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Is it Time to Exit Student Housing or Should You Try and Weather The Storm?

In some towns the loss of a university could destroy the local economy. Peter Hemple reports

Universities closed their doors in mid-March and many transitioned over to virtual teaching almost immediately. Most universities have since allowed students to terminate their accommodation contracts for the summer term and a number of private accommodation operators have followed suit by allowing students to request a refund of summer term rent.

However, at the moment many students are still living in their student accommodation, including international students unable to leave and those that had been affected by the virus. But looking ahead, Covid-19 makes planning difficult for the forthcoming academic year, especially if UK universities will need to plug a gaping hole in their finances due to a lack of international student fees.

The Institute for Fiscal Studies (IFS) said that while only one in five students on British campuses are currently from overseas, the fees paid by international students amounted to 37% of all tuition fee income, close to £7bn in total. The IFS stated: “If the current coronavirus crisis results in a big drop in international students, this could spell major financial problems for UK universities.”

According to the IFS, the number of international students varies considerably between each university, which means that the impact of less international students next term will not be evenly distributed throughout the sector. If no new international students enrolled for the upcoming academic year, the HE sector would lose around 10% of its total income, assuming no changes in domestic student numbers and no change in the number of existing overseas students. For nearly 90% of universities the loss in income would be 15% or less, but a minority of universities would lose 20% or more of their income. If instead all international students did not attend university next term - the existing students and new entrants - then total losses to the sector would be nearly twice as large at 17%.

Universities that stand to lose the most tend to be those that are higher ranked in the league tables, as well as universities in London and several specialist colleges, as those are the ones that international students are most keen to attend. Lower ranked universities typically serve mostly UK students, leaving their finances less vulnerable to drops in international numbers (assuming domestic student numbers remain constant). For example, nearly 70% of the student body at the London School of Economics (ranked 4th in the Complete University Guide) were international students in 2018-19, while this was less than 5% at the University of Wolverhampton (ranked 124th).

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