LSE is quickly building up revenues from non-certificated “short courses,” going further than its peers as it seeks to diversify sources of income in the face of declining public funding for UK universities.
There is no formal definition in the UK of short courses, a catchall for courses often lasting just a few weeks long, or less, and which often don’t result in academic credit. Yet the term appears prominently in LSE’s financial statements. In 2017/18, LSE made £37.2 million from “short courses” – more than 10% of its overall income and around 18% of its income from tuition fees. These shares have roughly tripled in the last decade.
In an era of lower public funding for universities, deriving more income from non-core activities could be a prudent strategy. “In general, given the uncertainty over the future of higher education funding, diversifying income is probably a sensible strategy for any university at the moment,” said Nick Hillman, director of the Higher Education Policy Institute (HEPI).
There is no UK-wide data on short courses, because the body in charge of data for the education sector — the Higher Education Statistics Agency (HESA) — doesn’t collect them. However, HESA does collect data for each university on “non-credit bearing courses,” which often overlap closely, sometimes nearly identically, with short courses at many universities. This data shows that, over the period 2003/04 to 2017/18, LSE’s income from non-credit bearing courses as a percentage of overall income grew from 2.28% to 10.44%, even as the total UK average actually fell from 1.69% to 1.51%.
Even in terms of absolute size, LSE is overtaking some of its largest competitors. Last year, Oxford University reported £36.8 million from “professional and non-matriculated course fees” in its financial statement, which was less than LSE’s £37.2m in short courses.
Despite this, LSE is still a laggard compared to at least one university. London Business School made £48m from executive education alone (excluding its executive MBA programmes) last year, nearly a third of its overall income.
LSE’s flourishing summer school — the largest in Europe, it says — has been a key driver of revenue from short courses. In 2016, LSE increased the capacity of its summer school by upping the number of sessions from two to three, dispersed over a nine-week period between June and August. Additional growth has come from larger numbers of students from universities in China and Australia choosing to participate in short-term study abroad sessions.
LSE has added new programmes to its summer school, such as ‘‘Foundations of Psychological Science” which launched this year, as part of efforts to “ensure our course programme reflects the range of subjects taught at LSE”.
Whilst the challenge is finding enough space to run them all, LSE has said: “the development of the new Centre Building at the heart of LSE’s campus will help tackle this.”
Besides its summer school, many short courses are intensive five-day experiences, part of LSE’s executive education offerings run by LSE faculty. This November 4-8, for example, students can take courses ranging from “Corporate Finance and Strategy” to “Regulation” to “Achieving Leadership Excellence,” aimed largely at executives and managers. Price tags range from £3,495 to £6,995.
Short courses long in the making
LSE has long sought to increase its revenue from non-traditional sources, including short courses, its joint TRIUM MBA programme with NYU Stern and HEC Paris, etc.
In the 2009/10 annual accounts, then-Director of LSE, Howard Davies, celebrated the school’s financial surplus despite government funding cuts. “[T]he surplus is largely attributable to the success of what one might call ‘noncore’ activities,” he wrote, referring to activities ranging from the executive education programmes to joint University of London offerings. “It is very important for the School that these activities should remain healthy.”
Declining university funding has been an obstacle for universities for years
In October 2010, in a bid to make the education sector more sustainable, the Browne Report ushered in years of sharp higher education spending cuts. Among other things, it recommended removing direct public funding for most undergraduate courses, and, to pay for it, eliminating the cap on tuition fees and allowing more student borrowing. The government acted on many of the recommendations. Within five years, universities’ core funding had shifted from government funding to student fees.
Source: House of Commons Briefing Paper 7393, July 2019
As a heavily research-oriented institution, LSE may have an additional incentive to grow its non-traditional sources of income. The UK faces a growing deficit in funding for research — more is spent on research at UK universities than is returned in income — and the current practice of cross-subsidising spending on research with income from teaching may not be sustainable, a report from HEPI warned in 2017.
“The LSE’s challenge is a shortfall in research – they get lots of tuition income, especially from international students, but their research grants have a big shortfall compared to the research they want to do,” said Hillman, the HEPI Director. “This shortfall has to be made up from other sources.”
LSE continues to view its short courses programmes, in particular its growing summer school, as vital to its revenue diversification plans. Increasingly, LSE also views the summer school and its short courses programs as intrinsic to the school’s identity, it hinted in last year’s annual financial statement.
Celebrating the enrolment of 7,247 students on LSE’s summer school programmes and an expanding range of executive masters programmes, LSE invoked its founding in the 1890s when it got its start through a programme of lectures.
LSE said: “Growth in these areas is consistent with our strategy to diversify income sources… [I]nterestingly this echoes the founding of the School when education was offered through a range of lectures and part-time programmes.”
