Income from higher tuition fees will flow into universities' expanding marketing departments and budget surpluses rather than efforts to improve the student experience, according to participants in a a roundtable discussion.
The prospect of British universities spending more than 20 percent of their revenues on marketing as some U.S. for-profit colleges do, while competing for students in a more marketized system, was debated at a session in London organized by Times Higher Education and the Parthenon Group, which advises universities on private investment.
Asked whether this level of expenditure on marketing would be good for the academy, Matt Robb, senior principal at Parthenon, said: "It depends whether you take a system perspective or an institutional perspective."
He acknowledged that "if you take a system perspective, you might say that's too much money being spent on marketing."
But from the point of view of individual institutions, he argued, "if they cut their marketing spend the number of people they attract falls."
A report released in July by the U.S. Senate Committee on Health, Education, Labor and Pensions chaired by Senator Tom Harkin of Iowa, found that for-profits in the country spent an average of 22.7 percent of their revenue on marketing and recruitment, 5 percentage points more than their investment in teaching.
Tim McIntyre-Bhatty, deputy vice-chancellor of Bournemouth University, said that UK universities would rapidly move toward an equivalent figure. "The question is how quickly and the answer is 12 months," he said.
Robb said that tuition fees had escalated and the same thing would happen to marketing budgets. "There's no doubt that universities will spend more on marketing in the next 5 to 10 years than they have done to date," he added.
He stressed that marketing did not just mean advertising. For example, much of the expenditure in the U.S. goes on employing recruiters who advise prospective students online, he said.
David Farrow, director of marketing strategy and communications at Aston University, said he thought the average marketing budget for British universities was currently around 4-5 percent of revenue, but "over the past year it has grown dramatically, as you'd expect."
He said that traditional university advertising spots had become "cluttered." "We can all spend more but it doesn't necessarily mean we are more successful," he said.
Universities will also have to amass bigger budget surpluses if they want to continue to invest in buildings, given cuts in capital funding, said Rama Thirunamachandran, deputy vice chancellor of Keele University and former director for research, innovation and skills at the Higher Education Funding Council for England.
The assumption that universities should run a surplus of around 3 percent was "out of date," he argued, adding that the "minimum" was now 5 percent. "We think we need to invest more than ever," he said.
Responding to the suggestion that higher tuition fees would be diverted into building up surpluses and marketing, Mark Overton, deputy vice chancellor for external affairs at the University of Exeter, said that this was "a consequence of the regime that introduced student fees."
"It's not our fault that we are behaving as sensible economic actors," he added.