Given Overcapacity, Universities in Taiwan Face Tough Decisions

National Tsing Hua University is planning a merger with nearby National Hsinchu University of Education. (Photo: CNA)

Schools may need to merge, join an alliance, or shift to a different line of business.

For the past three decades, government policy and a cultural stress on the importance of education have driven a boom in the number of universities in Taiwan, even as fertility rates have decreased. Despite warnings for years that a glut in the number of universities was developing, the serious extent of that oversupply has only recently become clearer to the public at large.

Today it is common knowledge that university admissions are dropping, and government data indicate that this is but the beginning of a sustained contraction in university enrollment nationwide. How each of Taiwan’s 126 universities (this figure does not include religious universities), 19 colleges, and 13 junior colleges copes with this demographic crunch will vary from one institution to the next. What is clear, though, is that the number of institutions of higher learning in Taiwan will contract in the coming years.

Lee Yen-yi, Director General of the Higher Education Department at the Ministry of Education (MOE), says that projected new student enrollment for the 2015-2016 academic year dropped to 250,000 students, from 270,000 the year before. That’s a decrease of 20,000 students, or 7.4%, in only one year. And it won’t stop there.

“Going forward, this trend will become increasingly pronounced and steep,” Lee says. “By the 2019 academic year, new enrollment will drop by 30,000 students from the previous year. Student numbers are dropping, but the schools are still there. The number of students they’re competing for is dwindling.”

Lee says lower birthrates are the major reason behind the drop in enrollment. In the face of that trend, some schools will have to close, while others will need to shift to different types of educational or cultural businesses or non-profit models, she notes.

This overcapacity in the higher-education sector is a relatively recent phenomenon. In 1985, Taiwan had only 28 colleges and universities, with total enrollment of just over 190,000, which meant that 21% of 18- to 21-year-olds were receiving higher education, according to MOE figures. Fast forward 20 years to 2005 and a vastly different educational landscape comes into view, with 145 colleges and universities serving 1.1 million students – and 82% of 18- to 21-year-olds enrolled.

What accounted for this explosion in higher learning? During the 1985-2005 period, the prevailing view in government was that education, particularly in the fields of science and technology, had been crucial in driving the Taiwanese “economic miracle” of the 1970s and 80s that brought about the shift from a labor-intensive economic model to a capital- and knowledge-intensive economy.

Although there is nothing inherently wrong with the desire to expand the number of universities, the approach taken by the government at that time, particularly with regard to funding issues, tended to reward quantity over quality. A case in point was the MOE’s “head-counting” mechanism, which distributed funds among universities according to the number of students enrolled. This approach “failed to encourage competition and performance among colleges and universities in the past,” according to a 2007 paper by professors Song Mei-mei of Tamkang University and Tai Hsiou-hsia of National Chiao Tung University.

The stress on quantity was exacerbated by then-president Lee Teng-hui’s adoption of an educational reform plan promoted by Taiwan’s first Nobel Prize winner, Lee Yuan-tseh, who also served as president of Academia Sinica. The plan included a grant program intended to reward “academic excellence,” but critics noted that it focused almost exclusively on research institutions involved in studies related to Taiwan’s key industries.

At the same time, many colleges and technical schools were permitted to upgrade to become full-fledged universities, increasing competition and blurring the previous areas of differentiation.

The result of this somewhat haphazard and inorganic growth of Taiwan’s higher-education sector has been felt by Taiwanese students, especially undergrads.

Many Taiwanese students, especially those unable to get into the country’s top schools, seek better options abroad. Richard Jones, operations manager at UKEAS, which has been preparing and sending Taiwanese post-grad students to universities in the United States and United Kingdom for the past seven and 23 years, respectively, says there were many motivations to go abroad for graduate studies.

“Many students simply feel an overseas education at a well-known institution is going to help them in their career,” Jones says, particularly since employers elsewhere may not be familiar with the Taiwanese institutions that awarded the undergrad degree. Many students also seek to improve their English or experience the greater world, he added.

These relatively traditional factors aside, there has also been a perception that the expansion in the number of universities in Taiwan has caused a dilution in the quality of education, Jones notes. He cites comments from one of his senior managers that a large number of students now feel that it has become easier to graduate and that some of the course requirements have become easier than in other countries, especially for universities outside of Taiwan’s top tier. “With a significant number of students, there’s the feeling that the value of the education at some of the universities here is not as high as in other countries,” he observes.

Jones also notes feedback indicating that many students find it difficult to get a decent job with just a bachelor’s degree.

Time for action

 The coming years of decreased nationwide enrollment are unlikely to have a big impact on Taiwan’s elite universities. But other institutions, both public and private, are making moves to address the challenges today to avoid crises tomorrow.

One of the more visible initiatives taken by Taiwanese universities has been to join forces. One high-profile example is the “U9 League,” an alliance of nine private universities formed in order to pool resources and faculty in order to provide greater value to students.

Soochow University initially proposed this league of private universities, which when established in 2012 also included Chinese Culture University, Shih Hsin University, Tamkang University, Ming Chuan University, Fu Jen Catholic University, and Shih Chien University. Tatung University was added in 2016. At present, the U9 League is still mainly a concept, as it has yet to make final decisions on how exactly it will operate.

“We’re planning on cooperating in curriculum, but we’re still in discussions,” said a Soochow official who requested not to be named. Among the possibilities under consideration are enabling students to attend classes at different campuses or receive joint degrees, she notes. “Our next meeting will be at the end of August, and it’s likely things will be clearer after that.”

Other universities are moving faster. In July, three universities located in Taoyuan – Chung Yuan Christian University, Yuan Ze University (both private), and National Central University (public) – signed an agreement to form their own educational alliance. Lee Cheng-wen, Deputy Director of Academic Affairs at Chung Yuan, said the three-way alliance (undoubtedly easier to coordinate than a nine-school league) has already decided on a cooperation framework.

“For students, we’re allowing them to select courses from any of the three universities’ curriculums, and courses completed at any one of the universities will be recognized by both of the others,” Lee says. “Each university has different strengths, so together we’ll arrange which school will offer which course. We’ll offer some at National Central University, while others might be offered at Chung Yuan. In this way, we’ll be able to share our resources, enabling students at each university to take classes that they wouldn’t normally have an opportunity to attend.”

Students won’t be the only beneficiaries of the three-way alliance. “From the universities’ perspective, we’ll be able to lend and borrow faculty and research space, which has obvious benefits,” Lee says. “And given that the faculty members at each university have different individual specializations, we’ll be able to pursue a shared research model.”

Is this alliance the first step in a plan for the eventual unification of the three universities? “Right now we don’t have such a plan,” Lee says. “At present the three schools’ situations are still quite good, so we haven’t discussed any merger plans. This is an alliance, but each school is its own master.”

The friendly takeover

 Other universities are taking things to a higher level of commitment by formally merging.

Two public universities located in Hsinchu – National Tsing Hua University (NTHU) and National Hsinchu University of Education (NHUE) – have already agreed to merge, or rather for the former to absorb the latter. The two universities have submitted their proposal to the MOE for approval.

Chen Sinn-Wen, NTHU Vice President for Global Affairs, said Taiwan’s demographics are going to drive many universities to change how they operate. “There are really just too many universities,” he notes. “Even if the population stayed constant, I feel we’d still have too many universities.”

Two dynamics will separate the wheat from the chaff in the coming years, he says. “If you don’t have students, you don’t have a university, and in order to be a good university, you have to be a certain size.” Besides scale, he adds, the rapid emergence of new academic fields in recent years means that universities need to have sufficient faculty numbers spread across diverse fields in order to respond quickly to student needs.

“If you have a larger number of faculty, it is much easier to form a new group focused on a new academic field,” he says. “This is a very important issue. We’re not worried that we won’t be able to attract students. Rather, we want to be a leading academic institution.”

Assuming that NTHU’s absorption of NHUE is approved, the transition will be far from instantaneous, Chen says. In the first year, most likely beginning August 1, 2017, NHUE will stop admitting new students. Within two or three years, NTHU will add a relatively small college of education and a new college of art. And within five years, current NHUE students should have finished the studies they started before the beginning of the absorption.

Within roughly 10 years, all other arrangements should be completed and the universities will be fully united, Chen says.

Aside from entering into alliances, merging, or simply closing down, the MOE’s Lee cites additional options for smaller universities considering what to do in the face of declining student figures. One opportunity she mentions is for struggling universities to look at the other end of the demographic crunch and reinvent themselves as nursing homes or hospices for Taiwan’s rapidly aging population.

“This is a growing market and there will be great demand in the coming years,” she says. “University infrastructure – such as classrooms, dormitories, and activity facilities – is well-suited for conversion into elder-care facilities.”

Another possibility, Lee notes, is for smaller universities to create innovative educational partnerships with local private companies to train students in the particular skills the companies need. The schools would thus provide fertile recruitment pools for their corporate partners, and the perceived likelihood of finding a job after graduation would help drive student demand.

At the same time, Lee expresses support for the objectives of the above-mentioned university leagues and alliances. “Each school has its own special advantages in terms of departments, faculty, and facilities to share with the other members,” she says. This type of sharing can keep costs down for all members of the league. The MOE is encouraging the alliances to specialize in providing research and development services to Taiwan’s small- and medium-sized enterprises, which lack the resources to maintain their own R&D facilities and staff, she adds.