Written by IFF Research

Reframing the student accommodation compensation debate

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In a recent blog post we discussed the options available to refund tuition fees for the ‘Covid class’ of  students. Our focus now turns to student accommodation. Whilst some providers have found themselves to be able to fully waive or discount rental fees for their students in university owned accommodation, others have reinforced that students will have to fulfil their contracts at the going rate. The picture is mixed because not all providers are created equal. Each face their own particular set of circumstances when considering whether or not they can offer accommodation compensation.

A question of fairness

Portrayal of discounts on accommodation in the media have often been framed in terms of zero sum game. Where some universities have offered students full waivers or discounted rent, it is seen to be particularly unfair on other students who have not been given similar offers by their universities. As such, solutions that offer all students equal compensation have garnered strong support. A number of petitions calling for universities to end all tenancy agreements, to reimburse rent fees already paid when accommodation has not been used, or to offer partial discounts, have received over 100,000 signatures. While student rent strikes across the country have received consistent media coverage. The government, however, have underlined their stance that universities are autonomous institutions. Whilst an additional £50 million has been provided to support students struggling with the financial pressures of the pandemic, government funds for rent compensation across the board are not forthcoming.

Factors at play

There are several factors at play when universities come to weigh up whether or not they can compensate accommodation fees:

  • Intake of international students – Covid-19 has had a major impact on intake of international students. Whilst overall enrolment has perhaps been better than initially expected, UK universities are still forecasting a 10.7% decrease in international tuition fee income in comparison with the previous academic year. The importance of this cannot be underestimated. In 2018/19, teaching of international students generated an estimated surplus of £1.7 billion or 43%; meanwhile other teaching income produced a deficit of 3.3%. Naturally, providers with the largest international student intake will feel this impact most strongly, as surplus generated from international student fees contribute heavily to supporting ‘loss-making’ areas such as research and facility maintenance. Universities facing a large deficit in international student fee income are facing particularly difficult decisions in how to allocate diminished funds.
  • Financial health pre-Covid – Prior to the pandemic the variation in financial health of universities was sizeable. In 2018/19, equal numbers were operating with a deficit of more than 5%, or a surplus of over 10%. Simply put, some providers were better placed to deal with the financial blow of the pandemic, which will be reflected in their ability to offer students financial support for their rent payments.
  • Scale of student accommodation – Providers with ownership of extensive halls of residence face considerably greater financial difficulty in supporting students with rent compensation in comparison with those who have limited university owned properties, and have more students living in privately owned halls of residences or other private accommodation.
  • Staff expenditure – Providers whose staff costs represent a high proportion of overall costs, may face the unwelcome reality of being able to pay their staff or being able to compensate their students’ accommodation. As with overall financial health, the variation amongst providers is sizeable. On one end of the spectrum SOAS’ staff costs represent 85% of total income, and at the other, the Liverpool School of Tropical medicine’s staff costs amount to 20% of total income.

Re-framing the debate

On reflection, while none of these factors alone give reason for rent compensation to be denied, when considered in combination, it does offer rationale for why some universities have acted where others have not. It also suggests that in order to have productive debate about accommodation compensation, we may need to frame the discussion around provider (as well as student) financial circumstances, rather than making it just a question of fairness.