Change Needed To Overcome Colleges' Challenges - Financial and Students Drop Out Rate

7th July 2022

Scotland's colleges responded well to Covid-19, but changes are needed to ensure they are financially sustainable in the long term and more students graduate.

Covid-19 funding contributed to a better-than-expected end of year operating position for the sector in 2020-21. However, colleges' finances are forecast to deteriorate.

Colleges responded well to the shift to online learning during the pandemic. But the proportion of students successfully completing their course has fallen. On average, socially disadvantaged and vulnerable students are less likely to successfully complete their course than their peers.

Wide-ranging recommendations to improve the college sector were made by the Scottish Funding Council (SFC) in 2021, including multi-year funding assumptions. They were broadly accepted by the Scottish Government, which is due to set out the future role of the college and university sectors in 2023. In the meantime, it is important that the government and the SFC support colleges to plan for change.

Stephen Boyle, Auditor General for Scotland, said, "The challenging financial situation facing colleges will make it difficult for the sector to balance the delivery of high-quality courses and Scottish Government priorities.

Changes are needed to ensure the sector is financially sustainable in the long-term and more students successfully complete their courses.

Colleges need support to plan for those changes, and the Scottish Government needs to work with the SFC to put its plan into action at the earliest opportunity.

KEY MESSAGES
1 Covid‑19 funding contributed to the college sector reporting a healthier than expected financial position in 2020-21. This is forecast to change for the current and next academic years. It will be difficult for Scotland's colleges to balance the delivery of high-quality learning at the volume currently expected and to contribute to other Scottish Government priorities while remaining financially sustainable.

2 Colleges have continued to deliver learning in unprecedented circumstances and responded well to the shift to online learning during the Covid‑19 pandemic. However, the proportion of students successfully completing their course and achieving their intended qualification has fallen. And on average, socially disadvantaged and vulnerable students were less likely to successfully complete their course than their peers. High rates of student withdrawals may affect the life chances of individual students, impact on wider society, and risk not maximising public investment in the college sector.

3 Change is needed to ensure more students are successful and that the college sector is financially sustainable in the long term. Wide-ranging recommendations for change made by the Scottish
Funding Council (SFC) in 2021 need to be implemented at the earliest opportunity. The Scottish Government is due to set out the future role of the college and university sectors in 2023, but it is
important that the Scottish Government and the SFC support colleges to plan for change now to make best use of available funding.

Colleges face difficult decisions to achieve financial sustainability
6. Colleges face a challenge in balancing the delivery of high-quality learning at the volume currently expected with the financial decisions required to remain financially sustainable in the longer term. To balance their budgets, incorporated colleges are striving to increase non-SFC income and reduce costs. Auditors found that around half are considering or likely to consider reducing staff in 2021-22 to deliver savings. This has potential implications for the delivery of learning, student outcomes and the experience of remaining staff. It also heightens the risk of further industrial action within the sector.

7. In the context of growing financial challenges and uncertainties, medium-term financial planning based on as much information as possible is more important than ever. In May 2022, the Scottish Government announced its multi-year spending plans up to 2026/27. This shows a flat cash settlement for the SFC over the next four years, equating to an eight per cent reduction in real terms. The multi-year plan confirms that the college sector faces some really challenging years to come.

Successful course completion
FE Students: 61.3% full-time | 76.3% part-time
HE Students: 72.1% full-time | 81.3% part-time
successfully completed their course.

Student withdrawals
Full-time students: 27.7% FE | 17.7% HE
failed to complete their courses.
Withdrawal rates increased in 2020-21 by 6.9 percentage points
and 2.8 percentage points respectively from 2019-20.

Read the full report HERE
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