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UK Universities Rely Upon “BOGO” Degrees/Other Offers in Order to Survive Brexit

May 28, 2017

When the United Kingdom (UK) voted to exit the European Union on June 23, 2016, the decision (known as “Brexit,” an abbreviation of “British exit”) impacted the credit rating of its infrastructure, including its universities. On June 29, 2016, Moody’s Investors Service downgraded many entities in UK sectors from “stable” to “negative”:

London, 29 June 2016 — Moody’s Public Sector Europe (MPSE) has today taken rating actions on 55 UK sub-sovereign entities (and associated 30 SPVs) covering the following sectors: (1) Local Authorities; (2) Transport for London; (3) Universities; (4) Housing Associations; (5) PRS Finance plc. The actions follow a referendum vote in favour of the UK leaving the European Union (EU) and the recent change in the outlook on the UK’s Aa1 government bond rating to negative from stable. For more details on the sovereign outlook change, please refer to Moody’s press release: http://www.moodys.com/viewresearchdoc.aspx?docid=PR_350566. …

The outlook change on the ratings of 52 UK sub-sovereign issuers and associated SPVs reflects Moody’s assessment of the impact of the UK vote to leave the European Union along with the change in the outlook of the UK’s Aa1 sovereign rating to negative from stable, which has direct implications for sub-sovereign entities given the economic, financial and institutional linkages between the sovereign and sub-sovereign sectors.

ECONOMIC AND FINANCIAL: Moody’s believes that there will be a prolonged period of uncertainty following the “leave” vote, which will weigh on the UK’s economic and financial performance. A downturn in the economic outlook in the UK has direct implications for UK sub-sovereign budgets through (1) potential slowing or declining transfers received from the central government, which make up a significant share of their revenue; and (2) further potential austerity measures included in the government’s next Budget and next Spending Review.

As this July 04, 2016, Varsity article notes, Cambridge University retained its high credit rating despite Brexit; however, several other UK universities experienced Moody’s credit downgrade; still others were downgraded by Standard & Poor’s (S & P) Global ratings.

As concerns UK universities, a factor that complicated the credit-downgrading issue involved both the overall number of 18-year-olds being smaller in 2016 as well as the number of those 18-year-olds choosing to apply for university entrance also decreasing, especially as concerns males.

So, in August 2016, UK universities– under economic pressure to fill their seats– turned to some creative/ pragmatic solutions. For example, in its attempt to attract the best students, Sheffield University offered a “BOGO” (buy-one-get-one) option for students: Purchase a bachelors degree; get a masters degree for free.

Other UK universities offered percentage discounts on classes and other enticements. From the August 07, 2016, UK Sunday Times:

In one of the biggest scrambles in years, universities are coming up with ever more imaginative ways to attract the best applicants. They range from free tickets to watch the Premier League champions, Leicester City — offered by the city’s De Montfort University — to iPads, airport transfers and discounted courses if a student can also persuade a sibling or a spouse to sign up to a course.

However, it is the two-for-the price-of -one degrees that universities believe will be the strongest lure to the brightest students….

Kent is offering a £1,000 discount for postgraduate courses and 10% off first-year tuition fees for a sibling or a spouse who also enrols on a degree course. Lancaster’s deal is 10% off a postgraduate course, rising to 20% off for gaining a first in the initial degree.

The discounts are evidence that this summer is going to be a “buyer’s market” for students.

That student “buyer’s market” involves universities’ further ensuring that no seat goes unoccupied by offering unfilled seats to students with grades that under better economic circumstances would not be high enough to gain university entry. This process is known as “clearing.”

Part of the uncertainty involved whether students from countries remaining in the EU would choose to attend school in the UK. (For detailed reading on EU student retention concerns, see this July 2016 Varsity article.) As another August 07, 2016, UK Sunday Times article notes:

Some of Britain’s top universities are offering thousands of degree places through clearing — the system that matches students with unfilled places on courses….

Many universities… will accept students who may have underperformed in the exams.

Sir Steve Smith, vice-chancellor of Exeter University, which lists 225 degree options in clearing, said: “People are nervous and universities are being defensive; if EU students do not turn up, universities want to make sure they fill their places. There is a lot of uncertainty post-Brexit. Students will have a lot of choice this summer.” …

The offers are evidence that this autumn is going to be a buyers’ market for students, according to experts. The glut in places is blamed on fears that European and overseas students will turn their backs on Britain because of uncertainties over funding after Brexit.

Mary Curnock Cook, chief executive of the universities admissions service [UCAS], said…

“Pretty much the full range of university types will have some vacancies, so whether your grades are stellar or frankly a bit middle-of-the-road, there will be plenty of opportunities in clearing.”

As of January 2017, the overall number of UK university applicants fell 5 percent, with EU student applications falling 7 percent. In a February 2017 UCAS publication, admissions exec Curnock Cook observed:

It’s clear that the tough recruitment environment for universities will continue through 2017, leading to unprecedented choice and opportunity for applicants. Although the January deadline has passed, it is not too late to apply….

This entire situation underscores the simplistic reasoning behind the *failing education* mindset that postsecondary institutions should simply agree on *high admission standards* and ignore the greater economic complexities necessary for fiscal stability/survival.

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Want to read about the history of charter schools and vouchers?

School Choice: The End of Public Education? 

school choice cover  (Click image to enlarge)

Schneider is a southern Louisiana native, career teacher, trained researcher, and author of two other books: A Chronicle of Echoes: Who’s Who In the Implosion of American Public Education and Common Core Dilemma: Who Owns Our Schools?.

both books

Don’t care to buy from Amazon? Purchase my books from Powell’s City of Books instead.

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