Unpredictable business school enrolment poses threat to finances

Nearly a third of UK business schools are expecting their income to decrease in 2023-24, according to a sector survey, with more missing student recruitment targets – particularly at postgraduate level.

This year’s annual poll of members of the Chartered Association of Business Schools (CABS) reveals a mixed picture among deans, with potentially worrying implications for parent universities that rely on income generated by the schools.

Asked how income levels could change this academic year, the percentage of those expecting an increase dropped from 77 per cent last year to 45 per cent. Thirty per cent say they are expecting a decrease in income whereas only 2 per cent said the same in 2022-23.

At the same time, the costs of running a business school are rising, according to the survey, with 64 per cent of respondents stating that this year actual expenditure has been higher than expectations.

Issues with recruitment will further worry deans, with 50 per cent reporting that enrolments of UK students were below their target for the year and 44 per cent saying the same about non-European Union student enrolments.

At the postgraduate level, nearly 50 per cent of schools report that recruitment was either significantly or moderately below target, with nearly a third (31 per cent) reporting a decline in actual enrolments.

Deans were almost unanimous in placing some of the blame on the government’s ban on visas for dependants of international students. Ninety-three per cent believe the new rules – due to come into force in January 2024 – will have a negative impact on postgraduate student numbers, with older MBA students – who are more likely to bring family with them – most affected.

Ninety-two per cent of deans stated that their school was “to some extent reliant on international student fees to ensure financial viability”.

Further changes that will limit the amount of funding a student can obtain for a classroom-based foundation year to £5,760, down from £9,250, was another factor. Just under half (46 per cent) of respondents said that they expected to be affected by these changes, with some “explicitly stating they have to consider shutting down foundation year provision or have already suspended intakes”, the report said.

Robert MacIntosh, chair of CABS, said the survey had highlighted “genuine cause for concern with declines in UK and non-EU international students”.

“If those trends continue, there would be huge implications for business schools, for their parent universities and more widely for UK plc,” the pro vice-chancellor for business and law at Northumbria University added.

Business students are a “vital source of revenue for the entire university ecosystem”, he said, and the fees they pay “underpin the costs of teaching and research across a much broader range of subject areas than just business”.

The survey found that an average of 59 per cent of business schools’ net income goes to their parent institutions.

“We are calling for a national cross-sector and cross-party conversation on university funding to ensure that the consequences of policy changes, such as those relating to foundation year funding and to student visas, are fully understood,” Professor MacIntosh said.

“Only by working in partnership will we secure the global reputation of our business schools and universities.”

tom.williams@timeshighereducation.com