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Demise of branch campuses exposes reliance on government subsidies

The demise of New York University’s Tisch School of the Arts campus in Singapore announced late last year, and possible closure of the branch campus of the University of Nevada Las Vegas revealed last week, has highlighted problems of viability and the extent to which some overseas institutions depend on big host-country loans and subsidies to survive.

Singapore’s Minister for Trade and Industry Lim Hng Kiang revealed last week that Singapore had provided S$11.68 (US$10 million) in loans and S$5.3 million (US$4.3 million) in grants to Tisch Asia to 2011, and only “stopped disbursements when it realised that Tisch Asia was facing financial difficulties”.

Tisch, a graduate film and creative arts school, announced in November that it would close its Singapore campus set up in 2007, possibly by 2014.

Singapore hosts 11 foreign branch campuses and has a number of joint degree partnerships with prestigious international institutions, often lured with generous Singapore government start-up loans and subsidies under its ‘Global Schoolhouse’ initiative started in 2002.

Many are still successful after the five- to seven-year government subsidies end. But in some cases, at the project level, “there may be specific circumstances that affect the viability of a school’s operations in Singapore”, Lim admitted.

Lim’s figures came after Education Minister Heng Swee Keat said last September that his ministry was unable to divulge ‘collaboration fees’ between Singapore’s universities and overseas partnering institutions as they were covered by confidentiality clauses.

Subsidies to New South Wales

Lim also revealed in his reply to a parliamentary question on 14 January that Australia’s University of New South Wales (UNSW) Asia, which shut down its branch campus in Singapore five years ago after operating for just one semester, had received S$15 million in loans and S$17.5 million in grants from the Singapore government through the Economic Development Board (EDB).

UNSW mothballed its Singapore outpost in 2007 citing a financial shortfall of S$15 million a year, caused by lower than projected student enrolment. The university had also balked at the high cost of building a campus in Singapore, for which it said at the time it would require loans of S$140 million at 2007 prices.

Singapore’s EDB said it had offered the subsidies as it expected UNSW to “contribute at least S$500 million a year to the economy in direct spending”, according to official documents.

The Australian university has agreed to pay back US$22 million in loans and interest to the Singapore government, according to local reports.

A year before UNSW’s demise, a research partnership with the US-based Johns Hopkins University ended reportedly because of disagreements over the level of government subsidies.

Singapore’s Agency for Science, Technology and Research said at the time that Singapore had provided more than US$50 million in funding on various terms to set up the Johns Hopkins programme, although full details have not been made available.

The case of Nevada

Last week the University of Nevada at Las Vegas said it would end its collaboration with Singapore Institute of Technology (SIT), which offers degrees in hotel administration and management via Nevada’s Harrah College of Hotel Administration, when a five year contract that it entered into with SIT in 2010 ends in 2015.

Richard Linstrom, UNLV’s associate dean for Singapore and managing director of UNLV Singapore Ltd, said the American university was reviewing its operations in Asia as part of a global strategic review.

UNLV, which set up on its own in Singapore in 2006, entered into a partnership with SIT that guaranteed enrolments. It currently has a student body of over 600 in Singapore.

“We are not closing because of failure,” Linstrom insisted. “We are turning away hundreds of students, and our graduating students have a 100% employment rate.”

“Every single penny UNLV spent in Singapore has been raised in Singapore, it’s a self-supporting programme,” Linstrom told University World News. “We got a loan [from EDB] of about S$3.5 million at a market interest rate which we will have fully paid off at the end of 2015.

“I don’t think we ever thought we were permanently opening a campus in Singapore. If we’d thought that, we would have looked for donors to build a premises.”

Instead, the less than 10-year period of the Singapore government loan “was the time horizon at that point”, said Linstrom “It is safe to say that but for the Global Schoolhouse initiative including the financing, the venture would not have occurred.”

According to Linstrom: “We’re breaking even now, even with the loan repayment. But the question is looking into the future with the [worsening] exchange rate trends with the US dollar and inflation the way it’s going. It did not look sustainable going forward.

“We’ve been using US instructors and to lure Americans to come here has become more expensive because of the exchange rate.”

Under the current arrangement UNLV receives US$33,000 per Singaporean student to provide a degree that would be US$80,000 – and with lower costs – in America, he said.

In a proposal to SIT in October on a new agreement to take effect after the current one expires in 2015, Linstrom said he asked SIT for double the tuition fee, increasing the length of the degree and an increase in the amount of time students would spend in Las Vegas.

But the talks “did not go beyond the proposal stage”.

Tisch Asia subsidies

Experts said Singapore had become more reluctant than in the past to bankroll overseas universities, and is still reeling from the Tisch Asia debacle last year when MPs demanded an explanation for the high levels of subsidy provided to an institution that was apparently not viable in Asia.

Under pressure, the EDB responded that it “provided Tisch Asia with a level of support that was commensurate with the anticipated benefits of having the school in Singapore”.

Lim clarified in his parliamentary answer last week: “Tisch Asia was established on the basis that it would be financially sustainable after a few years.

“However, over time the school realised that its revenues were lower than projected while its costs exceeded earlier projections, mainly due to exogenous factors such as the appreciation of the Singapore dollar against the US dollar and the [Singapore] construction boom in 2007.”

Tisch Asia’s parent institution, New York University, contributed more than S$20 million in subsidies to Tisch Asia from 2007 to 2011, Lim revealed, adding: “NYU eventually concluded that Tisch Asia’s masters of fine arts programme was not financially sustainable on its own”.

Lim said: “Investors know their business better than government and are in the best position to assess the viability of their plans. Our role is to facilitate and support projects where there are benefits for Singapore, while ensuring that monies are used judiciously and that processes are in place to monitor the progress of these projects.”

Related Links
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