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Winners and losers in the current system

There is no doubt that, as with most changes, the £9,000 fee system introduced in England in 2012-13 created winners and losers. We know that applications are back up for full-time undergraduates - and we know this includes students from non-traditional backgrounds, which is great. But that is not the whole story. On the day the Public Accounts Committee confirm the rising costs of writing off loans, Libby Hackett looks at the winners and losers in the current system, and calls for a fundamental rethink.
This article is more than 10 years old

Libby Hackett is the former Chief Executive of University Alliance.

There is no doubt that, as with most changes, the £9,000 fee system introduced in England in 2012-13 created winners and losers. We know that applications are back up for full-time undergraduates – and we know this includes students from non-traditional backgrounds, which is great. But that is not the whole story.

First-time undergraduates

The £9,000 fee cap applies only to those students and courses that qualify for a fee loan. UK Government fee loans carry a significant subsidy and therefore access to fee loans is constrained to particular groups of students. In the UK, we have chosen to prioritise first-time undergraduates.

The problem is that the £9,000 undergraduate fee has had knock on effects in other parts of the HE system where students cannot access a fee loan so still have to pay 100% of the fee upfront. This is the case for nearly all postgraduate students and around 2/3 of part-time undergraduate students where fees have increased but fee loans are not offered. The consequence has been growing pressure on postgraduates, some part-time and mature entrants and those seeking to re-train (ELQ students).  Also known as the losers.

Intuitively upfront cost would be detrimental for those from poor backgrounds thinking about HE, and so the UK should be experiencing lower participation from non-traditional entrants in these areas.

But our experience is complicated. We know that applications from students from poor backgrounds has actually increased despite the introduction of the £9,000 fee. But this is just amongst young, full-time, first time undergraduate entrants – i.e. those students that can access a Government subsidised fee loan. The winners.

Postgraduates

For postgraduate students, the picture is complicated. First and foremost, we are still waiting for students under the new £9,000 system to graduate.  Whilst we can speculate about the behaviour of graduates carrying an increased fee loan, we do not know with certainty how they will behave.

Secondly, we are used to a postgraduate market in which students have to pay the fee upfront – usually for a 1 year postgraduate taught degree.  And whilst postgraduate fees may have gone up slightly since 2012, they have certainly not trebled and are unlikely to suddenly do so in 2015 when the first year of 2012 students graduate. So hopefully the PG market will not experience a sudden shock in 2015.

Thirdly, and perhaps most reprehensibly, we have yet to develop a credible measure of deprivation or otherwise for postgraduate students and until we do so, it will be impossible to know the impact of these changes on access to postgraduate education for certain.

One can only speculate about the choices that might be made by a graduate from a poor background carrying high levels of debt being able to pay the upfront cost (or take out a private loan) for a postgraduate qualification.

Part time and mature students

For part-time and mature students that cannot access a fee-loan because they are either studying at a low intensity or are re-training when they already hold a degree qualification or higher, the picture does not look good.  We know there was a 40% drop of part-time students in the UK over just two years from 2011-13. Whilst this snapshot is by no means the whole picture (for example, much of this drop happened the year before higher fees were introduced in 2012), it is difficult to deny that higher fees, where combined with restricted access to fee loans, has reduced participation amongst some of the most non-traditional and hard to reach students.

How much of this was due to poor information or other supply and demand factors (e.g. the wider economic downturn in the UK) is almost impossible to ascertain but the outcome is irrefutable – they have lost out in the current system.

Private providers

For established private providers, their students have been able to access fee loans for the first time but only up to £6,000. For new private providers it has (quite rightly) continued to be tough to enter the new market except as a deliverer of another institution’s qualifications – but don’t underestimate this market.

A large number of small private providers have emerged that are delivering accredited sub-degrees from for-profit private degree awarding companies. Collectively these small new providers have recruited far more students than anticipated, leading to a hole at the heart of BIS’ HE budget and the Government being forced to step in and halt further expansion.

In principle, it is a good thing to see the HE market expanding and diversifying in this way but the difficulty is that new places qualify for fee loans that carry a subsidy and these costs all come out of one limited BIS budget. Checks and balances need to be in place in a sector dependent on quality and reputation both in the UK and overseas.

SNCs did not apply to private providers in 2012-13 and 13-14 but will be applied in 14-15 before number controls are removed for the mainstream sector in 15-16. The Government has yet to decide whether it will apply some form of number controls to new providers after 15-16. Those in the system already are doubtlessly looking forward to 15-16 and the removal of student number controls along with most of the mainstream providers.

Some of the better established private providers (e.g. BPP, Regents etc.) have also received University Title under this Government – something that has doubtlessly helped their reputation and has been welcomed by those in favour of a more diverse HE system. But we all remain at risk from those providers that may seek to play the system to make a fast buck. Winners and losers exist among private providers, but this is a highly dynamic and fast-changing part of UK higher education, with a lot of scrutiny on its activity. Its future therefore remains unclear.

Employers

Employers are probably sitting on both sides of the fence for this one as well. They are no doubt benefitting from highly trained (although in most cases non-specialist) graduates entering their workplace at no cost to themselves. We know that graduates are more productive than those without an HE qualification and it is encouraging to see graduate jobs and salaries increasing again.

However, there is little doubt that the lack of loan access for most part-time and all postgraduate students will start to hurt employers at some point. Given the lack of flexibility in the system to re-train and access a second loan and given the growing demand for postgraduate skills in the workplace, some solutions for upfront finance and support for these students need to be identified.

Predictions about the way we’ll work in the future suggest that unless we achieve a much more flexible market and genuinely open up the market for different forms of HE with a range of entry and exit points, we are likely to end up with an out of touch, traditional system that is increasingly less relevant to the world of work.

We need to turn this around and get financial support in place for all students to allow the system to adapt to changes in demand more effectively. In order to do this, we need to design a Government loan system that does not carry a subsidy and can be offered to every student, such as the one we are designing through our uni_funding work. Without this foundation in place, the losers in the current system are going to have an increasingly difficult time – to the detriment to individuals as well as our economy and our society – and the sector’s future will remain unclear.

2 responses to “Winners and losers in the current system

  1. Hi Libby, that’s a great take on the current situation and good work in pointing out the hidden ‘losers’. On the postgrad point, we’re currently running a survey with taught postgrads and ask quite a lot about their finances and living costs. Happy to share what we’re doing with you and the team.
    Jenny

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