Private colleges, varsities set to lose RM11 billion in 2020

Sheridan Mahavera

Foreign students make up a large percentage – up to 40% in some colleges – of the country’s private higher education sector. With closed borders, some institutions risk closure. – AFP pic, June 20, 2020.

STARTING next month, a private college in Kuala Lumpur is cutting salaries by up to 30% and forcing staff to take unpaid leave as it struggles with the fallout from the coronavirus pandemic. 

A memo from the administration to staff, seen by The Malaysian Insight, said it is forced to take drastic measures because of a plunge in new international student enrolments due to worldwide travel bans.

Malaysia and many other countries are still enforcing travel bans for foreigners as they slowly reopen their economies after months of lockdown to fight the virus.

The college is one of about 100 private tertiary education institutions (IPTS) in Malaysia in dire financial straits due to a drop in new foreign and local students, said an industry group.

This represents about a quarter of the 443 such institutions in the country, according to Higher Education Ministry data.

The Malaysian Association of Private Colleges and Universities said IPTS nationwide are expected to lose between RM7.22 billion and RM11.3 billion in revenue this year.

President Parmjit Singh said the drop in revenue is being felt not just in Malaysia, but also other countries with huge international student populations.

The American education sector is projected to lose US$23 billion (RM99 billion) owing to a 25% and 15% decline in new international and local enrolments, respectively, he said.

In Australia, the loss is projected at A$16 billion (RM48 billion) from now until 2023, with this year’s losses pegged at between A$3.1 billion and A$4.8 billion.

In the UK, a £463 million (RM2.5 billion) loss in tuition and living expenses is expected due to 14,000 fewer new students from East Asia, said Parmjit.

A UK House of Commons briefing paper said a 100% fall in fees from international students translates into a £6.9 billion loss of income for the higher education sector.

Students and their parents moving their belongings from dormitories at San Diego State University, California, in March. The coronavirus has hit the education sector badly, with many parents fearful about sending their children back to campuses. – AFP pic, June 20, 2020.

“In Malaysia, there will be more than a 50% reduction in new international student enrolments for the rest of this year,” said Parmjit.

“It is a double whammy as the post-Covid-19 situation will lead to a significant drop in local students as well, but this is largely attributed to issues relating to affordability.

“Therefore, it is imperative that foreign students return as soon as possible.”

Bleak year

Malaysia closed its borders from March 18 as part of the lockdown to curb the spread of the coronavirus, which, as of yesterday, has infected 8,535 people in the country.

Colleges and universities, both private and public, have closed and will remain so until the end of the recovery movement-control order (RMCO) on August 31.

According to Higher Education Ministry data, there are 443 IPTS in Malaysia as of March, comprising universities, university-colleges and colleges.

In 2018, more than 92,400 international students were enrolled in IPTS and about 39,000 in public institutions.

The top five source countries for international students in 2018 were Bangladesh at about 22,100, China (16,300), Nigeria (11,100), Indonesia (10,700) and Yemen (7,300).

Parmjit said most private institutions have a larger proportion of local students.

With the composition of foreign students ranging between 10% and 40%, he said, any significant drop in their enrolment will have a major impact on the overall health of these institutions.

The 20% to 30% of international students yet to complete their studies in Malaysia, but who have returned to their home countries, might defer their studies to the next semester, he said.

The decline in locals and 50% drop in foreign students will have a major impact on institutions’ bottom line and result in more IPTS recording losses for the 2020 financial year.

“It is expected that at least 100 private higher education institutions are in financial distress and may risk closure,” said Parmjit. – June 20, 2020.

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