The Higher Education Policy Institute (HEPI) has warned that English universities carry private-sector financial exposure while operating at public-sector speed, as fee-dependent institutions face constraints that leave them unable to respond like truly autonomous providers.
In Policy Note 76, Risk and Resilience: What UK higher education can learn from the United States, Dr Dan Greenstein — former Chancellor of Pennsylvania’s State System of Higher Education, former University of California Vice Provost, and now Chief of Industry Transformation at Ellucian, which sponsored the note — argues that English higher education is funded like American private higher education but governed and priced like American public higher education.
The result, HEPI says, is a sector that depends heavily on tuition fees with little direct public funding, yet cannot freely set prices because fees are controlled externally. That combination, Greenstein contends, leaves institutions exposed to market risk without the flexibility private providers normally enjoy.
Matt Seales, Ellucian’s Senior Vice President for Europe, writes in a foreword that institutional decline rarely begins with one dramatic event. Trajectory, he argues, matters more than snapshot measures of financial health.
Hillman: ‘It’s the revenue, stupid’
Nick Hillman OBE, Director of HEPI, said debate about the “Americanisation” of UK higher education often misses how constrained British institutions already are.
“People talk about the Americanisation of UK higher education, but UK institutions are often in a worse position — nominally autonomous but remarkably constrained. That forces managed decline. In the end, it’s the revenue, stupid.”
The note also flags Scotland and Northern Ireland as facing the worst combination: a capped tuition price alongside capped student intake.
Seven lessons from the United States
Greenstein sets out seven lessons for UK higher education drawn from US experience:
1. Funding design matters more than funding levels. Absolute spending does not predict distress as clearly as whether funding keeps pace with inflation and whether institutions can raise prices when costs rise.
2. Sector averages hide institutional reality. Aggregate figures can mask severe pressure at individual universities whose balance sheets look nothing like the sector mean.
3. International students are propping the sector up. One revenue line — overseas tuition — is currently carrying a disproportionate share of institutional finances.
4. Failures compound. Institutions rarely collapse from a single problem; financial, enrolment and operational pressures drive one another.
5. From 2028/29, retention becomes a revenue driver. When fee increases are tied to quality measures, student retention stops being only an access indicator and starts determining income.
6. Recovery must come from revenues. Austerity can improve efficiency but cannot deliver growth on its own.
7. Shared services only change direction when they face students. Cost-saving shared services help margins, but only student-facing and instructional services can reshape an institution’s trajectory by driving revenue.
HEPI’s Policy Note 76 is published with sponsorship from Ellucian and is available from the institute.
