Is online learning a lifeline for financially struggling universities?
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The new interim head of the Office for Students (OfS), David Behan, recently made headlines by suggesting that the golden age of higher education could be over. He highlighted a range of issues that have emerged in recent years, leading to the financial difficulties faced by higher education institutions (HEIs) across the UK.
Whether or not one agrees that recent times can be described as a "golden age," there’s no doubt about the scale of the financial challenges facing the sector. Although the new Labour government has adopted a more positive tone on higher education than its predecessor, they’re not busting a gut to ameliorate the situation. When the new universities minister, Jacqui Smith, was recently asked if the government would allow a university to go bust, she replied yes, if necessary.
She also stated, “Universities are independent organisations. They’ve got to make decisions themselves about how they run themselves as effectively as possible.” Given that it is unclear what plans the government is developing to help remedy the position UK higher education finds itself in, it is evident that HEIs will need to find ways to survive in this new reality without expecting big solutions in the short term. To put it bluntly, this means cutting costs and increasing income.
As the main source of income for most HEIs is student tuition fees, this is the key area to target for revenue growth. This is one of the main reasons why UK HEIs are now becoming more serious about online education, as they seek to boost their income from tuition fees. While it would be inaccurate to suggest that all recent activities are solely driven by this, senior university leaders I have spoken to recently have conveyed a sense that it is no longer a question of whether they will enter the online education market, but rather that they must, due to the need to diversify income streams.
In one sense, this challenging situation is a helpful catalyst for institutions to move towards greater diversity in their provision, catering to a wider range of student needs and demands. However, the main factors driving HEIs towards online learning are the same ones that create conditions for poor strategies, overly optimistic expectations, and a neglect of the changes and investment required.
For many HEIs, developing online learning provision will not provide a short-term income boost. To put it another way, online learning is not going to be the saviour that financially struggling HEIs might be tempted to believe it is.
Being competitive costs…
One of the first and most obvious reasons is that this market is competitive and becoming increasingly so. However, that isn’t a reason to avoid entering the online education market; if HEIs only operated in non-competitive student markets, they would not be operating at all. Yet, a lack of experience and knowledge of this market, combined with an increasingly desperate financial situation, can create a false sense of high opportunity that seems achievable with minimal effort and change.
HEIs are not all equal, but few, if any, can simply "build it and they will come." Those that wish to enter the online education market and increase student numbers must develop effective strategies to attract online students, which will require both investment and change.
Some have argued that substantial investment is not necessary to move into online education, particularly regarding the creation and delivery of an online programme. They have pointed to the pandemic experience as an example of how online programmes can be quickly and cheaply adapted as a minimum viable product to test the market. There is certainly something in that , and any orthodoxy about what an online programme must be in terms of content development, quality, and success should be challenged.
However, one of the biggest challenges for HEIs entering this market is attracting and recruiting online students. While there may be greater congruence between programme development and learning and teaching for on-campus operations, there is less congruence between marketing and recruitment activities.
A good example of what I’m talking about here is the OfS short course trial, which resulted in pitifully low levels of student recruitment. The evaluation report of that trial included a line worth considering in this context:
“Not all (HEIs) seemed to have predicted the effort and cost necessary to implement promotions into what were new markets for them.”
There is the dual challenge of entering a new market and the cultural difficulty HEIs face in competing for students. Some argue that HEIs are not designed to compete and the marketisation of higher education is regularly railed against.
But if UK HEIs want to grow online student numbers, how they compete to attract students and the effectiveness of their strategies will be crucial. HEIs will not get away with following the same playbook for on-campus student marketing and recruitment. Short-term, temporary resource shifts are also unlikely to succeed; instead, they will need to develop new and enduring capabilities.
Is it a small world after all?
For those tempted to view online learning as their financial saviour, the access it appears to offer to a vast global audience is enticing. This can be further fed by equating online international students with on-campus international students. But, when you’re struggling through a financial desert, beware the mirage that is a larger market of distributed students willing to pay for significantly marked-up products.
While it would be incorrect to claim that no HEIs mark up fees for international students on online programmes, this practice is much less common. The vast majority of UK HEIs that are genuinely and strategically invested in online learning tend to price programmes the same or similar for both UK and international students.
Some HEIs also recognise the price sensitivities in different regions and adjust their pricing accordingly. Also, there is the growing application of good and services taxes for digital services across the world to consider, which can impact what students ultimately pay.
It’s worth adding here that there are opportunities for UK HEIs to develop online provision for an international student audience, but the reality of this is often misunderstood, particularly when on-campus and online international student audiences are conflated.
Finding your lane
Another area where conflation can be problematic is in determining your position within this market. Higher education is a hierarchical environment where comparisons with other institutions are part of the landscape. Depending on your position within a HEI, there will always be institutions you aspire to be more like, and others that, frankly, you may regard with a degree of condescension.
Entering the online learning market can sometimes, but not always, mean challenging these preconceptions and rethinking your position within that hierarchy. One of the most obvious ways this might manifest itself is in programme pricing. What HEIs consider to be competitive pricing based on their standing in other markets may not be competitive at all in new markets.
Given how deeply ingrained this sense of hierarchy is in UK higher education, it can be a challenging thing to confront. Unfortunately, there are examples of HEIs whose misguided perception of their position has led to difficulties in recruiting online students.
Therefore institutions that are more tempted to look to online learning for financial succour, need to consider this or run the risk of starting to run in the wrong lane.
A good long-term investment
The challenging situation in which UK higher education finds itself has led to more moves into the online learning market. At times, this can feel like a case of the right move for the wrong reasons, and it is these underlying motives or drivers that may carry a greater risk of miscalculation.
The great danger is that financial desperation can inflate HEIs sense of the scale of opportunity, the pace at which it can be realised, and the level of effort required to achieve it.
In general, more moves into online education should be viewed positively. They create more opportunities for people to study for a university qualification in different ways, and there is enough evidence to suggest growing demand for this.
However, the online education market is one with which many HEIs are not particularly familiar, and it is one in which strategy is crucial. Developing an effective strategy fundamentally requires HEIs to be brutally honest with themselves about their strengths, weaknesses, and capabilities. It also involves understanding a new market and avoiding the trap of conflating it with their existing, long-established markets, along with simply applying the same strategy, marketing, and recruitment playbooks.
The development of online provision is ultimately a good investment for HEIs, but not for short-term financial returns. It is a good investment because it expands the ways in which HEIs offer access to higher education, broadening the audiences they can reach and enhancing their capability to serve existing audiences. If HEIs want to continue to survive in the current environment, both of those things will play a crucial role.
