Are tuition fee refunds as difficult as they sound?

There are three big bullet points in the All Party Parliamentary Group on Students’ inquiry into student tuition and accommodation costs during Covid-19.

The first is that, along with means-tested maintenance grants to assist with costs, that a hardship fund of over £500m is created to both refund rents for accommodation which has not been used due to lockdown measures, and to address lost part time job income and digital poverty.

Half a billion doesn’t sound like it will be enough – so for the avoidance of doubt, let’s carefully separate some concepts here. I’m not convinced that rent rebates should be about student hardship or student support. It’s not about whether you’re rich or poor, thriving or struggling – arguably, as a society, we shouldn’t be requiring people to pay rent on properties that students have had no use for all year.

There are students who’ve not had a single timetabled session on campus all year but have nonetheless been required to live in the local area and so rent a property in the area. There are more that have barely been on campus. Shouldn’t we begin by assuming that none of them should have paid a penny out in rent?

We should also be wary about automatically assuming that the fix is to help (some) students to pay the rent. If nothing else it’s a waste of student loan subsidy. There are two policy options here – we relieve students from paying rent and decide which landlords to compensate, or we ask them all to pay and decide which students to compensate.

Taxpayers might reasonably ask why they are subsidising student loans to pay for properties students can’t use.

We have lost our Verona

The APPG’s second big idea is that lost learning is addressed through the funding of educational opportunities not available through the pandemic – including summer (and potentially autumn/future) programmes to replace lost teaching, networking, field trips and access to essential specialist facilities to allow students to build the skills and portfolios that they may have otherwise missed out on.

That’s a great idea – and is worthy of further investigation, major investment and of changes to the timetable to make as much of it happen over the summer as possible.

But hold on a minute. Either there has been learning loss, or there hasn’t. The sector’s general position is that outside of highly specialist courses, everything’s been successfully moved online – and according to the report Universities UK, the Russell Group, the University Alliance and GuildHE’s submissions apparently coincidentally all agree:

All say that they are “confident” that the “majority” of students will achieve the learning outcomes set out for their course despite the changes this year, given the measures and efforts that their universities have made.

But if the APPG is right, students have paid for a whole host of things that they’ve not received – online or not – that are about their learning. We do need to decide which it is, really.

No sound of serenade

And that takes us to the APPG’s third big bullet (other than letting students cancel housing contracts and extending PGR students’ funding). Tuition fees? No refunds:

The group said that proposals for tuition fee refunds would not provide the support that most students need now… Refunds would also reduce universities’ income and therefore their students’ education

In saying so, the APPG is merely reflecting the government’s position on fees. One of the consistently surreal aspects of the ongoing debate over whether students should be entitled to some kind of tuition fee rebate is the way in which the Westminster government suggests it has no influence, control or agency over the issue. It’s hands are tied.

In this response to a petition that has gathered almost 600,000 signatures on the issue, the Department for Education (DfE) reiterates that:

HE providers are autonomous and responsible for setting their own fees under this level.

What, of course, it doesn’t add is that the government retains the power, through secondary legislation, to vary the terms of student loans both retrospectively and unilaterally. As such it’s not as difficult to find a fair mechanism for fee refunds as the APPG and others suggest.

Learning through the scars

The argument goes that most students who get a partial rebate won’t see any change because their loan will be written off after thirty years anyway – all that will change is notional debt figure on their SLC statement and university finances in crisis. As DK notes in his piece on compensation options on the site, it’s a move that would only have an impact after graduation, and would disproportionately benefit graduates that earned more.

That makes sense – but let’s set aside for a minute the way in which that argument doesn’t address international students, part time students, postgraduates and others (many for religious reasons) that pay upfront. Let’s also agree that it’s possible to believe that students can be entitled to financial redress while simultaneously believing that that redress should be funded by government.

In some ways, this is dead simple. If a student, under consumer protection law, is entitled to a tuition fee rebate of say £2,000 this year and they graduate with £50k of debt, the smart solution isn’t to delete that £2k from their debt, it’s to amend the repayment terms to cause that student to pay back 4 per cent less than they otherwise would have done over their lifetime.

In other words, students who pay upfront get what they’re legally entitled to with a payment underwritten by government. And for those in the loan scheme, students get an appropriate and proportionate reduction in payments, with no loss of income to universities – ideally, given there’s a massive recession coming, targeted at their twenties. Simples!

My preference in all of this – as DK argued for in the compensation piece – is a cash goodwill payment. That would address the pain that is being felt now, stop students from dropping out, and avoid the moral hazard of automatically and directly funding landlords. But let’s not assume that fee refunds are impossible – if the government wanted students to pay less for their degrees, it could make that happen.

We never said I’m sorry, we never said enough

The danger is that it’s about to do the actual opposite. The Augar review itself doesn’t quite go as far as suggesting that existing students should pay more, but pre-pandemic the student loan book’s contribution to the deficit already looked horrifying.

With the “fiscal illusion” now removed and a vast recession and major pandemic deficit to address, it’s not hard to imagine the repayment threshold being lowered, the write off period being extended and the interest rate (either absolutely or on a taper).

I very much doubt that government will decide that students are getting a blanket fee refund this year. But ironically, it’s entirely possible that come the Comprehensive Spending Review, it may well decide that instead of charging them less for this experience, to plug the deficit it needs to charge them even more, magically re-discovering its agency and power in the process.