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16th December 2022

The trends shaping UK higher education in 2023 and beyond

Forces shaping the UK’s higher education sector and where we’re headed next

Universities are struggling to find growth due to reduced interest in post-graduate degrees, says Kim McLellan, Managing Director at Hunterlodge, who oversees a range of higher education clients.

Universities are struggling to find growth in the UK due to reduced interest in post-graduate (PG) degrees from the home market, says Kim McLellan, Managing Director at Hunterlodge, who oversees a range of higher education clients.

“These challenges go back to 2014-18 when the higher education sector essentially ‘ate its lunch for breakfast,’” says Kim. What I mean by that is, at that time, the undergraduate market was struggling due to population deficits of 18-year-olds, so Higher Education Institutes (HEI’s) began mopping up more and more potential PG students into their Undergraduate (UG) study places.”

“Another big factor impacting PG numbers is that PG study normally tracks the job market. In a buoyant job market, PG goes down. When the job market is tough, PG goes up. Right now, the job market is booming, so universities are facing a hard PG home market. Many businesses are starting to feel the pinch and are sensing that change in the air.”

Kim says he believes this will prove a “short-term blip” and the upward trajectory will return in short order. “For now, HEI’s will need to be more strategic in their approach, work more collaboratively and be more agile in order to pivot and make up revenue losses,” Kim says. “In recent memory, marketing has always been about the 4 Ps – Product, Price, Place, Promotion – and for some reason senior management only listens to marketing about promotion. This is no longer the case.”

“Place has become vital, and many universities have been attempting to fill their PG gap by attracting international students, to middling success, as they experience how volatile international markets can be and the need for international diversification.”

Kim says there are several other higher education trends shaping the UG market too, from the cost-of-living crisis to the rise in online learning. Read on for more.

It’s the Big 4 for a reason

First is the resurgence of the ‘Big 4’ degree subjects – business, psychology, computer science and law – which are seeing disproportionate growth both nationally and internationally, according to Kim. To grow as a university, he says it’s imperative to have a strong provision in at least three of these subjects.

“The smart ones are investing heavily in their product portfolio, but the big problem is that you need to have an equal share of voice between subjects,” Kim says. “You have course leaders saying, what about us? It’s very political. A university can’t act like a business and back the winning horse or horses. Plus, for the sake of their academic and research capabilities, you do need a broad range of subjects. The war is raging between academic prowess and commercial sanity. The point is that those who can manage these forces effectively will come out on top.”

Statistics business Statista found that in the 2020/21 academic year, there were 474,970 enrolments for courses involving business and management studies, making it the most popular subject group in that year, followed by medicine with 339,150 enrolments.

Cost-of-living isn’t going anywhere

Many universities are overlooking the cost-of-living crisis, says Kim, but it’s important that they don’t let the issue slip into the background. A survey by Save the Student, a website that investigates student issues, shows the average student’s maintenance loan falls short of covering their living costs by £439 every month in 2022. He says this is set to get worse.

“My advice to universities would be to discover, what’s their spin?” Kim says. “How does cost-of-living fit with their brand? What are they doing about it for their students? Some universities are smashing it. For example, the University of Northampton is giving free laptops to every student that starts. When students join, they can say, here’s the Wi-Fi, now get on with your studies. It’s simple, smart thinking. In addition, they are dropping accommodation deposits to show their continued support to their students. Others are tapping into their data to better understand whether their students are living at home or looking for private accommodation then altering their advertising.”

Kim wants to see a London university come out as the first to offer free travel cards throughout a student’s study or provide food, heating, accommodation grants – appreciating that it is the most expensive place in the UK to live.

 A resurgence of MOOCs

MOOCs (massive open online courses) have been around for a while and are seeing a significant resurgence, says Kim. To entice prospective students to the top of the funnel, universities are now offering MOOCs for free, with many courses are also being modularized to facilitate the “own place, own pace” trend to huge commercial return. According to Statistics Business Research and Markets, the EdTech market could reach $605 billion in value by 2027, up from $254 billion today.

“MOOCs have been around for years in places such as the Open University, but only a few universities have been smart enough to digitize products, especially when it comes to modular delivery,” Kim says. “You could break down a typical MBA, split it into four components—things like leadership, for example—and charge a premium on that six-to-eight-week course.”

The London School of Economics is one institution that Kim thinks has done this effectively.

The road ahead

 According to Kim, many of these issues will remain for years to come. However, there is good news. Population growth means that the undergraduate market will remain buoyant in the coming years – very shortly becoming tomorrow’s PG market (as soon as 2024). Indeed, the Office for National Statists predicts that the population of the UK will increase from an estimated 67.1 million in mid-2020 to 69.2 million in mid-2030, with England’s population is projected to grow more quickly than the other UK nations.

“Population growth in the home market will continue to be buoyant for the next 10-15 years,” says Kim. “Between 2016 and 2021, the population had a dip, but today the 18-21 market is bouncing back at a huge rate. What you do have is disproportionate growth across the country. And what that means is that London is going to be the hunting ground for students.

“The message for universities is that the population is there, and the market is there, the challenge is working out what part of the market you want to capture,” says Kim. “The UK is also fast becoming the number one destination for international students. While some issues will remain, between the growth in the two markets, the future is looking very, very rosy for any higher education institutions.”

We’ve got our fingers on the pulse, so drop us a line at kim.mclellan@hunterlodge.co.uk and let’s chat.

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