Key challenges for the international education sector

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  • 1. Key Challenges for theInternational Higher Education Sector ISANA Annual New Zealand Conference 2009 Professor Nigel Healey University of Canterbury
  • 2. Overview  Where have we come from? – a brief history of the international higher education sector  Where are we now? – the implications of the GFC  Where are we headed? – the outlook for the international higher education sector  The coming challenges for New Zealand universities
  • 3. Where have we come from? Long term growth in the number of students enrolled outside their country of citizenship1975 1980 1985 1990 1995 2000 20060.6 M 0.8 M 0.9 M 1.2 M 1.3 M 1.9 M 2.9 M Source: OECD Education at a glance, 2008
  • 4. Where have we come from - demand vs supply  Looking backwards from 2009 – a golden era of growth  The ‘perfect storm’:  rapid growth in the demand for international higher education from developing countries and  supply-side response from higher education providers in developed countries – especially the Main English- Speaking Destination Countries (MESDCs)
  • 5. Where have we come from - demand  Drivers of demand for higher education in developing countries are:  per capita GDP growth  income distribution (‘size of middle class’)  knowledge economy  population demographics  Domestic higher education sector expansion is constrained…  …so unsatisfied demand by those with the ability to pay “spills over” into universities in the developed world  Rapid GDP growth fuels both demand for higher education and the ability to pay
  • 6. Where have we come from – demand and percapita GDP Source: Price Coopers Waterhouse
  • 7. Where have we come from – demand andpopulation pyramids
  • 8. Where have we come from – supply (1)  Why the supply-side response?  Most universities publicly owned or funded; private universities mostly not-for-profit  Higher education is heavily regulated and central part of government policy  Traditional view of higher education:  higher education = a ‘public’ (technically ‘merit’) good  therefore higher education historically publicly subsidised, tuition free in many countries  foreign students - geo-political/development motives  Problem: higher education is a ‘superior good’, participation rates have increased from 5% in 1960 to 50% in OECD today
  • 9. Where have we come from – supply (2)  Massification challenges traditional view:  private rate of return so high, no practical need for public subsidies  public subsidies lead to regressive distribution of income  governments have had to reduce real value of public subsidies as participation has increased  UK, Australia and UK first movers in introduction of tuition fees  but domestic fees still regulated, even though public subsidies inadequate  fees for international student deregulated first  differential incentive to recruit international students  Government policy has encouraged recruitment of international students to cross-subsidise research and domestic students
  • 10. Where have we come from – the big players Student mobility in tertiary education (2006) % 20 18 16 14 12 10 8 6 4 2 0 Source: OECD Education at a glance, 2008
  • 11. Riding the perfect storm – NZ higher educationin 2005 International Foreign (non-resident) (non-citizen) Australia 17.3% 20.6% New Zealand 17.0% 28.9% UK 13.9% 17.3% Switzerland 13.2% 18.4% France 10.8% - Germany - 11.5% USA 3.4% - OECD average 6.7% 7.6% Source: OECD Education at a Glance 2007
  • 12. Riding the perfect storm – increase ininternational enrolments to 2005 (2000 = 100) 1000 800 600 400 200 0 ali a NZ UK rland ance any U SA CD str ze Fr erm OE Au wit G S Source: OECD Education at a Glance 2007
  • 13. Where are we now – the global financial crisis US housing Sub-prime Initial Trigger downturn mortgage losses Pre-Conditions Booming credit markets New structured credit products Uncertainty about extent and location of risk Impacts De-leveraging Movement to safe liquid assets
  • 14. Factors influencing demand to study overseas  Cost of study abroad  Ability to pay for tuition and living costs  from savings  by borrowing  by students working in host country  part-time while studying  full-time on graduation  Willingness to pay for tuition and living costs  Uncertainty  Public security  racism exacerbated by recession
  • 15. Exchange rates: an important driver of NZenrolments 2009 Source: Ministry of Education, RBNZ
  • 16. Exchange rates: low end courses more pricesensitive in NZ Source: Ministry of Education, RBNZ calculations
  • 17. Where are we now – facing a bumpy ride Cost of study abroad Ability to pay from savings Ability to pay by borrowing Ability to pay – jobs in host country Ability to pay – jobs on graduation Willingness to pay – uncertainty Public security
  • 18. Where are we headed – the IDP vision (1) Forecast Global Demand for Higher Education
  • 19. Where are we headed – the IDP vision (2) Forecast Global Demand for International Higher Education
  • 20. Where are we headed – demand  Developments on the demand side  Rapid expansion of higher education sector in developing countries  Projects 211, 985, 111 in China  Private sector providers in Asia, especially India  New technologies and on-line learning  Growing consumer sophistication (QS-THES/Jiao Tong)  Growth in demand for international higher education from spillover may slow  Source markets likely to shift from undergraduate to postgraduate
  • 21. Chinese enrolment rates (%) 120 100 80 Primary Junior Secondary 60 Senior Secondary 40 Tertiary 20 0 1990 1995 2000 2005 2006 Source: China Education Yearbooks
  • 22. Where are we headed - supply  Fiscal pressure will inevitably lead to deregulation of domestic fees (with means-tested student support) in first movers (UK, Australia, NZ)  reduces attractiveness of international students  Late movers – Continental Europe and Asia – forced to introduce domestic fees, charge full-cost international fees  Bologna and spread of English as a medium of instruction  New competitors in export education market, including many former source countries
  • 23. Where are we headed – the future shape ofinternational higher education  US higher education as a model for global higher education  6,000 colleges and universities offering bachelors’ degrees  Only state universities and major private schools offer masters degrees  Only elite schools offer PhDs  Only rich and talented (scholarships) mobile at undergraduate level  Mobility increases at masters and PhD level  Model for the future at global level?
  • 24. The challenges for New Zealand universities –the starting point  Internationalisation has been rapid and opportunistic  Rational response to unprecedented demand growth as a result of public policy  Skewed to major growth markets – especially China, Korea  Unusually large role of key players  Role of state schools as feeders to universities  Role of agents in bringing international students to NZ schools  Unplanned and (initially) unwilled expansion of numbers in universities  International offices not geared up to managing, and later sustaining, international numbers  Resistance to institutional adaptation to support internationalisation
  • 25. International student visas by sector2500020000 University15000 Polytech PTE10000 School 5000 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: Education New Zealand
  • 26. The China effect: international visas issued toChina1200010000 8000 University Polytech 6000 PTE School 4000 2000 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: Education New Zealand
  • 27. Chinese visas as % of total 80 70 60 50 University Polytech 40 PTE 30 School 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: Education New Zealand
  • 28. Chinese students as % international tertiaryenrolments, 2005 60 50 40 30 20 10 0 Australia NZ UK US Source: OECD Education at a Glance 2007
  • 29. The challenges for New Zealand universities  Good news:  We have excellent, internationally connected and benchmarked universities  5 of 8 (62.5%) of NZ universities in THE Top 500  Universities multinational, multicultural environments  Bad news:  Global faculty shortage – salaries falling behind  Rising oil prices, environmental awareness may erode multinational staff and student base  The Bologna effect  Asian universities upgrading capabilities very fast
  • 30. The future for successful internationalisationof New Zealand universities  Understand our markets and the changing needs  Understand our competitors  Build long-term relationships built on mutual benefit, not quick one-way gain  Our differential advantage must be as a research-led, postgraduate player  Celebrate and embrace internationalism  NZ small trading economy, need to be internationally connected to knowledge economy  Integrate international students – networks of the future  Use student exchange to create genuinely multinational learning environment  Ensure curriculum is internationally benchmarked
  • 31. Conclusions  International higher education has been driven by a perfect storm of demand and supply  The global financial crisis has stalled growth  Demand and supply factors are realigning to make the future different from the past  New Zealand universities has stumbled into internationalisation – surviving in tomorrow’s global market requires vision and commitment