Higher education becomes a globally traded commodity as demand soars

22 July 2010

A worldwide trend of falling state investment and rising tuition fees will prompt intense competition in the "globally traded commodity" of higher education - and the sector must also prepare for the global advance of private providers.

Those were the messages from two presentations at the UK Council for International Student Affairs (UKCISA) annual conference, which took place last week.

John Hudzik, former vice-president for global engagement and strategic projects at Michigan State University, said there was evidence to suggest that the economic crisis had not damaged global student mobility - but that funding provided by students through tuition fees is changing higher education.

"Private funding is increasingly a factor in shaping the flow of students around the world," he told an audience at the University of York.

Professor Hudzik, a former president of Nafsa: Association of International Educators, which promotes the exchange of scholars and students to and from the US, cited figures showing that tuition fees now constitute 51 per cent of operating income for US public research universities, up from 38 per cent in 2002.

With economic growth in developing countries creating a larger middle class, Professor Hudzik forecast continuing rapid increase in global demand for higher education.

"The fact of the matter is that there are not enough public funds in the global system to support the growth that is going to take place in higher education," he said. "It is going to have to be filled in by private funding."

That trend means that institutions will have to cope with "a more cost-conscious consumer" and "a more demanding consumer", Professor Hudzik said.

In turn, this will drive universities to compete more fiercely for the best academics and postgraduates, and to offer students the best "product" and the best prices.

"Any other commodity that has become globally traded has improved in quality and decreased in price," Professor Hudzik said. He went on to suggest that the sector would have to "figure out how to cut costs".

He predicted increased movement in students between non-Western countries, pointing out that China now attracts more students from overseas than it sends out to other countries.

Answering questions from the audience, Professor Hudzik outlined the disadvantages of the trend towards private funding. "I've always thought that a strength of the US was its commitment to accessible and free public education. But we aren't there any more."

Tony Adams, an international education consultant and former pro vice-chancellor for international at Macquarie University in Australia, told the conference: "There is almost no industry that has survived the global downturn as higher education has. That means there are boardrooms around the world saying, 'Where can we put our money so it can survive the next crisis and we can continue to grow?' What we are about to see is a huge private investment into international higher education."

In many fast-growing economies, he argued, "capacity issues of universities will be overcome by private universities entering the market and taking over from the public sector".

john.morgan@tsleducation.com