End of boom time for universities?

A record 532,000 undergraduates were accepted into university last autumn, and applications to higher education are up once again, latest figures show.

From this perspective, everything looks pretty rosy in higher education.

Big business certainly thinks so. Last year, a record £6 billion was invested in the UK’s student housing stock alone amid predictions that student numbers will soar further.

With undergraduate number controls abolished, that may well happen. Some fairly astute business heads clearly believe that the only way is up, with Goldman Sachs now getting into the student digs business by launching its own housing provider to take on Unite and UPP.

But this week’s Ucas applications figures – the first reliable indicator of demand in the 2016 admissions cycle – contain indications that the boom in student demand might be slowing.

While applicant numbers are up ever so slightly (0.2 per cent), the number of UK applicants is marginally down for the first time since 2012. The downturn in English applicants is more marked, a 1 per cent dip, or 2,430 students in total, since last year.

As pointed out by Ucas’ chief executive Mary Curnock Cook, that slip is partly explained by a 2.2 per cent fall in the overall number of 18-year-olds in the UK.

That decline is due to continue – and perhaps deepen – until at least 2020, according to data analysed by the Higher Education Policy Institute (Hepi) back in 2008.

That will be partially offset by an upturn in application rates, Hepi predicted. That was indeed the case this week, with the application rate among young people hitting record levels.

But universities will nonetheless be concerned by the falling number of potential customers, which is probably why many are turning to the European Union market to recruit.

This week’s Ucas figures show that 9,000 more students applied from the EU this year – 45,220 – compared with 2012, while the number of non-EU applicants is up by about 10,000 on four years ago to 56,560.

But how long can that giddy level of growth continue? Growing economies are doing more than ever to create high-class universities capable of retaining ambitious, middle-class students, while the slowdown in the world economy may make it less viable for them to travel overseas, as might tougher visa restrictions.

Other threats to overall university numbers have also been laid out recently. Mary Curnock Cook seldom speaks at a conference without mentioning the rising popularity of BTECs over traditional A levels. Though BTEC holders are more likely to attend university than previously, studies show those who do well in vocational qualifications are still far less likely to head to university than those who gain a good set of three A-levels.

The moves to establish a vocational training route equal in status to a degree might also bear fruit in the next few years and offer a more plausible alternative to higher education for many.

Certain regions are also likely to see sharper dips in their numbers of 18-year-olds – with the North East and North West likely to see the biggest declines. Factor in the lower application rates from these areas, and it could be bad news for those institutions that traditionally recruit heavily from their local areas. The decline in London will be less severe and will be mitigated by the fact that application rates from Londoners are the highest in England.

With a rapidly diminishing pool of UK applicants and universities now able to massively expand their student intake, the pressure to recruit will be ever more acute. And those swish new student rooms may lay vacant unless providers pick the right spot to build.

 jack.grove@tesglobal.com