There is another way for universities to generate revenue

Much is made of the higher education funding crisis, and we could well ask how we got here. Universities will blame inflation and reduced government funding, but in truth over the last decade most universities have received an international funding windfall from international student recruitment and tuition fees.

In the United Kingdom alone, this is in the region of around £20 billion (US$25 billion) a year over the last two recruitment cycles (2021-23) and it would be interesting to know how all that money has been spent.

After a week-long search across the vast expanse of the internet, I must confess that the realm of fiscal innovation within global higher education appears rather barren, with most universities falling back on the default position that governments should provide them with more funding and-or students should pay ever higher fees.

Public-private partnerships

There are, of course, numerous examples of public-private partnerships (PPPs) aimed at bolstering higher education infrastructure.

For instance, in the United States, projects spanning from 1994 to 2018 have seen investment ranging from modest sums of US$15 million for housing developments to staggering figures like US$1.4 billion for endeavours such as utility projects (like the University of Oklahoma’s US$718 million design, build, operation and maintenance project in 2010), multi-purpose university parks (such as the US$550 million project for the University of West Florida in 2013) and parking facilities (like the US$483 million project for Ohio State University in 2012).

In Australia, the landscape of research commercialisation and industry engagement underwent a significant transformation from the late 1970s onwards. ANU Enterprise (at Australian National University), established in 1979, was followed by UniQuest at the University of Queensland in 1984, and subsequently by numerous others.

These commercial arms were created to cultivate connections with industry and government through what is now termed as business-to-business (B2B) and business-to-government (B2G) relationships.

University pursuits in investment and venture capital, intellectual property protection, technology incubation, entrepreneurial support, provision of short-form learning and utilisation of facilities for commercial endeavours are not novel concepts. These notions, which are now commonplace and trendy, were embedded in the foundational frameworks of many university commercial entities decades ago.

However, it’s worth acknowledging that the entrepreneurial ventures of universities often stir up controversy and may not seamlessly align with the core operations of the institution, especially amidst growing fiscal constraints.

What is clear, however, looking to the future, is that how universities are funded needs to change as it is highly unlikely any more funding will be forthcoming from governments, with many demands on the public purse and universities at the bottom of the list when it comes to priorities.

It is hard to argue that K12 education and health should not be prioritised over higher education post-pandemic, with higher education having received a windfall in overseas revenue over the last three years.

We feel it is only reasonable for domestic tuition fees to rise with inflation. It may be worth starting this when inflation falls to below 5% and we appreciate that universities will have to absorb the lost value to date. That said, domestic tuition fees rising in line with inflation is the reality students, universities and policy-makers will have to face sooner, we hope, rather than later.

Students as assets

But what if we shifted the narrative? Far too often students are referred to by the public, government and even universities themselves as a cost, ie, the cost of teaching them. Let’s shift the narrative and see students as a university’s ‘asset', not a cost.

If universities are to fulfil their social contract, there should be a direct link between those graduating from university progressing into employment, raising productivity and therefore driving economic growth. In truth, universities should be seen as economic growth engines, not education cost centres.

If universities were funded differently and students were considered an asset not a cost, huge revenue opportunities would open up. Let’s take the model of how UK universities work with the National Health Service (NHS). Every year each NHS Trust contracts with universities locally for the numbers of doctors, nurses, midwives, physiotherapists, etc, they need to fill the vacancies becoming available within the trust.

Why is this restricted to just the NHS? For example, the inland revenue centre based in Nottingham is a major public sector employer and could contract with Nottingham Trent University and the University of Nottingham, plus other universities in the locality such as Loughborough University, to recruit for their graduate vacancies.

We would anticipate most vacancies would be in accounting, business and finance, but there would be additional vacancies across the board, such as in communications and marketing, human resources, IT, etc.

Why would a university restrict itself to working with just the public sector? Let’s take Greggs as an example, a UK company based in the Northeast and much loved by all students as a place to buy a bacon sandwich and vegan sausage roll. Greggs may have most vacancies in Newcastle upon Tyne so could recruit from Newcastle and Northumbria universities. That said, they will have a need for talent countrywide.

Amazon, while a United States company, has its UK headquarters in Manchester so could partner with universities in and around the Northwest such as Manchester Metropolitan, the University of Manchester, the University of Salford and the University of Bolton, for its graduate recruits.

A huge international opportunity

This brings me to the huge international opportunity for universities to partner with multinational firms and international companies to provide their future talent pipelines, from both their domestic and international student cohorts.

This March 30 multinational and Malaysian employers travelled to the UK to exhibit at a careers fair to recruit Malaysian students studying in the UK back into jobs in Malaysia or the ASEAN (Association of Southeast Asian Nations) region.

Each company spends thousands of dollars on this activity, including on advertising, exhibition stands and sponsorship, in addition to flights, hotels and subsistence in London. Would it not be a more effective use of their graduate recruitment budgets to look at their historical recruitment in the same way a university would look at its international graduate destinations data and partner with specific universities to provide a graduate talent pipeline now and into the future?

Only if higher education re-frames students as ‘assets’ and invests in their futures, by getting to grips with their own leading domestic and international graduate destinations with robust representative graduate outcomes data, will they be able to deliver on this revenue-raising opportunity.

Targeting employer engagement both at home and overseas is only possible if universities know which employers they should focus on. Once they have a strategy, there are more opportunities to raise funds as universities could partner with those companies employing their graduates at home and overseas for applied research, continuing professional development and short courses, all of which would generate revenue for the institution.

Is it enough that universities take just a few hundred pounds or dollars from companies to exhibit at careers fairs both in person and virtually? This is in return for providing a valuable ‘talent pipeline’ for the world’s leading companies. It is estimated that in the UK graduate recruiters spend approximately £5,000 (US$6,300) to recruit a single graduate. In the US it is US$5,000 and in Australia AU$6,200.

A win-win

By seeing students as their primary assets and formalising the provision of this ‘talent pipeline’ with targeted companies identified through their domestic and international graduate outcomes data, universities can work with companies on a commission basis, halving the cost of acquisition, the commission per graduate being paid directly to the university for the value added coming from higher education.

The public sector, private sector and multinational companies would benefit by having a constant, reliable talent pipeline at the same time as lowering the cost of acquisition. Universities would benefit by filling a significant funding gap between domestic tuition fees and the cost of teaching with a new source of revenue. Plus, students would be the main beneficiaries with a higher likelihood of securing graduate jobs with leading firms prior to graduation.

We realise that the challenges of funding universities cannot be solved overnight. That said, it is within the universities’ ‘gift’ to drive fundamental fiscal reform through innovation and thinking outside the box before they go cap in hand to government and ultimately the taxpayer to bail them out of a financial hole.

First published on University World News, by Louise Nicol, at 30 March 2024, There is another way for universities to generate revenue…