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 6th largest world economy, 22nd 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.

post list Latest articles

6 responses to “The high cost of higher education

  1. I wonder, if in the spirit of a fair comparison with other institutions, Mr Lygo will amend this article to include full details of his remuneration package (he was paid a jaw-dropping £738,000 in 2012)? It would be of great help for the many prospective students that see the salary of institutional leaders as a valid means of selecting the best institution for them.

    To further support student-led choice I wonder if he would care to comment on the findings of the QAA in reviewing BPP to national standards? They noted that:

    * students were unaware that lectures at non-London campuses would have remotely delivered lectures, rather than the small-group face-to-face provision that Mr Lygo correctly notes that the evidence suggests students prefer. This still isn’t clear from the BPP website.

    * The university used the term “‘consistently outstanding student satisfaction” in reference to unpublished and non-benchmarked internal student survey data. They were asked by the QAA to cease this potentially misleading usage in 2012 but the phrase is still visible on their website in 2014. I wonder if we could be updated on this, ideally with the release of survey data that could be compared with the NSS.

    To be clear, I’ve no axe to grind with BPP or any public or private university, I’m just interested in open, transparent and comparable data.

    I do admit I am particularly doubtful that it is seemly for a senior member of staff to critique other universities using the wealth of public data that is available though their own institution does not share comparable data.

  2. Your comments don’t address the substantive issue of why it is necessary for the traditional sector to cost so much and still demand even more money from students and tax payers.

    Addressing each of your points:

    1. My salary was unusually high in that year because I was paid for the shares I owned in the publicly listed company. BPP was owned predominantly by institutional shareholders (including the University Superannuation Fund) and I had built up shares via a Save as you Earn scheme via the 18 years of service I have given the company. My current salary is tied to the average increase of staff in the University. All of this was private income not funded by taxpayers. It is hard for a taxpayer to understand why more money is needed for Higher Education when VC’s salaries are increasing out of line with the average. I think that is a fair point?

    2. There is a table on the website detailing the information so I would dispute your claims. It is a well recognised trend that lectures are being replaced by synchronous and asynchronus online delivery.

    3. Feedback from teaching is derived entirely from student feedback and the vast majority of our students are postgrads having studied at other Universities so have a good comparator. In a recent Legal Week survey, for example, BPP was voted as in the Top 5 for teaching quality behind Oxford, Cambridge, UCL and Strathclyde. We are currently in the NSS so you will soon see our data. We provide key information set data. Our faculty contribute to the HEA agenda and we are increasingly becoming Fellows etc. We also have independent scrutiny and classroom observations of our teaching which we believe supports what we do. So we feel we have the independent verification of our teaching standards.

    All of this is a distraction from the central issue. Why should HE cost so much? There is a conspiracy to drive up costs. I appreciate the high tuition cost model of Oxbridge but why should that cost model be a justification for every University to charge the same fee and demand more?

  3. Thanks for your response, and I particularly look forward to the publication of NSS data.

    I couldn’t find the table you refer to in point 2 – could you share a link?

    For me, it is the same issue. We can only look at value for public funds (and student fees ARE public funds) if we have comparable data across institutions or we are not comparing like with like.

    For example I note that your original article talks primarily about undergraduate study (with reference to the fee levels etc) but in your comment you talk primarily about post-graduate study. Undergraduate and post-graduate education are very different processes (and these are two discrete groups of students with very different needs and expectation) and conflating the two does confuse the issue.

    The primary costs associated with HE are academic and support staff salaries – and the HEPI/HEA report does concur that engagement with high-quality staff in small groups is the gold standard for students. I did look at the HESA dataset to identify whether BPP was in line with competitors as regards their student:staff ratio but alas this is another national dataset that does not include BPP data.

  4. Thanks for a challenging post – I’ll leave it to others to engage (as they have already begun to) with the public:private arguments.

    One point that interests me is the productivity per classroom issue. The logic of the hypothetical model is unarguable – the more intensively a classroom is used, the less cost – per student – that classroom is. The problem is achieving in real life occupancy rates at such a high level.

    Two thoughts occur. One is that maintaining a standard class size is advantageous – if every group is 15 students, then that is the size you need all rooms to be. There’s more flexibility that way.

    The second is that in a smaller institution physical distance between classrooms matters less: it is easier to optimize the teaching timetable for teachers, students and the estates team without requiring people to sprint between classes. I don’t think that sprinting between classes was covered in the HEPI report but I’m fairly sure it would get a thumbs down from all concerned. Except possibly on a sports science degree.

    It would be interesting to see teaching room occupancy data tabulated against institutional size and spread of disciplines. The mechanics of operating a university are a real factor in what it costs, and I suspect that there are both advantages and disadvantages of scale which it would be good to uncover.

  5. I’m surprised at Carl’s back of a napkin calculations given his leadership position. Firstly an individual’s salary is not the sole cost of their employment – add in NI and employer pension contributions (which are significant in this sector; 16% of salary for USS). It is then important to have people who can actually administer the courses and manage back office functions – finance, IT, admissions etc etc. Who pays for these? I assume many courses will also have tutorials and that the GTAs who lead these might be paid money too.

    Carl also neglects to note that a proportion of the £9k fee has to be reinvested in bursaries/widening access etc so this is not the amount available per student. The ‘typical contract’ that Carl refers to is also in the post-92 sector only so covers less than half the academic teaching staff.

    It is great that BPP can offer a cost-effective alternative and that there are different types of provision in the sector. The sector is also aware that it can do more to deliver efficiency and is doing so as evidenced by the Diamond Review. However, the author does a disservice to HEIs and the level of debate needed by running off some ill-thought through numbers to create a straw-man argument about the profligacy of the publicly-funded HE sector.

  6. Having worked in a private uni (that is not Carl’s) – I am very wary of the rationales put forward about lowering cost because I saw the arguments put forth behind closed doors. “Lean Six Sigma Teaching”, “Can the publisher print on thinner paper to save money?” to name a small few. There is much the public sector can do to improve how it runs it’s model, but opening the doors to private equity and management consultants isn’t one of them. Before you know it, you have the best run airport in higher education.

Leave a Reply