Universities should look to deliver real returns on investment

Posted on June 24, 2010

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The emergency budget has hit Higher Education particularly hard with cuts in spending of up to 25% over the next four years.

Coupled with the impact on capital expenditure that the VAT rise will bring about, leading universities are inevitably looking to an increase in fees to meet the shortfall.

In itself, that shouldn’t be considered a bad thing.  Plenty of marketing plans are based on a premium price and in some markets, such as housing, levels of unaffordable debt have come to be seen as par for the course.  But there must be some kind of pay back.

Premium brands command high prices by restricting supply/increasing desirability.  Houses, on the other hand, are likely to retain their value and can be sold on.

But is it likely that Higher Education can charge a premium and still be seen as a mass market product?

It’s unlikely.

Charging a premium for something with intangible value requires a restricted market offer, which means that the only way Higher Education can charge the prices it needs to is it if can demonstrate a tangible return on investment – but since that means competitive advantage in the job market for “purchasers” relative to others, significant ROI can only be achieved by a minority.

It seems likely that a market for education is inevitable and that widening participation will, ultimately, have proven to be a goal too far.  Some will be prepared to pay, but they are unlikely to be from poorer backgrounds – with graduate unemployment up 44% year on year, it hardly seems an investment piece.

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Posted in: Education, Politics