In a joint letter to the leaders of the five main political parties, the heads of Queen’s University Belfast, Ulster University, and the Open University in Ireland have said the current £4,750 cap on undergraduate fees, which has consistently fallen below inflation since 2011, needs to be raised to £5,831 to reflect rising costs.

They argue that without urgent intervention, the region’s “skills pipeline, research capacity, and innovation-led growth” will be at risk, undermining productivity and long-term economic recovery.

They also point to the financial pressures facing Northern Ireland’s universities, including a “real-terms loss caused by a legacy of sub-inflationary uplifts” and declining international student numbers, and highlight the gap with fees in England and Wales, which of course will rise to £9,535 in the next academic year.

NUS-USI says that a rise in fees called for by the universities would mean “asking students to bear the brunt of a broken system”. Its petition does that thing that people do – it infers that poverty now would be exacerbated by a fee increase, when it wouldn’t.

It says is that given nearly one in five students are using a foodbank, “we can’t be putting more burden on students at a time like this” – but of course an increase in fees wouldn’t put an additional burden on students, only graduates.

And while emotive magazine stories like this reflect a general fear of debt, there’s pretty much no evidence that an increase in fees of the level being called for in the letter would depress participation – especially given that in one of the vox pops, Ebony has her eye on studying physiotherapy in Liverpool, but is leaning towards taking up studies at home due to the costs.

A review is coming

It all comes as the Department for the Economy prepares to launch a comprehensive review of higher education funding this spring. The review is expected to consider a wide range of issues, including tuition fees, student support, research funding, and the Maximum Student Number (MaSN) cap, which limits places to around 7,000 annually.

That means that in 2023/24, NI’s four universities enrolled 29,220 FT FD UG students from NI, 9,305 of which were entrants – suggesting that about 2,300 were paying their fees upfront and weren’t pulling down maintenance support either.

Meanwhile England had 8,375 FT FD UG students from NI on the roll, Scotland had 2,435 and Wales 475, which is 11,285 – 3,190 of which were entrants.

In other words, Northern Ireland is sending about a quarter of its students, and about a third of its student loan borrowers to the rest of the UK. Long term, there will be concerns about whether they’ll return – and whether NI’s mix between birth rates, population ageing and the working/pension age mix makes the whole economy unsustainable.

Loans and subsidies

Two factors come into play in any review in NI – the politics of fees and debt in the Assembly, and the Ts and Cs of student loans managed by HMT in Westminster.

As regular readers will know, although the outlay, repayments and subsidies associated with student loans appear in devolved administrations’ budgets and accounts, they’re in a special ringfence called “Annually Managed Expenditure” – they are managed by the Treasury.

The “rule” in the Statement of funding policy: Funding the Scottish Government,Welsh Government and Northern Ireland Executive is that where a devolved administration offers “broadly similar” terms for an AME programme, the UK Government will fund the cost of this programme.

For example, the UK Government currently funds the devolved administrations’ student loans (alongside the Department for Education’s student loans in England)… Where a devolved administration wishes to offer more generous terms for an AME programme, then the excess over that implied by adopting broadly similar terms for that programme (and therefore broadly comparable costs) must be met by the devolved administration.

Getting further information out of the Treasury about how that rule is actually applied is astonishingly difficult. I’ve had it variously suggested to me that once adjusted for the size of the country, it’s based on outlay, it’s based on write-off (ie eventual cost to the public), it’s based a mix of both, and other confections.

I’ve also had it suggested to me that there seems to be no real detail on how the Treasury calculates and applies “broadly similar” and just ticks out (or doesn’t) proposals from the devolved administrations if they propose changes.

In Wales, Minister for Further and Higher Education Vicki Howells has publicly called for more clarity – but I raise it here because of the ridiculous situation that NI has got itself into over subsidy.

In 2023/24, NI domiciled students pulled down £364.5 million in SLC issued loans – £206.9 million in tuition fee loans, and £157.6 million in maintenance loans. £356.5m of that was in loans for UGs – the PG component for NI is almost non-existent.

In tuition fees, that means that 30.8 per cent of fee loan borrowers were in study outside of Northern Ireland – but given the higher tuition fees charged by providers elsewhere in the UK, the total amount paid out equates to almost half of the total amount paid out in tuition fee loans – 48.2 per cent.

That obviously means that NI’s system is conspiring to have more of the Treasury’s money spent on students that leave NI than on those that stay. But you might resolve that you’re happy with that on the basis of two factors – how much (more) debt those students get into, and how much (more) they end up paying for that privilege.

It’s obviously true that students from NI studying rUK end up in more tuition feed debt upon graduation. But it’s not necessarily true that they end up paying more.

That’s because all borrowers in NI are on Plan 1 – the OG student loan repayment system that applied in England before the advent of 9k fees.

The old plan

Plan 1 was a system that was never designed to take (via interest rates) money from the rich(est graduates) and give to the poor(est graduates) – it was a system in which the assumption was that pretty much everyone would end up repaying their modest(ish) student loans in full.

Hence the key terms – you only start paying back once you’re earning what is currently £26,000, there’s no real interest (just RPI) and there’s a write-off at 25 years.

That is a system that makes sense when the fee loan is £4,750 and the maximum maintenance loan is £4,855. The poorest students in NI (and you do have to be pretty poor – the parental contribution expectation kicks in at an income of £19,203) on a three year course would graduate with about £30k of debt – and that is set to be repayable by the vast majority of graduates within the 25 years. So the subsidy for them is minimal.

But it’s a different story for those that leave NI. Their fee debt alone is circa £30k, so with maintenance loans on top, the poorest end up with about £45k of debt – not withstanding that on those amounts, the poorest probably aren’t those most likely to be leaving NI.

Plan 1 and its 25 year cut off means that they’re much less likely to repay in full – and depending on how you estimate both long term earnings and the value of money in the future, means that the Treasury is putting in about £6k per graduate.

Add all that up, and it’s a terrible deal. The Treasury is not only spending more on outlay for those that leave NI, it’s subsidising those loans to a much higher value. The system cuts off its subsidy nose to spite its political face.

See saws

So what could be done? Debates about fees and funding tend to worry a lot about headline debt levels, and almost always miss the amount that graduates will eventually repay.

But whatever the confusions about how debt works, there’s a see-saw between debt on graduation and being able to afford living costs. The total grant and loan for an NI-domiciled student studying in NI is £7,925 next year – miles behind the rest of the UK. For families on £41,065 a year, that ticks down to just £6,300 in maintenance loans.

Both Belfast and Derry/Londonderry have a lower cost of living than much of the rest of the UK – but it’s not that much lower. Financial support for living costs – at least comparably to the rest of the UK – is just derisory.

A good chunk of direct devolved spend is going on direct T grants to the universities and some of the top-ups in grants. But the letter from the three universities suggests either that that T grant needs a top up that the executive won’t be able to afford, or that the growing shortfall needs to be made up in more fee debt.

And what’s remarkable about that is this. If Northern Ireland stuck to its Plan 1 terms and conditions, and tuition fees rose to £30,000 a year, and everyone got a maintenance loan of about £30,000 a year, the vast majority of its graduates would pay no more over their lifetime than they do now.

A small few – who were set to repay in full in, say, year 23 or 24 of their 25 year loan would pay 9 per cent over the threshold for a couple of extra years. But everyone else’s loans would be written off at 25 years. The big difference is that NI’s students would have a lot more money spent on their education and living costs by the Treasury.

Treasury says no

Of course, if NI’s executive could stomach the politics of what would look like a lot more debt, the Treasury would pop up with a “broadly similar” spreadsheet to say no.

But if your policy aims are a mix of:

• The need to fund more places so students from NI can study in NI, which would come at a cost
• The need to fund those places properly in university costs, which would come at a cost
• The need to fund all students with proper support for their living costs, which would also come at a cost

…then the sensible thing to do is look at the levers.

First we’d need to know how that “broadly similar” thing really works. Then, if you’re trying to limit the long-term exposure to the Treasury, you can look at pulling some other levers to help you fund some extra exposure to the Treasury:

• The 25 year write off. Barely anyone would notice if it was 30 years.
• The interest rate. Barely anyone would notice if it was RPI+1 per cent, for example.

I suspect that if the real trade-offs were put to students in Northern Ireland, significant volumes would opt for more places, more living costs support and better funding of their education. In a perfect world, principled resistance to higher fees makes sense. But in a system where subsidies are likely being unspent by the NI executive, principled resistance will make students and their universities poorer – and NI poorer as a result.