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How can universities increase share of the international student market?

Grant Thornton recommends steps for universities to increase their share of the growing £20 billion international student market

A global report by Grant Thornton out today 6 September 2016 reveals that higher education institutions (HEIs) could increase their share of the growing international student market by enhancing their financial models to incorporate yield management techniques from other industries. Universities must act quickly and strategically if they want to maintain or increase market share from the increasingly savvy, prices sensitive student market that Grant Thornton estimates is currently worth £20 billion[i].

Carol Rudge, partner and global leader of not for profit at Grant Thornton International Ltd, says: “The global marketplace for international students has increased rapidly over the past few years, providing a significant income opportunity for HEIs. Asia remains a key target market, while the growth of the middle classes in Latin America and Africa will create new regions from which to recruit in the years to come.”

Although international students contribute more than a quarter of some HEIs’ income[ii], the report shows that many universities do not make the most of financial models that would allow them to fully benefit from student demand. With institutions increasingly competing for a share, the challenge is to become more attractive than the competition. This can be achieved by striking a balance between maximising income while still providing sufficient financial support to students. The report recommends that HEIs will be better able to withstand market volatility if they use yield management techniques, popular in the aviation and tourism sectors, to ensure that places are given to the right number of international students at the right price. This enables them to factor in the primary financial factors affecting where international students decide to study - tuition fees and cost of living. These are subject to change depending on currency fluctuations and exchange rate movements, causing uncertainty for HEIs and their international students.

However, in order to maintain reputation as well as encourage inclusion, those in the HEI sector must also recruit a diverse group of students. Grant Thornton suggests HEIs uses their market intelligence to offer scholarships and discounts to international students who will bring the most value to the institution, targeting those who are likely to be influenced by reduced fees, not those who are able to pay the full price.

Carol Rudge adds: “HEIs need to pay close attention to the motivations of international students and provide them with the right incentives to study. By protecting and growing the income they receive from international students, institutions will be in a better position to fund strategic priorities and avoid market shocks. They will need to match how much they charge with their reputation, and identify the tipping point at which higher fees cause international students to go elsewhere.”

Grant Thornton also points to branch campuses in foreign countries and the use of blended learning as a potential way to generate extra revenue. Such activities provide access to markets that may have been difficult to access in the past, and provide students with a cost-effective global experience in a local setting. If done successfully this can significantly boost a university’s overseas reputation.

However, although branch campuses have become increasingly popular in the past two decades, universities should be wary of the financial and reputational risks they bring. Working in regions with different social and ethical norms, and where there may be political sensitivities, can be a real challenge, and the costs of it all going wrong are high.

Carol Rudge concludes: “Universities should carefully consider the realities of establishing branch campuses to expand their international student numbers. The opportunities are considerable but so too are the risks. HEIs will need to seek advice on what model of international enterprise to go for, ensuring they fully understand the impact of different regulatory and tax structures, the local culture, and social and ethical norms.”

The report is part of a series on international student mobility by Grant Thornton. A report on policy is available and further reports will be published later in the year.


[i] Grant Thornton estimate [based on reported income from tuition and fees in the US (US$ 19,754,000,000 [£13.8 billion as of 16 June 2016]: The Economic Benefit of International Students. Washington D.C.: NAFSA, 2014. Web. 7 June 2016.) and analysis of HEI income in the UK (£4 billion: Grant Thornton UK LLP. Adapting to Change. 2016. Web. 7 June 2016. The Financial Health of the Education Sector.) and Australia (A$4.7 billion [£2.4 billion as of 16 June 2016]: Ibid.)

[ii] Grant Thornton UK LLP. Adapting to Change. 2016. Web. 7 June 2016. The Financial Health of The Education Sector. The analysis shows that, in the UK, nine universities draw more than a quarter of their total income from non-EU international students.


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