Data: default rates at UK universities revealed

Flywire’s Income collection policy benchmarks report 2024 revealed that an analysis of the default rates reported by HE institutions in the 2022/23 academic year showed that universities in the UK could be risking up to £500 million each year in late revenue.

Data collected from the survey of 44 UK institutions – which included 14 Russell Group universities, 17 post-92s and 13 independents – revealed that over a quarter (28%) had default rates higher than 10% in the the 2022/23 academic year.

The company recommended than universities “take a step back” and consider their income collection methods. “Different international student populations have different needs, but continuing to address each with one-off policy updates or proposals will not position UK institutions to ensure long-term student and institutional success,” it said.

Flywire said the survey had uncovered “subtle themes” among universities with lower default and bad debt rates, including higher deposit rates, flexible instalment plans, effective sanctions in the face of non-payment and strong pastoral care for students struggling to pay.

“Unfortunately, there’s no silver bullet. While brand power can enable institutions to attract more financially capable applicants, it’s not a guarantee,” the report noted. “Russell Group institutions tended to report lower default rates, but a quarter experienced default rates above 5% in the 2022/23 academic year.”

The report dropped other key data – including information on how different institutions impose sanctions, and institutions’ spend on agent commission.

The survey revealed a lack of knowledge of institutions’ total spend on agent commissions, with 39% saying they were unable to name this figure. Meanwhile, respondents to the survey revealed the drastic difference in spending on agent commissions at different institutions, with eight universities saying they spent more than £5m, while others spent less than £1m and some between £10m and £25m.

And the survey results also revealed when institutions tend to make their first commission payments to agents, with this ranging from after a student enrols to after the first half of first-year fees were paid or after the full payment of first-year fees.

Flywire also highlighted the differences between how universities impose sanctions on students who have not paid their fees – noting that only about half of those surveyed offer pastoral care for those struggling to pay.

While 95% of respondents imposed sanctions for the non-payment of fees, just 51% offered pastoral care prior to imposing them, the survey found.

But Flywire noted that geopolitical uncertainty – for example the devaluation of the Nigerian currency – only added to “the growing challenges” around sanctions.

The report also delved into the type of sanctions universities favour for non-payment. These ranged from suspension of classes or the inability to sit for exams to the withholding of academic transcripts.

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