Japanese courts asked to step in to prevent closure

July 22, 2005

A small private university well away from Japan's centres of population has become the latest victim of the cut-throat competition for undergraduate students.

Hagi International University, established in 1999 in the remote Yamaguchi prefecture, blamed declining enrolments for liabilities of ¥3.7 billion (£19 million).

It filed in the Tokyo District Court for debt relief and protection from creditors to enable it to continue operations and to provide services to its current students.

It is not the first university or college to go bankrupt, but the case is unusual. Some unviable universities and colleges have been closed or merged with larger ones, sometimes with subsidies from local governments being given to the rescuing universities.

In this case, the court will be asked to help put together a rehabilitation plan under the provisions of a law originally enacted to dispose of or to restructure the many insolvent companies in Japan's post-bubble economy.

This is the second time a university or college in Japan has asked for such legal protection, the first case being that of the scandal-ridden Tohoku Bunka University in June 2004.

Backed with about ¥6.8 billion from Yamaguchi prefecture and Hagi City, the university was founded to provide four-year undergraduate courses under the departments of international studies and of business and management information.

It continues its day-to-day operations using financial aid from a Hiroshima company. But it has failed to meet its target of 300 students per department because of its remote location, short history and lack of prestige.

Another damaging factor has been a difficulty in getting study visas for overseas students - Jmore than half of those in the international studies department are foreign nationals, but new restrictions on visas have curbed the intake for 2005.

Nationally, the population of 18-year-olds fell from 2.04 million in 1995 to 1.51 million in 2001, and the downward trend is expected to continue.

Meanwhile, competition for school-leavers between the universities and the two-year colleges is growing fiercer. However, the proportion of pupils seeking university places appears to have peaked at about 50 per cent - as many young people question the benefits of spending large sums on a degree that has a declining value in a competitive job market.

The number of universities also continues to grow, increasing rivalry between institutions struggling to meet enrolment quotas. This has prompted concerns of a severe decline in admission standards.

In 2000, a survey of 471 private universities showed that about 30 per cent failed to meet enrolment quotas. Since private institutions depend on tuition fees for about 70 per cent of their revenues, they are severely affected by the student shortage.

The financial newspaper Nihon Keizai Shinbum predicts that by 2007 the total number of senior-high graduates will be about equal to the number of places universities plan to offer.

Most of the universities, which run four-year courses, have so far had an easier time than the colleges, which run two-year programmes. Many have been able to found graduate schools, while more and more tertiary institutions are returning to urban areas from remote locations.

Local clusters of universities and colleges are forming consortia to diversify the courses they offer without increasing the number of teaching staff.

Some private two-year colleges, many of which were women-only, have been restructured to become co-educational and/or four-year institutions.

Others have set up new vocational programmes - for nurses and medical technicians, for example - in the hope that graduates of such courses will be more employable and able to gain more stable employment more quickly.

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