The impact of the economic crisis on higher education

By Vangelis Tsiligiris. Higher education has been placed at the centre of public debate as a result of the 2008 financial collapse and the ongoing economic crisis. The main thrust of this debate centres around a rejustification of the role of higher education and a redefinition of its funding relationship with government.
Nevertheless, most of the discussion fails to mention the impact of the economic crisis on higher education. To me, this is important because the economic crisis has changed higher education at both the micro and macro levels. The immediate shorter-term impact of the economic crisis has been at the institutional micro level. Lower student numbers on certain programmes – the most expensive ones and those with lower job prospects – has led senior managers in universities to prepare for the worst by making plans to reduce staff at all levels and rationalise their portfolio of programmes.
To me, this is a cyclical problem and is not new in higher education.
What I think is more important is the longer-term impact of the economic crisis on higher education macro planning and policy. The economic crisis has legitimised the long-existing argument that higher education should be treated the same as any other service in the economy and, as such, should be subject to ever-more accountability and managerialist practices. It is important to note that all this has come about in a period when financial neo-liberalism has dominated policy-making globally.
As a result, higher education policy has entered a phase of extreme rationalisation with an emphasis on ‘cutting the excess fat’ and ‘balancing the budget’. One may argue that this is also not a new development. However, what is new is a consensus among governments, at least in the co-called developed countries, that prioritises fiscal rationality as a result of fear about public debt problems. It seems to me that the economic crisis has created a neo-liberal policy and management framework in higher education that has resulted in moves to shift the financial burden for higher education from governments to students and their families.
So increasingly we see governments attempting to turn direct funding and public debt into indirect funding via student loans and private debt. This transformation serves the macroeconomic objectives of governments and legitimises talk about students getting ‘value for money’ and a ‘return on their investment’ in a ‘service provider-customer’ model of higher education. As a result, higher education institutions now have to pursue plans to create alternative streams of income more aggressively, while imposing severe cuts on their provision by cutting academic programmes that are not competitive.
Transnational higher education
At the same time, globally, higher education institutions compete more fiercely than ever before to recruit international students and pursue more aggressive transnational education activities.
In my opinion, the economic crisis will cement the transformation of traditional destination countries for international students to exporters of transnational higher education services. This is already happening. In 2011 the number of students studying abroad on a UK higher education programme offered by transnational partnerships was greater than the number of international students studying in the UK. Increasingly, countries like the UK consider transnational higher education to be a more profitable and less risky – in terms of immigration issues – alternative to international student mobility. Also, students in source countries consider international mobility less and less attractive. The reason for this is twofold.
First, there are increasing costs – tuition fees and living expenses – along with stricter immigration rules in traditional destination countries. These are discouraging international students from going abroad.
Second, the growth of transnational higher education providers in the source countries of international students, coupled with a wider acceptance of transnational provision as a recognised form of higher education, has made it more attractive. For countries with longstanding structural problems in their higher education systems – for example, Greece – the impact of the economic crisis will be more severe. These countries have either completely abandoned alternative providers of higher education (that is, transnational higher education partnerships) or left them completely unregulated. Abandoning alternative providers has reduced the available choices for domestic students who want to study without going abroad – and, as we have seen above, going abroad is now problematic, for a number of reasons. Lack of regulation leads to problems of consumer protection and creates significant risks for foreign university partners engaged in these unregulated transnational higher education activities.
Finally, another issue both governments and higher education have failed to address is unemployment. The economic crisis has driven the unemployment rate of young graduates to its highest peak in years. The global economy is promoted as being a ‘knowledge economy’, which is used to justify ongoing attempts to increase participation rates in higher education. However, there is growing scepticism about the capacity of the global economy to create enough jobs for graduates. So what does the future hold for higher education? In a recent online discussion in which I took part, I wrote: “Allow me to argue, wearing my economist’s hat, that higher education will be shaped by the pursuit of monetary objectives (low inflation, balanced budgets, reduction in expenditure on ‘public goods’)…
“If governments continue to move away from the ‘higher education as public good’ approach, higher education will continue to become more marketised and less research focused.”
Thus, it seems to me that the future of higher education has been handed over to economists and is now less about higher education as such and more about the political economy.
* Vangelis Tsiligiris is college principal of the MBS College in Crete, Greece, and a PhD candidate at Birmingham City University.