13 Universities predicted to go bust as a result of COVID-19 if not bailed out.

'Thirteen universities face "a very real prospect" of insolvency following the coronavirus crisis unless they receive a government bailout, a study suggests.'

'The researchers do not name names but, under their central estimate, suggest 13 universities, out of the UK's 165 higher education institutions, would end up with negative reserves "and thus may not be viable in the long run without a government bailout or debt restructuring"'

So which Universities do TSR believe are under threat of going under?

Also do you believe this may be a positive in the long-term? A sort of thinning the herd...?

Should the Government bailout these Universities to allow just current students to finish their courses?

Source: https://www.bbc.co.uk/news/uk-53280965

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Reply 1

hhamadaman

they should be bailed out of course for so many reasons.
but yes there are too many people going to uni but theres no serious alternative.
I wonder why they are going to go bust if theyve continued operating during lockdown and charging for their services in 2019/20
I think the small unis are under risk of going under. the big ones have too much collateral and power. but the small ones dont even offer a lot of the expensive courses like medicine and dentistry that require a lot of resources to teach. the small ones dont even have a lot of international students (fewer international students are expected in 2020/21 year) so the reason why any uni would go under doesnt seem to make much sense??

Reply 2

FRS500

Personally, I don't believe in universities being bailed out usually.

All universities have contingency plans where if for whatever reason they did shut down, students would be assisted into places at alternative unis in order to complete their degree.

It's actually a requirement.

Reply 3

Joinedup

Original post by FRS500

I'm pretty dubious that would actually work out if one uni failed... let alone 13 at the same time.

Also if you let unis collapse suddenly there's a risk that some useful research groups would get broken up

Reply 4

Napp

Hmmm it rather begs the question of how they squandered their money. Although it's a fair bet these universities are some of the err less than prestigious ones with few foreign students and rich alumni.
As a general rule of thumb i don't think the tax payer should be on the hook to these universities simply, well, because.. If they're actually conducting some useful research and it can be proved that their implosion would be a significant negative event then maybe. But yeah, bailing them out simply for the sake of bailing them out seems a waste of money when the country is staring into the yawning void of being perpetually broke.

Reply 5

threeportdrift

Careers Forum Helper

Original post by FRS500

They are required to have Reserves, normally about 6 months worth of operating cash. They are just about burnt through that, and the 13 will be the ones that are facing the most crashing loss of student income next year.

They have no contingency plans for transferring students etc, there's no requirement to have those sort of plans.

Reply 6

username4986690

They shouldn't be bailed out, they are clearly not financially stable in the first place.

Reply 7

mtesla

Maybe they should stop paying six figure salaries to chancellors, senior chairmen, and other high rank positions that contribute nothing to the education of students.

Reply 8

swanseajack1

The reality is the Government created this problem when they created the market place by removing the cap in the first place. There were rumours last year that 3 universities were about to go bust either on the south coast or the North West. Covid has just made it worse. Many of the lower ranked universities tend to have fewer international students compared to somewhere like LSE so you expect the impact to be less.

Reply 9

nexttime

Original post by Napp

Surely this is an exceptional circumstance? If a uni can show that they were financially viable pre-covid, and that they can be viable again in 2021, then having the local economy devastated by losing the uni makes no sense.

Supposedly there were a handful of unis that were facing uncertainty even before covid - those could be allowed to go under in a controlled way that does not undermine confidence in the whole sector (clearly a major risk).

The government is looking for places to invest to keep the economy from crashing in the next couple years - supporting unis is surely a prime candidate for that.

Original post by DiddyDec

They shouldn't be bailed out, they are clearly not financially stable in the first place.

Because they couldn't hack losing half their income? Tough standards!

As above - if this is a temporary thing they should be supported.

Reply 10

username4986690

Original post by nexttime

Because they couldn't hack losing half their income? Tough standards!

As above - if this is a temporary thing they should be supported.

It is only 13 out of 165 institutions, so what did the other 152 do that these did not?

If they want money they can lie up with the rest of the charities for a cut of the £750m.

Reply 11

Napp

Original post by nexttime

Indeed, although i was more angling at what you noted in the second paragraph. In those that were already teetering on the brink.
I mean, if said university was happily chugging along before hand and it can be demonstrably shown that the freezing of travel/lock down is what shot them then one might be more sympathetic. But, as a general cost/benefit analysis would tend to show propping up a failed university due to the bad luck of Covid to keep the academics employed and the students off the dole is not a suitable use of tax payers money.
But, as you noted, a case by case basis should of course apply.

Whilst it might be somewhat cold, wouldnt that tend to apply only to the good research universities? After all, it comes across as somewhat spurious to assume a bottom rung university teaching, for example, sociology (or what not) is not exactly going to present a good investment for the tax payer.

Either way, it should be interesting to see what happens with this and if they do ask for a bail out what sort of money they demand. A few million being neither here nor there but anything more, well.

Reply 12

username402722

Assuming it is true and can be supported by figures, the 13 should be named. So people who are choosing a university can decide on the basis of knowledge, and government will be forced into deciding if they want to bail them out.

Reply 13

nexttime

Original post by Napp

Whilst it might be somewhat cold, wouldnt that tend to apply only to the good research universities? After all, it comes across as somewhat spurious to assume a bottom rung university teaching, for example, sociology (or what not) is not exactly going to present a good investment for the tax payer.

Either way, it should be interesting to see what happens with this and if they do ask for a bail out what sort of money they demand. A few million being neither here nor there but anything more, well.

Case by case I agree.

In terms of keeping the economy from crashing I more meant the staff employed by the university and all the money students bring to local businesses, rather than the long term investment in education. If people are choosing to pay for sociology and that lets the uni be profitable then so be it (although I am personally in favour of changing the loan system for low yield courses - separate debate). Long term unis need to be viable or they should go under, no question.

Although I think if a uni were to teach only sociology then they aren't exactly going to fall into this group. Sociology is cheap to teach!

Original post by DiddyDec

It is only 13 out of 165 institutions, so what did the other 152 do that these did not?

If they want money they can lie up with the rest of the charities for a cut of the £750m.

As I'm sure you know, the finances of a university will be complicated. The relation between debts and assets and income cannot just be assumed.

It should be assessed on a case by case basis and no, I don't think it should be limited to any arbitrary amount.

Reply 14

nexttime

Original post by barnetlad

That would sink the unis for sure, even with a bailout agreed!

Reply 15

username4986690

Original post by nexttime

If they were struggling pre-covid then they are not a viable charity.

The other charities don't get this favourable treatment, I see no reason why university charities should be any different.

Reply 16

Ratchet Hoe

The real question is, which 13 universities are they? They are hiding and robbing students in 😖

Reply 17

neko no basu

Original post by Ratchet Hoe

The real question is, which 13 universities are they? They are hiding and robbing students in 😖

I want to know which ones they are tooo
But I know they're not allowed to say :frown:

Reply 18

Realitysreflexx

Original post by CTLeafez

Those 13 should be merged into other universities then.... There must be a regional winner, expand that one.

All of these flaky unprofitable universities... Are the ones handing out mickey mouse degrees that are poor value for money and diminishing the word university educated....

It would also be questionable to refer to alot of UK "universities" as such in other European countries.

The UK has a similar division in wealth issue as it does quality of uni's.