One outcome of the COVID-19 pandemic and the resulting lack of mobility has been a surge in student enrollment across Europe, with individuals opting to increase their vocational skills at universities, where volumes on average are up 12%. A key driver for this increase was the absence of attractive live job vacancies/roles at the height of the pandemic and the desire of many to use the lockdown period as a time to improve their skillset. Additionally, as lockdowns were implemented and classrooms closed, many programs opted for online teaching where internet connectivity was the only gating factor for students, both domestic and international. The initial months of lockdowns were a challenge for both teachers and students, who were unable to attend any form of classroom instruction. However, as the pandemic progressed, many classes were administered online with the increasing availability of recorded replay sessions and online supervised exams. The sector was able to metamorphosize itself, administering education regardless of student location and nationality.
In addition to the technological advances in education delivery, student volumes remained resilient during the pandemic lockdown period. There were consistently low dropout rates across private schools where the average fee pool is between €10,000 – €30,000 per annum. Parents seemingly prioritized education in what must have been a challenging financial year for some. Unlike universities that experienced an increase in student intake, there was no substantial surge in admissions across private schools. Equally, there was no drastic decline, and attrition rates remained the same as in pre-COVID years. While fee discounts of 10 – 20% were offered for a term or more, the overall fee pool remained in line with prior years and some schools even saw moderate increases.
Overall, be it private schooling or higher university education, the resilience of the European private education sector as a financial model has been laudable. Although we expect to see a return to normalized student volumes in the long term, we believe that we are navigating at the top of the cycle for these models in the short term. We view the enrollments demonstrated during the crisis as encouraging and the ability of institutions to maximize margins by reducing fixed costs of classroom education as noteworthy. Our long-term view is for student enrollments to normalize and for fixed costs to increase. However, for the next 24 months, the sector is likely to be the beneficiary of strong tailwinds. We are therefore constructive on investments in the sector over the next two years but remain cautious in the long term.