In April 2014, Michael McDonald of Bloomberg wrote an article with the headline “Small U.S. Colleges Battle Death Spiral as Enrollment Drops” in which he described the decline of small U.S. colleges and universities. He pointed out some disturbing facts:
- In the United States, the number of private four-year colleges that have closed or were acquired doubled from about five a year before 2008 to about 10 in the four years through 2011. That statistic was based on a study in 2013 by researchers at Vanderbilt University in Nashville, Tennessee, citing federal data.
- Among all colleges, 37 merged in the three years through 2013, more than triple the number that merged from 2006 to 2009, according to Higher Education Publications Inc., a Reston, Virginia-based directory publisher.
All of the schools in the Vanderbilt study that closed in recent years were small, with fewer than 1,000 students and average assets of less than $50 million. Most had endowments of about $1 million, and many were private institutions that depended on tuition as their primary revenue.
Likewise, I see the potential for up to 25 higher education institutions in the United Arab Emirates to close or merge in the next ten years unless they begin to take action now.
Here are my seven reasons why as many as 25 colleges and universities in the UAE might close:
1) Too many institutions with small enrollments. There are at least 113 registered higher-education institutions in the UAE today. At least another four to seven are expected to start up within the next year. The vast majority of these institutions are privately held, and do not receive funding from the UAE government. Sixty institutions have enrollments under 1,000 and 47 under 500.
2.) Accreditation. Only one accreditation agency exists in the UAE, the Commission for Academic Accreditation (CAA), which has approved 79 of the 113 UAE higher education institutions. The other schools not approved are registered in free zones in Dubai, Ras Al Khaimah and other cities. The institutions located in free zones are considered branch campuses, and the degree is given by the home campus. However, the UAE government only recognizes schools that have been approved by the CAA. If a student graduates from a free zone school and it is not CAA-approved, the degree is only recognized in the home emirate. This limits the ability of their graduates to work outside that one Emirate.
3.) Pricing. The UAE higher education market is highly cost competitive. In some cases, such as the federal or semi-governmental institutions, UAE nationals do not have to pay tuition. For the other 100 private and branch campus institutions, the average tuition for a bachelor-degree program ranges in the AED ranges from 150,000 to 200,000 ($40,800 to $54,000). Other additional costs include housing, food, books and other miscellaneous expenses. On the high end of the cost spectrum, some UAE universities rise above 250,000 dirhams ($68,000).
4.) Student recruitment and retention. Universities in the Emirates are competing with over 110 other UAE institutions for students and have expanded their recruitment to the Middle East, Asia and Africa. This has been a successful strategy, and over 50,000 students in the UAE are citizens of other countries. However, recruiting students is very expensive, and only a small percentage of students out of those who indicate interest begin their first year at a particular institution. The average expat student applies to between six and ten institutions. Once a university has a student enrolled, they want them to succeed and graduate, but many drop out or transfer. There are no reliable figures in the UAE on retention, but in the United States only 44 percent of undergraduates get a bachelor’s degree from the institution where they first enrolled.
5.) Maintaining quality faculty. A 2012 report found that 5,969 full-time equivalent faculty members were teaching in the 53 CAA-approved and three federal institutions. There are now probably closer to 7,000 faculty members. While some institutions offer very good compensation and try to keep quality faculty members, many still struggle with constant turnover. This is due to lack of pay raises or lack of promotion, which are especially a problem with smaller institutions that lack funds for raises and offer few career opportunities.
6.) High overhead. The costs associated with maintaining a university campus facility are steep. Expenses include utilities, information technology, insurance, telephone systems, security, maintenance and repair. The cost of loans to build campuses must be added to overall operating costs.
7.) Reputation. In recent years, numerous organizations such as Times Higher Education, QS World University Rankings, Shanghai Academic Ranking of World Universities, and U.S. News & World Report Best Global Universities rankings have begun to include Arab universities. Rankings have become increasingly popular with parents and school counselors. Many of the smaller institutions with little academic research and no international reputations do not make these lists, and so their brands are at risk.
Which universities may be at risk of closing is not always clear, but at least 60 could fall into this category. It is up to the institutions themselves to take steps to remain ahead of the competition and make sure they can sustain themselves in the future.
Dean Hoke is the founder of the Abu Dhabi based Edu Alliance education consulting company.