Slide 1

Background In the competitive international higher education market, parents and students are increasingly concerned about the creditworthiness of overseas universities. In the UK foreign students are very important, and in some cases critical, to universities’ intellectual strengths and financial solvency. If a UK university were to fail or close, or have visa problems, foreign students would have to bear a large financial loss without much hope of compensation. Closure of a UK university would affect the perceived creditworthiness and marketability of all.

Proposal A potential solution to this, which arose from discussions at London Higher, is to offer insurance to international students for their placement and, if placement is not possible, their fees. Universities would make contributions to an assurance fund. In the case of a university going bankrupt, foreign students would be placed on equivalent courses with another UK university or have their fees refunded. Such a collective insurance scheme would mimic ABTA’s (Association of British Travel Agents) Common Fund (1965) and Retailer’s Fund (1972) which repatriates stranded holidaymakers, refunds deposits, or provides alternative holidays, as well as the Air Travel Organisers’ Licensing financial protection scheme for holidaymakers’ air travel.

Amongst the competition there a good example of managing similar risk. Australia has a student fee guarantee scheme which applies to overseas students only. It requires providers to pay into an assurance fund and to be part of a 'tuition assurance scheme', which ensures that students are provided with suitable alternative courses, or have their course monies refunded, if the provider cannot provide the course(s) that the student has paid for (see Tuition Protection Insurance - http://esosassurancefund.com.au/esosact_2000.html). While the Australian system is mandated, a scheme could also work as an opt-in mutual insurer, though there would be a larger marketing task.

Next Steps
While this idea was first put forward in 2011 and posted here on 20 March 2012, since then the idea has benefited from inputs of a variety of people, including London Higher, several universities and the university mutual, UMAL. Z/Yen is interested in exploring these issues further with any interested party. Please contact Professor Michael Mainelli, Director, Z/Yen Group Limited, michael_mainelli@zyen.com