The high cost of higher education

It is not surprising that students continue to question whether they are getting value for money now that the higher fees regime is impacting more students. The latest HEPI/HEA data on the Student Academic Experience finds that 70% of undergraduates at Scottish institutions, who typically pay no fees, believe they are receiving good or very good value for money, compared with only 41% in England, where fees are typically £9,000 per year.

Students were asked to list their top three priorities for institutional expenditure, 48% of undergraduates chose ‘reducing fee levels’ (55% for first and second year students who are subject to the higher fees regime).

My institution, BPP University (a private independent university with UK degree awarding powers), charges domestic fees in a range from £12k – £18K for the entire undergraduate law degree, compared to £27K in the traditional sector.

The price of politics

The Coalition raised fees to be paid back by graduates, and ensured universities maintained levels of funding in the process. The Labour Party is currently tied to lowering the headline fee to £6,000 and replacing the lost income to universities with direct taxpayer subsidy.

So across the political spectrum, there is now acceptance that the cost of university is the cost of university and cannot be reduced. But is this really the case?

Vice Chancellors have done themselves no favours in accepting 10%+ pay rises at a time when they have urged pay restraint in the wider sector (my salary is linked to the average increase of staff at BPP).

All this raises the questions; where is this money going? Why should university cost so much?

Muddying the water

To avoid answering these questions, another is often posed in its place: what is the purpose of university? Be wary of those that try to obfuscate about who should pay and how much they should pay. It is generally agreed that university is a social good. The evidence suggests that if you have a university education you are more likely to be healthier, live longer, pay higher taxes, earn more, give more to charity and play a wider role in society.

It is also a private good. Increasingly universities have adopted the language of employability and surveys such as the Destination of Leavers in Higher Education measure the relative success of graduates finding work or further education once leaving university. So universities are being judged on whether their graduates find work.

The next obfuscation is around the need to maintain our reputation in the world as a leader in research. The UK punches above its weight and research matters to the future success of the nation.

The UK is the 6^th largest world economy, 22^nd when averaged per capita, and yet has seven universities in the top 40 Times Higher Education World University Rankings. The UK is ranked second behind the US in research with Asia catching up quickly.

But with 151 recognised university bodies in the UK, why is that we still design uniform systems at undergraduate level so that seven universities may continue to appear in the top 40 World University Rankings, based on the quality of that research?

It is a convenient cul de sac to park an argument about how we cut the cost of undergraduate education to the taxpayer and the student.

What students want

The HEPI/HEA survey found that the average of contact hours per week during term time was 14.2 hours. The ideal classroom size favours smaller groups up to a maximum of 15 students per group (89% of students agreed they got a lot out of student groups this size or smaller).

Students prefer more contact time in smaller groups of up to 15 students. 35% of students wanted more teaching hours, 35% wanted smaller class sizes, 34% wanted better training for lecturers and 34% wanted better learning facilities.

This starts to tell us something about the economic model needed to support what students want and helps us understand what the cost of undergraduate education should be.

The cost of teaching

The typical academic contract for lecturers in the traditional sector provides for a maximum of 18 hours per week for formalised teaching and a 550 hours maximum of formalised teaching in any one year.

In a recent Times Higher Education Survey, the average staff salary for all academic staff taken from HESA data was identified as being £47,278. Prospects UK suggests an average lecturer level salary between £33-43,000. The Guardian Tracker of average lecturer salaries suggests an average of £36,000.

Even taking £50,000 as the average salary with a maximum teaching week of 14.2 hours (79% of the maximum permitted), this would suggest a direct teaching cost for a group of 15 students of about £50,000 (plus taxes etc.) This compares to the revenues of 15 students, which yields £135,000 at a fee level of £9,000 per year.

There will be lecturers who teach longer and are paid less, just as there will be those that are paid more and teach less.

Added to teaching costs are the variable costs, which include property, but on the basis of the above teaching hours, each classroom should yield over £400,000 of income excluding use during evenings, weekends and out of term time.

Capital spending

Students do not want inefficient use of estates and expensive locations, nor should the taxpayer be required to fund them. According to recent reports, Russell Group universities intend to spend £9 billion of capital over the next five years – a figure comparable to the money spent on the 2012 London Olympics. And in other parts of the sector universities are also making large capital investments.

Just before the higher tuition fees regime was introduced I recall a leading US academic advising Vice Chancellors that under a higher tuition fee regime you need to invest in the quality of your swimming pools and sporting facilities. Yet the HEA/HEPI survey shows us that only 11% of students saw this as a priority.

Funding support staff, libraries, the ever increasing burden of regulation, the increasing expectations of quality assurance internal/external processes etc. all add to the cost of university and I accept some of these hidden costs can be large. But in the HEA/HEPI survey only 14% of students felt that it was a priority to increase investment in support staff, including such things as careers advisers.

I have not begun to touch upon the cost savings that can be obtained from utilising online technology to deliver improved and individualised services to all students.

A Legal Week survey of students placed BPP University as the most value for money undergraduate provider also placed BPP as the 5th best university for teaching quality behind Oxford, Cambridge, UCL and Strathclyde (5th out of 151).

Our model shows that is possible to have high quality teaching without being research intensive and at the same time charging students a lower tuition fee.

But of course why would you charge less if you can charge more? Policy makers need to carefully re-examine the widespread acceptance that a university education needs to be so expensive. And if regulators truly believe that students at the heart of the system, then it is time to listen to their number one priority.