The Education Policy Institute convened the Chair of the government’s review, the former universities minister, and an assortment of researchers last week to discuss the direction of HE funding – what did we agree on?
Release the wonks
Analysis from EPI, the Institute for Fiscal Studies, and the OECD looked at the impact of tuition fee reforms, as well as trends in university finances and access. In his first major speech, Philip Augar, the review’s chair, spoke of the challenges he’s looking to address in the coming months
Lord Willetts, the universities and sciences minister during the coalition government, also gave his assessment of what the reforms he implemented got right, and where change is required.
So what did a room full of HE wonks agree on? Firstly, that the review needs to design a funding model that supports a wider range of post-18 education pathways. While reforms to university and apprenticeship routes have attracted a lot of attention and allowed participation numbers to grow, technical and sub-degree qualifications have seen a sustained contraction. Joining up the various post-18 loan systems into a single loan entitlement was discussed, but whether one funding model can straddle the whole tertiary sector was hotly debated.
Informing that debate was the experience of part-time students, where numbers have shrunk by over a third since the 2012 fee reforms. As Lord Willetts pointed out, the coalition thought the extension of the loan-scheme to part-time students would help – rather than hinder – participation. This demonstrates that loan terms which might work for school leavers heading to full-time university study can’t necessarily be applied universally.
The wonks have spoken
None of the participants had kind words to say about the imposition of fee-caps by subject or institution, an idea floated by education secretary Damian Hinds on the eve of the review’s announcement. While variation in fees was an intention of the 2012 fee reforms, getting there by diktat without causing problematic changes to at least one of; student and provider incentives, funding progressivity, or labour market need – is easier said than done.
A more open debate was had on whether the current system delivers value for money. Funding for universities has gone up significantly since 2012, with per-student funding up by 50 percent for some courses. With international measures presented by the OECD showing UK universities are outliers in the amount of ancillary spending (spending unrelated to research or teaching), this begged the question: is the sector overfunded? It’s a question that’s hard to answer given the paucity of granular spending data, but which the post-18 review will have to consider.
If there was unanimity in one policy prescription, it was to bring back the maintenance grants that were ditched in 2016. As our panel, including university vice chancellors, pointed out, it is the cost-of-living pressures that students are finding most difficult to bear, and the inequity of saddling students from the least well-off backgrounds with the highest debts is clear.
Politics, dear boy
It’s curious then, that despite Theresa May using her review launch speech to recognise the issues the removal of maintenance grants has caused, they weren’t front and centre in the changes to HE finance announced at the Conservative Party conference in October last year.
Part of the reason may be the treatment of the loan system in government accounts. The long-run cost of lifting the repayment threshold to £25,000 is estimated to cost over £2 billion each year, whilst it’s likely that reintroducing maintenance grants instead would have cost significantly less than this.
How you count the beans
However, under current government accounting rules reinstating maintenance grants impacts upon the deficit immediately, whereas the cost of lifting the threshold is not realised in government spending until the loan is written off in 30 years’ time. The two key points of debate here were first whether the accounting rules are driving policy decisions in unhelpful ways, and then whether those government accounting rules (and associated fiscal targets) are actually immutable or not.
Indeed, the issue of government accounting rules seemed to sit behind many of the issues of debate at the conference, including how the government might go about improving funding for further education. While government accounts are unlikely to be an issue that will be of interest to the average 16-year-old considering their choices for tertiary study, given their importance to the future of the system, they are certainly an area the review will consider.
The wider point being here is that, as they interpret the evidence submitted to them, the government’s post-18 review advisory panel will need to ensure that any recommendations made on the future of the system are not clouded by any preconceptions of the levers for change. This review represents a genuine opportunity to improve English education – we hope that the panel is able to make the most of it.
“If there was unanimity in one policy prescription, it was to bring back the maintenance grants that were ditched in 2016. As our panel, including university vice chancellors, pointed out, it is the cost-of-living pressures that students are finding most difficult to bear, and the inequity of saddling students from the least well-off backgrounds with the highest debts is clear.”
I don’t agree with this. There is no need to bring back maintenance grants when the maintenance loans are so highly subsidised. When nearly all of the tuition fee loan isn’t repaid, maintenance loans are in substance a partially on non-repayable grant anyway. The switch from grant to loan actually increased the amount of living cost support for poorer students. I wouldn’t bring back maintenance grants – instead I’d means-test tuition fees so that poorer students only take out a loan for a small proportion of them. This would address the issue of poorer students graduating with the highest debt levels. It would provide more incentive to control borrowing for maintenance and take for instance accelerated degrees as it would significantly lower debt levels (with a lowering of the interest rate) thereby giving many more students a genuine saving on a realistic earnings pathway. Together with measures to incentivise universities to differentiate tuition fee levels, it would add a further dimension of steer to universities’ incentives knowing lowering fees could genuinely save students money in repayments later.
Above all though, the system needs to be more FLEXIBLE. Mature students often take several different courses throughout their lifelong learning. If each time they study is met with different loan conditions you get a mess in repayments. E.g. study 2005, your loan is written off at age 65 (and you repay 9% above £18k). Study now (in addition), your 2005 course loan is still written off at age 65 and you still repay 9% above £18k even though you’ve now little chance of clearing the loan before age 65 due to the massive increase in debt. So you get none of the benefits or protections of the higher loan conditions (such as the higher threshold). In these instances, you should be able to either transfer your existing loan(s) onto a new set of conditions or have the flexibility to decide which to pay down first. The current situation where borrowers with both pre-2012 and post-2012 loans still pay 9% above £18k while hardly any of the repayment is used to pay down the higher interest post-2012 loan is a disgrace.