Another Augar leak: but does it deliver for the treasury?

It’s very easy for the government to brag about not having student number controls when we are in a demographic dip – but I think we all knew that this was a temporary situation. As the number of 18 year olds climbs back up after next year we’ll need more places to satisfy demand – and those places cost money.

If you’re reading this after the ONS decision on the treatment of income-contingent student loans is released, you’ll know just how deep a hole the treasury is expected to be in. DfE has been doing sense-testing with vice chancellors ahead of the Augar report, and we should hardly be surprised that the latest kite to be flown that’s been leaked to the Sunday Times is all about trying to limit costs.

We modelled the effects of the fee cut a month or so ago – the standard fee value appears to have remained around the same though the higher value hasn’t been mentioned. We also still don’t know whether some or all of the institutional losses will be made up by the taxpayer.

DDDelivering savings for the Treasury

But the new and eye-catching headline idea – to limit access to loans to those who score DDD or above at A level – is likely to save very little money whilst being hugely regressive. Here I’ve plotted the proportion (raw numbers in the tooltip) of acceptances for students with DDD, DDE, DEE or EEE equivalent points by POLAR3 quintile. (Note this is UK wide, not just England, and that DDD students would still get fee loans – I’ve included them for comparison, but you can easy enough get rid via the filters.)

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You’ll spot two things straight away. Firstly, we’re not talking about many entrants – for 2018 entry we’re talking about 3,445 students with DDE or below. In financial terms, that’s £31,866,250 – big money for most but several orders of magnitude below the total government spending of the sector. There are institutions that run a bigger annual deficit than that.

Secondly, in proportional terms, this has the greatest effect on prospective students from a less advantaged background. Again, the actual numbers are tiny, but we’d lose around 3.5% of POLAR3Q1 and Q2 students, compared with 1.5% of Q5.

As we’ve discussed on Wonkhe before – it is hugely unlikely that less well off students are less capable, but very likely that A levels attainment is another signal of advantage. We know that POLAR3Q1 and Q2 students are more likely to attend institutions with a lower average tariff:

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And we also know (as could very easily be guessed) that students will less outwardly impressive A level results tend to go to lower tariff institutions:

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Winners and losers

With the correlation between POLAR groups and lower tariffs, the bulk of the pain of the lost income (remember this is about institutional income) will be felt by those institutions who disproportionately recruit from POLAR groups 1 and 2. There’s some information about the kind of institutions these might be in the HESA Benchmarks.

This is all inference here, because we don’t have data on the A level results of institutional intakes. We don’t have this because of the idea of institutional autonomy – the idea that institutions make offers, not the government. If – say – an arts college decides (very sensibly) to recruit by portfolio rather than exam results, then that is an academic choice. Likewise, if an old and ancient university decides to run its own entrance exam, or recruit following in depth candidate interviews – that’s their call.

Note also that our data above is from UCAS, so does not include the majority of part-time or mature entrants. Institutions that particular cater to these demographics – who would be unlikely to hold traditional entry qualifications – would be worse off to the point of there needing to be a specific exemption in this case.

Ethnic impacts

We also see a disproportionate effect on applicants if you examine ethnicity:

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So it seems that getting rid of an uncapped market for student recruitment in this way particularly disadvantages black students too. Which is not evidence of well considered policy making.

If you wanted to limit Treasury exposure to the market you’d bring back institutional student number caps – which has the advantage of limiting commercial rather than academic decision making in recruitment. I can’t see vice chancellors liking that either, but I know which of the two options would be fairer. And – bearing in mind the tiny numbers of students involved – institutional caps would be the most effective in actually addressing the problem, as opposed to getting favourable coverage in The Times.

2 responses to “Another Augar leak: but does it deliver for the treasury?

  1. Or in other words, this would reverse progress towards the government’s BME gap target, and the OfS POLAR gap target announced less than a week ago. Oh well, it’s well and truly up the flagpole now.

  2. It would be interesting to see the proportion of students with these grades going onto foundation years rather than into year 1 of a degree. My hunch is that this could destroy the foundation year market.

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