Market intelligence for international student recruitment from ICEF
15th Apr 2020

Measuring COVID-19’s impact on higher education

Short on time? Here are the highlights:
  • The financial impact of the pandemic is being felt now by higher education institutions around the world
  • As the pandemic continues this quarter, the effects are mounting in terms of both immediate budget impacts and forecasts for the coming year
  • Most institutions are projecting declines in both domestic and international student numbers, with combined tuition shortfalls running into the tens of billions of dollars

A new report from Moody’s Investors Services highlights the financial impacts of the pandemic on higher education institutions around the world. "We expect rated universities in all of our current jurisdictions - US, Canada, UK, Australia, Singapore, and Mexico – to enrol fewer students for the next academic year than planned, due to the outbreak," said Jeanne Harrison, Vice President and Senior Analyst at Moody's. "In addition, if campuses remain closed for part of the year, income from residence halls, catering, conferences and sporting events will be lower than budgeted. Endowment and gift income may also decline."

The Moody’s analysis highlights that public institutions in jurisdictions where government funding has been cut – as is the case in the United States – will be especially vulnerable. As in all other education sectors, the scale of the impact on higher education will depend largely on the duration of the outbreak. “If university campuses can reopen in time for the next academic year, the effect on demand and budgets will be more manageable,” adds Moody’s. “International student flows will depend on the how the outbreak and policy response evolve in individual countries.”

That passing reference to international enrolments nods at the combination of factors that will influence the shape and volume of international mobility in the year ahead. When will travel restrictions and other public health measures ease? How will the timing and impact of the pandemic vary across major destinations and key sending markets? How quickly can the global economy rebound from the dizzying drops already recorded this year?

Regardless of how those questions will eventually be answered, the projected effects are already being measured in the tens of billions of dollars for the world’s leading study destinations.

“Woefully inadequate”

In the United States, a US$2 trillion emergency relief package passed in March includes US$14 billion targeted to higher education. The American Council on Education (ACE) has pronounced that a “woefully inadequate” amount and is calling on Congress to earmark another US$47 billion in emergency aid that “would be equally divided between students and institutions” and that could “at least partially mitigate the damage done by this pandemic.”

“Perhaps the greatest question for colleges is fall enrolment,” adds a related report from CBS News. “It's a major concern for colleges that have come to rely on international students, especially those from China. At the University of Connecticut, which hosted nearly 3,000 students from China last fall, officials are bracing for international enrolment to drop by 25% to 75%, [and] a loss of up to US$70 million next year.”

In a 9 April letter to the US Congress, ACE projected an overall drop in college enrolment of 15% for fall 2020 – including a 25% decline in international student numbers – and an expected revenue loss for institutions of US$23 billion.

Modeling 2020/21

On 10 April, Universities UK proposed a sweeping package of relief measures for British universities. The peak body for higher education estimates the financial impact of the pandemic has already reached £790 million for the country’s institutions, including revenues lost in the form of “accommodation, catering and conference income as well as additional spend to support students learning online.”

Looking ahead, UUK characterises the potential impact as “extreme” with “universities projecting a significant fall in international students and a potential rise in undergraduate home student deferrals.”

All told, the UUK proposal calls for billions of pounds in relief funding and a variety of policy measures aimed at easing the pandemic’s impacts. This includes a proposal for “additional flexibilities in the visa system to support international students planning to start courses this autumn including allowing those students already here to switch visa category in country (extending current arrangements beyond 31st May) and flexibility on English language and other requirements for visa applications, where these cannot be provided due to the closure of testing centres or disruption to examinations.”

Focus on domestic students

Earlier this month, the Australian government announced an emergency package for the country’s universities that includes funding for new short retraining courses designed to help with re-skilling unemployed Australians, a funding guarantee of AUS$18 billion for domestic enrolments (regardless of actual student numbers), and another AUS$100 million in regulatory fee relief and deferrals.

Peak body Universities Australia, however, has warned that the package will not be enough to cover a projected revenue loss of between AUS$3 billion and AUS$4.6 billion that the sector is facing this year.

Given the timing of the pandemic – which began to take hold at the start of the current academic year in Australia – the country’s universities have felt the immediate impact more sharply than have those in other leading destinations.

As the pandemic continues, Universities Australia Chief Executive Catriona Jackson said, “It is clear that there will be a significant decline in second semester international student enrolments due to the virus, Government support is more important than ever.” (Editor’s note: the second academic semester begins in July for most Australian universities.)

“Universities estimate that more than 21,000 jobs are at risk in the next six months, and more after that,” adds Ms Jackson.

Looking to September

Meanwhile in Canada, government and university officials are trying to forecast the impact of COVID-19 on the international enrolments for the coming academic year. Combined tuition spending for foreign students at Canadian universities was roughly CDN$6 billion in 2019, and institutions are now actively planning for a variety of scenarios, ranging from a modest downturn in numbers to more severe declines.

In a recent survey of nearly 3,000 students intending to study in Canada, QS found that more than half (54%) were planning to defer their admission for a year. Another 15% have changed their plans and are no longer planning to come to Canada.

Speaking to the Globe & Mail, Trent University President Leo Groarke said, “If international students don’t come to Canadian universities, there is going to be a significant budget issue. One option would be that the government could step in and provide us with funding in the short term to manage that. I would think, in the end, we will get back to our normal levels of international students.”

Amid all of that uncertainty, all forecasters would agree that time is running short to firm up enrolment for the fall semester, and especially for incoming international students that require additional time for qualifying tests, visa processing, and travel and settlement planning.

The Canadian government has taken a step in allowing more flexibility for students that were planning to come to Canada this spring to begin their programmes online, but there has not yet been a determination as to how this approach might apply for fall commencements.

For additional background, please see:

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