Universities, Government and Students Relations

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Introduction

The demand for higher education has been on the increase in Europe for the recent past. The United Kingdom, in particular, has had a doubling number of student enrollments for undergraduate to doctorate level courses in its institutions both by in-statee students and international students. This has been attributed to the fact that many people consider education as a long term investment and its returns are higher as compared to the cost of the education itself (Rick van der Para. 1-2). However, with these high enrollment rates, higher education still remains to be expensive due to high fees charged on the students. For instance, in Britain, the tuition fees go to an average of about $4,000 per year for an undergraduate program.

The increase in the number of students enrolment for higher education has forced these institutions to expand their facilities and build new ones to accommodate more students with the support of the government, which has provided a policy framework to guide these institutions to develop their plans. The government has also provided financial aids to students to assist them in paying their tuition fees and upkeep expenses.

All over the years, higher learning institutions have always been financially unwavering institutions. This is partly due to the mission and the role they play to the general public and partly due to their operation and management style. However, with this economic downturn, the higher learning institutions have not been spared either. The higher learning institutions have been hit by this economic downturn to the extent that some institutions are almost going down on their knees, and their closure is imminent due to the financial challenges they are faced with.

The cost of operation of these instructions has become extremely unbearable. This is aptly expostulated in situations like payment of the escalating electricity and water bills, purchase of research materials, payment of wages, and day to day running and maintenance expenses. Hence, it has forced the administrators of these institutions to go back to the drawing board to look for ways of coming out of this crisis. Neither the students nor the British government and the international community at large has been spared by this economic crisis.

The Government, Student and Institutions response to Economic downturn

Most higher learning institutions have experienced unpredicted economic crunch, which has made them have some fiscal challenges in their day to day managerial activities. They have mostly relied on revenue collected from students fees, government support fund, and investments in long term investments such as investments in hedge funds and the common fund as a short term investment which have by far still not totaled up to the institutions budgetary needs as a result of this crisis.

In addition, these institutions have been using variable-rate bonds to fund their infrastructure projects, but a sudden increase in their debt payment service as the market for these bonds rocked high as a result of economic downturn in the bigger credit market. This has compelled the institutional management teems to look for alternative ways of raising funds needed for their day to day running expenses (Drayson Para. 1 -2).

In response to this economic downturn, many of these higher learning institutions are vigorous reassessing their current financial debt portfolio, revising their debt policy, and, at the same time, formulating suitable strategies to get capital funding, influencing and liquidity management. They have also resolved to increase tuition fees for in-state students and attract more international students who pay their full fees, which are higher than that the in-state students are paying. They have also retrenched some workers deemed redundant to cut the wages cost and have on the same breath subjected the remaining employees to long working hours.

At the same time, they have opted to outsource from business activities such as investing in long term bonds, which are the variable rate bond and the fixed-rate bond to fund their infrastructure projects. The variable rate bonds are bought by tax-free money market funds, and its interest rate is set periodically, such weekly or daily. On top of the bond interest rates variation, the bond owner can tender the bond back to the borrower with daily or weekly notice (The recession: what it means for education Para. 2 -5).

These institutions have not only embarked on looking for ways of raising funds needed, but they have also set up student support units purposely to mentor students during these biting economic moments as the students are also experiencing this economic crisis which has subjected them to a lot of stress and at times absconding classes. At the same time, these units act as a communication medium to students, staff and faculty to explain how this economic downturn is affecting the institution, hence dispelling fear and concerns that the institution is falling because the odds and influence positively how the institution is perceived to both the institution community and the outsiders at large.

Also, with the high enrollment of students to these institutions at this period of the economic downturn, the institutions are using these aforementioned student support units and the various marketing departments to carefully monitor sudden enrollment and incoming freshmen in this economic fall moment and sprig sessions for signs of stress. This stress might make the students feel as they are burdensome to their respective families who can influence the students start missing from attending college. If there will be any market change towards other institutions with low cost, it might influence the student to decide to go for the low fees charging institution. Hence, for any decision the management might take in regard to the fee adjustments, should consider what other institutions are charging.

This economic crisis has not spared the students as well, as they have become the bearers of this economic burden as a result of increased tuition fees by the institutions managers and the subsequent threat of lack of financial aid by the government to fund student loans and high escalating costs of living. This has forced the students to look for alternative ways of survival by looking for short term employment to raise money for their upkeep and payment of their tuition fees, working as freelancers, or making decisions based on which alternative is cheapest.

At the same time, student enrollment in higher learning institutions across Europe has increased during this time of economic slowdown, as they seek more training and retrain. This has partly been attributed to the laying off of workers from other sectors of employment, and the result is their opting to go back to school to study in a bid to enrich their qualifications, or just the desire to advance their studies to guarantee their job security through the in-service training programs whose main aim is to keep the working force abreast with the constant innovations made to the world of knowledge.

As the financial institutions were reconsidering their offer of loans to student as a result of this crisis, many students opted to get loans direct from the government as the financial institutions became more volatile regarding whether they will continue to give financial aid to students ( Europes Education Crisis: College Costs Soar Para. 1 -2 ).

The various governments in Europe have responded differently to this economic crisis facing higher learning institutions. Some governments have responded by increasing their appropriation account funds to these institutions to cater to their individual needs. In particular, the United Kingdom government has increased its funding by 3.2% and 4.5% to teaching and research projects, respectively, and at the same time funded infrastructure development in these institutions, hence cushioning them from adverse economic conditions.

Other governments like the Spanish and Austrian governments have decided to cut down their spending to these institutions by up to 7% of their spending, and they are still planning to cut down their funding to these institutions further if the economic fall continues as they have become so overwhelmed to such an extent that they cannot afford to fund these institutions. A country like Denmark has completely suspended funding these institutions until the economic crisis eases (Geoff Para. 1- 8).

The Implications of the Responses taken by Universities, Student and the Government

With this responses by the institutions, the government, and the students to this global economic downturn, several effects have been projected in the manner in which they have affected the higher education sector and the countrys economy at large. To start with, Higher education is going to be compromised since the need to meet their financial challenges will result in more outsourcing from business activities to raise these funds.

For instance, the institutions opting to invest in bonds such as the variable interest rate bonds still risk their financial needs because these bonds are not guaranteeing a panacea to the bites experienced in the financial world and if the investors in the institutions bond want to sell their interest and there is no buyer, the institution will be compelled to buy the bond. At the same time, the interest rates for the bond depending on the demand for that institutions bonds and the investor confidence for the creditworthiness of that institution, of which not all institutions are able to attract this kind of investment.

These institutions may misjudge their potential of attracting investors for their bonds and go ahead and invest in these bonds, which will even make their financial challenges to be worse and a waste of time if they are not able to attract investors. As a result of engaging in business activities, there will be an erosion of the real purpose of these institutions, which is to provide quality knowledge-based students also, it will affect the quality of research project activities as funding maybe not sufficiently allocated to these projects.

Their attention will be shifted towards how to make the ends meet by engaging in business activities rather than their mission of offering quality education services and help in solving societal problems. The increase the enrollment numbers to these institutions as a means of raising more funds will squeeze the resource and facilities of the institutions, causing more serious economic effects since more graduates will be produced but of no economic value to the country due to degraded education standards.

Students will become subject to stress due to the need for more money for their upkeep and tuition fees payment, and there will be increased drop out, or poor attendance to classes as these student will be going out to look for income. At the same time, this will also stress their family members due to the constrained budget to meet their needs and still be able to pay the fees.

Finally, the government stepping in by increasing funding to this higher learning institution will result in more burdens to the taxpayers as they will be taxed more to raise this money to fund this institutions. At the same time, the student demand for the government to increase its funding will result in more tax burden (Meg Para. 6 -7).

Conclusion

In conclusion, the economic downturn has greatly affected the higher learning institutions, and these effects not only affect the institutions but also the students and their families as their budgets are stretched due to fees increment, which they did not expect. However, with all this action taken to deal with this economic crisis by the institutions, still, it raises a lot of concerns that need to be answered. Whether these institutions are able to deal with immediate matter such as to approximate the extent of confidence of their budgets if the economic downturn to continue for some period of about one year to come in the current budget, how will they finance their debt and match their underway and planned capital projects? Will there be any warning signs of economic downturn growing to worse, resulting in a decline in enrollment and liquidity as a result of losses from their investment in the bond market? It is high time these institutions assess themselves carefully so that they can get prepared for such a crisis if it occurs again.

Works Cited

Drayson, Lord. Innovation in Higher Education: Ensuring the UKs Future Prosperity (2010). Web.

Europes Education Crisis: College Costs Soar (2010). Web.

Geoff, Maslen. University World News. Europe: Effects of financial crisis vary (2009).

Meg, Handley.Europes Education Crisis: College Costs Soar (2010). Web.

Rick van der, Ploeg. European Universities Must Get Their Act Together (2006).

The recession: what it means for education (2010).

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Universities, Government and Students Relations

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