Essay: How did universities become a money-making industry?

by Chris Jackson

By Alice Wright

The UK is home to a high concentration of world-leading universities. Our venerated institutions offer higher education qualifications from bachelor’s and master’s degrees to PhDs that are designed to equip the country with a skilled workforce as well as produce researchers to contribute to the advancement of academic knowledge and the betterment of society. 

Yet the idea that students and staff at these establishments aren’t getting “a fair deal” is never far from the headlines. So when did the pursuit of higher education and academia become part of the industry-speak of cost-benefit analysis, and what might be the long-term ramifications? 

On the surface the shift can largely be attributed to the introduction of tuition fees in 1998. Over the next two decades fees snowballed and now top £9,000 a year with maintenance grants largely converted into loans. 

One increase after the Browne Review in 2010 led to large scale protests, some of which turned violent. Despite the unpopular nature of tuition fee policy, there are no signs that it will be reversed any time soon. 

The commercialisation can be seen in how universities have become increasingly reliant on international students who pay much higher fees than their UK counterparts. In 2017−18, 14.4 per cent of undergraduate students and 35.8 per cent of postgraduate students were from outside the UK, according to a 2019 study from Universities UK

In 2017−18, the total reported income of UK higher education institutions was £38.2 billion. £21.1 billion of this was related to teaching activities (fees and grants from government). Thus government sees universities as a prudent investment, even though government expects that only 25 per cent of current full-time undergraduates who take out loans will repay them in full, according to the Commons Library. The value of outstanding loans at the end of March 2020 reached £140 billion. The Government forecasts the value of outstanding loans to be around £560 billion by the middle of the century.  

Continued government investment is in part down to the fact that the higher education sector has tangible benefits to the economy. In 2014–15, universities across the UK generated £95 billion in gross output for the economy. The UK university sector contributed £21.5 billion to GDP, representing 1.2% of the UK’s GDP. The sector also supported more than 940,000 jobs in the UK. 

The pandemic has further brought university finances into mainstream conversations and thrown more attention on the matters affecting their performance for both academics and for their fee-paying students. 

The government paid out £2.6 billion in tuition fees early instead of a multi-billion bailout for universities that the institutions requested in May 2020. Then in December 2020 and February 2021 new funding worth £20 million and £50 million respectively was announced. This is expected to indirectly support industry revenue growth in 2020-2021. 

Universities pivoted to remote learning as government restrictions were implemented in March 2020. However, whilst there has been consistent coverage of the dissatisfaction of students with remote learning, both student applicant and UCAS acceptance numbers have hit record highs. 

Indeed, according to Ibis World “rising unemployment and increased competition in the jobs market in the short term as a result of the economic effects of the COVID-19 (coronavirus) pandemic is expected to drive a higher number of both young and mature applicants to enter higher education.” 

The pandemic has brought about serious concerns about mental health on university campuses. In 2017−18, around two-thirds (65.5%) of UK higher education institutions had an annual income of £100 million and yet a lack of funding for services means vulnerable and struggling students are not adequately supported on many campuses. Students feel that their high fees are not being fairly exchanged for academic teaching and students services such as counselling. The pervasive feeling amongst students is that they feel ever-more neglected by the onset of remote learning. 

Students are not the only ones, however, that feel disaffected by the increasing commercialisation of higher education. There are around half a million staff employed at UK higher education institutions. 

Career trajectories of academics often involve precarious nine-month contracts with staff usually moving around many different institutions in their working life. The University and College’s (UCU) decision to partake in a series of strikes over pensions has left a bitter divide between students paying for teaching they feel they are not receiving, and academics that feel that the commercialisation of institutions has left them short-changed too. 

David Mathews outlined in a report for Times Higher Education the issue of academics no longer being able to spend enough time on their research and how this will put the industry in trouble. 

Mathews argues that the essence of academia is to be given the time and resources to think deeply about a subject and hopefully as a result contribute to the wealth of recorded knowledge upon it. Yet he states that “progression in academia is often progression away from why you got into it in the first place” as those that climb up the ladder from junior scholars to professors end up doing more admin and management work than actual research or even teaching. 

A 2020 report produced by Bethan Cornell at the Higher Education Policy Institute (HEPI) shows that 67 per cent of PhD students want a career in academic research but only 30 per cent stay in academia three years on. Some of the report’s findings support the idea that the long hours dedicated to activities other than research and precarious work contracts are among the factors limiting retention of academics. 

Among the PhD students that were interviewed included one quoted as saying that “the requirement to move around in pursuit of short term postdocs is terrible for social and family life”. Another claimed they did not wish to pursue a career in research and teaching as “the academic culture will be detrimental to my mental health.” 

Nick Hillman, the Director of HEPI, said that postgraduates are “crucial to the whole country, as postgraduate students provide the pipeline for academic, commercial and charitable research. If we are to cure diseases, improve productivity and improve people’s lives, that is likely to come via original research. So it is vital that, as a society, we look after our researchers”. 

As with many industries, the higher education job market has been in flux and left many employees and those trying to break into the sector in an anxious state. However, Professor Charles Stafford, Vice Chair of the Appointments Committee at LSE, argues that although the academic job market has been affected by the pandemic it is important for academics and those looking to enter the field to understand the situation in their own subject area, and not to over generalise the situation. 

Stafford also stated that the increase in student numbers may correlate to an increase in teaching based rolls, though it is too early to see any conclusive data confirming that this will be a long term trend.  

Whilst the commercialisation and industrialisation of academia has clear drawbacks, there are also arguments for stronger links between industry, universities and government – as the collaboration between pharmaceutical company AstraZeneca, Oxford University and the NHS has shown in the successful roll out of a covid vaccine. 

Chief knowledge officer of Times Higher Education, Phil Baty, states in a November 2020 report on university-industry collaboration that universities “cannot fulfil their limitless potential without collaboration – collaboration between institutions, with industry and across borders […] In particular, partnerships between universities and industry will be vital as nations seek to rebuild their economies after the devastation of the pandemic – reskilling the workforce and rebooting the knowledge economy.” 

So it’s clear that universities have a role to play – but equally there is an urgent need for these institutions to adapt both to continue to attract students and to make sure that staff are retained. As former Chicago mayor Rahm Emanuel put it: “Never let a crisis go to waste.”

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