Interesting questions raised by OU’s 5k fees

Yesterday, The Open University announced plans to charge £5000 fees. A THE story claims that it puts OU in ‘pole position’ to snap up the 20,000 places that are being made contestably available for institutions charging less than £7,500. But these 20,000 places are for full time undergraduate students – currently all of OU’s students are counted as part-time, even if they are studying at a rate of 1FTE.

Where things get complicated are with OU-validated degrees in further education colleges.  By putting these 20,000 places aside for low-cost courses, it is the intention of BIS to expand provision in FECs – either validated through a body like OU, or even funded directly.  What no one knows for sure is the true extent of the demand for these courses. It must be remembered that these 20,000 places are just theoretical lines on a spreadsheet – they will not necessarily become students unless there is sufficient demand for the low-cost courses in the mix.

It is clear that there will be some demand for this type of provision – there is already – but it is not an ‘either/or’ choice for most students. A £5,000 OU course delivered through an FEC might be an accessible and rational choice for some, but this is a very different sort of higher education experience to that undertaken in an HEI that is resourced at £7,500 or above. There is little evidence that demand for this type of provision will escalate, particularly if universities dramatically reduce their cheaper, franchised provision in order not to accidentally deprive themselves from the higher-resourced numbers that they need thanks to core and margin. Some analysis suggests we could even see the wholesale dismantling of the HE in FE infrastructure. And soon.

As all their students are part-time, The Open University is not currently subject to student number controls. They definitely won’t be in 2012-13, but they might well be from 2013-14 after the second phase of the teaching funding consultation runs its course.  And that’s when things will really get interesting.

The £5,000 fee level represents a dramatic percentage increase in fees as the OU’s prices were previously very low indeed, this being a key selling point. Given the tectonic shift in the balance of funding for HE, this is understandable. But the OU must be assuming that their distinctly lower prices from the rest of the sector will boost demand. Either for directly taught or delivery through other providers. And this is a big assumption to make as we head into market that will not be fully understood for years to come.

Their gamble may well pay off, but equally, it might not. And then they have a problem. If student X hoping to attend a ‘traditional’ full-time undergraduate course in a university misses out because their places have been forcibly allocated to OU-style provision – they could hunt through clearing or try again in a year. But most of OU’s provision isn’t trying to meet their needs, so it seems unlikely that this is where they would turn.

If the plan works, and they generate healthy demand and are indeed successful in snapping up those 20,000 places then you can expect universities whose numbers have been removed for this effort to begin taking a dimmer view of their staff moonlighting for the “competition”, as so many currently do. If the market really heats up, then there’s no telling how things might change. But with this potential ‘war at home’ and with a possible lonely death for HE in FE as we know it, the future of higher education looks less cooperative and more competitive every day.  It’s almost as if that was the plan.