Financial TimesUK business school heads expect revenues to drop in 2021

November 9, 20200

A buoyant year for MBA providers in the UK risks turning into a bust in 2021 because of no-shows and deferrals by overseas students, business school leaders have warned.

The deans had been optimistic earlier this year following a surge in MBA applications from people calculating that taking a career break to improve their financial and business training was the best option in the face of rising unemployment.

However, research by the Chartered Association of Business Schools (Cabs) among 39 deans ahead of its annual conference on Monday found that half now expect revenues this year to drop either moderately or significantly. That is largely because of overseas students deferring places until campus teaching can resume or dropping out before paying their first fees instalment.

Travel restrictions imposed to contain the Covid-19 pandemic have been a big barrier to overseas students starting courses this year, according to Robert MacIntosh, head of the school for social sciences at Heriot-Watt University and Cabs chair.

But he added that postgraduate management degree students are also more likely than others to have reacted negatively to recent moves to online teaching because of the value they place on networking in person with other students and teaching staff with good industry links.

Bar chart showing year-on-year change in UK business school revenues

“We have crammed a decade’s worth of digital innovation into a semester, but that does moderate the experience for students who had committed to coming to a campus to learn,” Prof MacIntosh said.

The decline in revenues would represent a reversal of the financial situation in 2019/20, when 61 per cent of the deans said income grew for their school either moderately or significantly compared with the 2018/19 academic year.

Overseas applicants are critical to MBA intakes, with one in three international students at UK universities now studying a business subject, according to the Cabs.

The Cabs conducted its survey after the new term had started last month and nearly a fifth of the respondents said enrolment numbers were down for the current academic year compared with 2019/20.

Bar chart of Expected year-on-year change in no-shows showing Business school student no-shows

Two-thirds of the deans said they expected non-EU international postgraduate degree students to be down either moderately or significantly this year. Only a third expected this to be the case for EU students and just a quarter expected a decline in homegrown student numbers.

Schools are under pressure to increase their international intake in part because these students pay more in fees. Forty per cent of respondents to the Cabs survey said their targets for overseas student numbers were likely to be increased for the academic year in 2021/22.

“There has been a history in the business school sector of students paying a deposit, but it not being absolutely certain that they will turn up. The pandemic has upped the ante in that area,” said Prof MacIntosh.

The government’s relaxation of post-study work visa rules this year has improved the attractiveness of the UK as a destination for postgraduate business students, but the Cabs argues that more must be done, now that the pandemic has made international travel less attractive.

A government spokesperson said: “The UK will always be open to international students and we continue to work across the sector to attract and support students from overseas.

“We also announced a package of financial support for the sector, including bringing forward £2bn worth of tuition fee payments and making £280m of funding and grants available for research.”

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