the office lacks independence, citing how its chair, James Wharton, holds a party-political whip in the House of Lords.
The government should consider requiring incumbent politicians to resign any party-political whip before chairing independent regulators, it said.
In response, Wharton said the Office for Students acknowledges the risks facing the sector, particularly the overreliance on international students. “Our important work in this area is often not publicly visible but we will continue to identify risk and use the tools we have to protect the interests of students if an institution encounters financial difficulties,” he said in the BBC report.
Meanwhile, the Department for Education said that the higher education sector “remains financially stable overall” and noted that international students accounted for “just 15 percent of all undergraduate entrants at UK providers in 2021-22.”
The government assured it would consider the report’s recommendations and respond in due course.
