Going to university means more than just face-to-face learning

As students start to return to universities, talk of a hybrid model of virtual and face-to-face learning ignores the reality of what students expect from a university course, says Richard Robinson, Head of Education.

A challenging year

As universities have marked a year of lockdown, it feels like an appropriate moment to take stock of a Higher Education sector that has faced a challenging year, and a mixed bag of media attention.

At Barclays, we see a sector that is well capitalised, with good access to liquidity and a world-class reputation for quality.

Covid-19 response built on strong foundations

The response to Covid-19 proved that the Higher Education sector was agile enough to weather the storm. Faced with the initial lockdown, universities moved teaching from face-to-face to online platforms within just a few weeks – a huge logistical achievement.

Equally impressive has been how effectively institutions adjusted once students were allowed to return to campus, demonstrating preparedness for whatever type of hybrid teaching the future may bring.

Despite initial concerns over enrolment figures, this hasn’t been reflected by the reality on the ground. Back in March and April 2020, some feared that international students would disappear, and domestic student numbers would fall off a cliff.

In fact, domestic numbers are up this academic year and the majority of institutions were also close to their best-case budget estimates for international students. Application numbers for next year also suggest increasing numbers of both cohorts.

A long-term move to hybrid education?

Some have speculated that the effectiveness of online lectures during the pandemic could result in students preferring a permanent switch to online learning and an end to the residential model of Higher Education. However, all the signs are that while students accept the need for some online study, most still want an on-campus experience – ‘going to university’ means so much more than just face-to-face study.

At the same time, it’s clear universities won’t be returning to doing things exactly as they did pre-Covid. Forward-looking institutions will be reviewing the events of 2020 – what made them more effective and what they didn’t do so well – and will be adjusting their business model accordingly.

I think the lessons learned will mostly be around the use of technology and what students really value about their experience of Higher Education. There could also be a reappraisal of institutions’ estates, but the appetite for investment from the sector suggests it’s confident that physical assets will continue to an important place in the future.

At Barclays, we firmly believe the residential model is here to stay, although that model will go through an evolutionary leap as a result of the pandemic.

A bright future for UK Higher Education

The fundamentals of the Higher Education sector remain strong: it is strategically important to the UK’s economic development, benefits from largely stable and predictable income and cashflows, and I think it’s fair to say there’s still scope to improve operating margins.

Of course, uncertainties exist – in the short term, we still do not know when all students can return full-time. Additionally, it’s still unclear if there will be a mass movement to recover tuition fees to account for an online teaching experience.

Despite popular perception, I see very little prospect of financial failures in light of this. Some institutions will need to amend business and operating models, while others will go through restructuring to align cost bases with reduced income streams.

While the end of the Brexit transition period inevitably saw reduced access to research talent and research funding, the impact was already being factored into most institutions’ financial projections, while converting EU students to higher-paying international students will bring income growth for some.

The challenges of 2020 have been very real. On the whole I believe the Higher Education sector has risen to those challenges, and we see every reason to continue supporting a sector with a very positive future. The level of interest in the UK from international students, despite Covid-19, shows how strong an international presence we have. Clearly, they feel the same way as I do: we had a world-class sector pre-Covid-19, and we’ll have a world class sector post-Covid-19.

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