Are headline writers getting it wrong on fees?

This piece was originally published by WonkHE on July 6th 2017.

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Yesterday’s briefing by the Institute for Fiscal Studies (Higher Education Funding in England: Past, Present and Options for the Future) was covered in the same way by most of the national press. “Three quarters of graduates will never pay off student debts” ran the headline the Independent. Coverage in the Times was almost indistinguishable. The Mirror did little more than capitalise its NEVER, and the Telegraph headline merely framed the 77.4% figure as “almost eight in ten.”

For journalists, it’s the obvious way into a complex story, a hook that ostensibly captures the current system’s flaws and rank unfairness. What better evidence of a broken model than millions of graduates weighed down with debt they’ll never earn enough to repay?

 

But there’s a danger that the terms of the much-anticipated national debate (as called for by Damian Green last week) will be shaped too narrowly by this statistic. While some evidence suggests that students graduating into higher levels of debt feel more anxiety than those in previous generations, the report offers other kinds of evidence that should arguably have a greater bearing on public thinking.

Indeed, to some extent, the unrepaid bit of a graduate’s debt embodies the funding model’s most progressive element. Because it kicks in when a graduate’s earnings are too low for repayment to be deemed possible, it’s effectively the government’s subsidy for HE, a solitary concession that universities might just be a public good as well as a private one. Jo Johnson hints at this when he talks about “a vital and deliberate investment in the skills base of this country”.

The problem is that the more substantive defects of the current system are trickier for newspapers to distill into a few big-font words on the front page. Take the “back-door” freeze on graduates’ opening repayment level. This not only contravened assurances that the threshold would rise with inflation, but we now learn that it costs students an average of more than £4,000 each. As the IFS briefing note explains, this is because the impact of the freeze is permanent. Over the five year period to which it initially applies, the long-run taxpayer cost is reduced from £7 billion to £5.9 billion. If extended for another five years, the government saves a further £700 million. Middle earners are hit hardest.

The 6.1% interest rate that some graduates will face come September is equally difficult to justify. For high earners, the use of RPI + 0–3% (rather than CPI + 0%) increases lifetime repayments by almost £40,000 in today’s money. A blog from Million Plus’s CEO uses adjectives like “staggering” and “usurious”.

We also need to be more mindful of those who don’t fall into the government’s go-to definition of a ‘student’. While recruitment holds firm among the young, full-time cohort, the same cannot be said of part-time or mature students. Many commentators have explained why we should avoid looking at HE participation through such a conveniently narrow lens, but policy discourse doesn’t budge, and the sector’s part-time and mature students remain largely invisible.

Claims about the graduate premium, such as Jo Johnson’s that “a degree is worth on average £250,000 in higher lifetime earnings for a woman”, should always be accompanied by an acknowledgement that subject-by-subject differentials are enormous. Other broken promises – on maintenance grants, on nurses’ bursaries – must be central to any national debate. Perhaps IFS’s most damning observations is that “incentives for universities to provide high-quality courses in return for the money they receive are surprisingly limited.”

As David Kernohan notes, the briefing should allow the sector to take a more nuanced and long-term view on HE funding in the aftermath of a heated election campaign. Our students deserve nothing less. The immediate focus of the press has been on the proportion of graduates who are projected never to earn enough that their debt is paid in full. But beneath the headlines lie a series of issues that more directly impact on equity, and potentially present greater long-term threats to students’ participation and the sector’s sustainability.

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The University Game

I’m looking forward to giving a Sarah Fielden seminar on May 11th at the University of Manchester. All welcome. Further details here.

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Who gains from the grumbles?

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Note: this piece was originally published by WonkHE on January 11th 2016.

“My students have paid £9,000 and now they think they own me” runs the headline. It’s one of those anonymous pieces, so the wider context is difficult to figure out, but the author seems troubled by a message that reads “all I’m asking for is a little respect seeing as I pay you £9,000 a year”.

It’s the “blunt, consumerist language” that offends the author, and a number of anecdotes follow, each reinforcing this interpretation. “If you ask me,” quips a colleague in the car park, “all universities are going to need a customer services department before long”. Another claims a student once told them: “I pay you to teach me what’s in the article, not the other way around”. The author recalls how very different they had “acted and spoke” when at university – assignments were completed punctually, guidelines followed diligently, etc. How they wish they could say the same of their students now.

passengers.jpgSuch rhetoric is becoming familiar on English campuses, and the points about unfair workload allocation, expectations of across-the-board excellence, and often counter-productive management culture all deserve to be made forcibly and repeatedly to policy-makers, sector representatives and intuitional leadership teams. But venting at students about how universities are funded is like confronting fellow passengers because your train is running late.

Remember, the student’s plea is not for higher grades, quicker feedback or the guarantee of a graduate job, but for “a little respect”. Is this really a case of neoliberal higher education policy coming home to roost? Or is it something altogether more localised and petty?

images22Perhaps the student was wrong to mention fee levels at all. But let’s not forget the extent to which the 2012 funding system has driven higher education to “hurl the cost of itself at graduates”, as Jim Dickinson recently noted on this site. According to the Sutton Trust, only one in twenty will now repay their debt in full by the age of 40, compared to almost 50% under the previous system. An average teacher will still owe £25,000 by their early 50s. The freezing of the repayment threshold will make an undergraduate degree more costly still and, last year, we saw maintenance grants turned into loans and student nurses stripped of their bursaries.

It’s naïve to believe that such wholesale reconfiguration of the way in which our sector is funded won’t disrupt the nature of undergraduates’ engagement with their university or change academics’ working conditions. That’s exactly why our students were placed at the heart of the system – so they’d behave like consumers and enact the marketisation agenda.

Teaching-Excellence-Framework2However, in many respects, they’ve refused to play ball. Take the proposal to link success in the Teaching Excellence Framework to higher fees. The National Union of Students objected immediately, taking a position of principled disengagement long before the rest of the sector began to follow suit. Yes, there are some individual undergrads who’ll seize their rights as newly-empowered service users to make unreasonable demands on staff as they seek to maximise their return-on-investment. But there are millions of others who don’t measure their experience in solely utilitarian terms and want their time at university to be inspiring, cordial and enlightening.

The nameless author of the piece fantasises about replying with: “Hey student – all I’m asking for is a little respect, seeing as how much you pay makes no difference to my wages, yet the level of support I am forced to offer you takes up 80% of my time despite the fact that teaching still only equates to 33% of my workload.”

Is support for students really something that academics are “forced” to offer? And if we must gripe about our salaries, might it be judicious to acknowledge the inter-generational unfairness that the current funding model precipitates?

arguing.pngBut the bigger question here is who gains from such grumbles. A frostier relationship between students and academics doesn’t benefit those who yearn for campuses of old. Rather, it benefits those who seek to marketise and instrumentalise the sector further. Undergraduates can be framed as dissatisfied customers, then as budding agents of change, while academics can be positioned as ivory-towered and over-protected. Many of the 4,000+ comments beneath the original piece offer precisely this reading.

But the student-academic relationship at English universities is surely stronger than such simplistic polarisations allow. Is a little respect really too much to ask for?

When it comes to higher education policy, Labour is asking itself the wrong question


(Note: I published this piece first at the London School of Economics’ General Election 2015 blog on 06.02.15…)


“How can we bring down the headline £9,000 per year figure?” seems to be a challenge that Labour Party policymakers have set themselves ahead of the General Election, perhaps concerned that higher fees could deter participation, especially among society’s less privileged groups, and that too many student loans are being written off. These are valid concerns and, to some extent, the “intense focus” on the £9,000 headline figure is justified: since English universities became the most expensive in Europe, enrolment rates for mature and part time students have fallen sharply. Moreover, estimates continue to suggest that the new funding system will prove more expensive for the taxpayer than the one it replaced.

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But there’s a risk that trying to reduce the headline figure will actually cause further damage. The first thing to remember is that £9,000 is an irrelevant sum to most graduates because they’ll never repay their debt in full. Whether higher fees deter young people from applying to university is difficult to gauge. There’s no evidence to support that position yet, even among those from the lowest socio-economic quintile, but it is possible that early trends are being skewed by a lack of meaningful labour market alternatives.

Labour is reportedly toying with the idea of capping fees at £6,000 per year. But university VCs are already demanding to know how the lost revenue would be replaced. It would be a bold government that asked the Higher Education sector to do it all a bit cheaper. Relative to the share of GDP received, many indicators suggest that UK universities already punch above their weight.

One solution would be to change the income threshold at which graduates begin their repayments. At the moment, it’s £21,000 per year. It would be very easy for any government to raise revenue by reducing this threshold, or by freezing it as inflation rises, thereby making graduates repay more of their loans more quickly. But such a move raises all kinds of equity issues. Remember that when £9,000 fees were introduced the biggest losers, relative to the previous model, were middle earning graduates. As the Sutton Trust noted, the “average teacher” would now pay back around £42,000 of student debt, and still be making repayments when they reach their early 50s. Under the previous system, the same teacher would have repaid around £25,000 and completed at the age of 40. In relative terms, changing the income threshold would hurt low and middle earning graduates more than those on higher incomes, and cutting the headline figure to £6,000 may well have a similar effect.

So what are the alternatives? As a recent report by the Higher Education Commission concluded, there’s no ‘silver bullet’ when it comes to higher education funding. But the question that Labour might want to begin asking itself is “Can those who benefit most from Higher Education contribute more?” Such thinking immediately brings to mind the Graduate Tax, a phrase that increasingly means whatever its user wants it to mean, as several commentators have noted. A ‘pure’ form of Graduate Tax, levied against all income at the same rate, would be controversial for practical reasons – very high earners may choose to leave the country rather than keep paying. It would also raise issues of fairness – should any graduate be required to foot the bill for their degree thousands of times over?

The kind of funding system that Labour might want to think about is one that demands more for longer from the very highest earners. At the moment, it’s possible for some graduates to repay their loans relatively quickly, thereby dodging interest. But what if everyone had to contribute something for the full thirty years? Just a regular flat, fee for those lucky enough to have finished their loan repayments and still be earning a healthy salary?

Would anyone complain about fairness if the resultant income allowed the 2012 funding system, with its safeguards for lower earning graduates, to be preserved at less expense for the taxpayer? And for the all-important repayment threshold to rise with inflation, as promised, for all graduates? Might it even allow further support for students struggling to get by on inadequate maintenance loans, or for hard-hit groups, such as mature and part time students?

The main opposition to a Graduate Tax seems to be ideological rather than economic. We’re told that, in the marketplace of Higher Education, “competition, with suitable regulation, benefits the student”. To treat all graduates equally is to make free market behaviour, such as price discrimination, more difficult. And that raises the toughest question of all: “What are universities for?”

Is the optimum model of Higher Education is one that drives up quality by using dubious metrics to pit university against university? Or should the goal now be to reclaim Higher Education as a public good as well as a private good, and to accept that some graduates will earn more than their peers simply because they enter better-paid professions? Labour need to ask the right question.

Enrolments slide further for ‘forgotten’ part-time undergraduates

(Note: I published this piece first at The Conversation on 19.01.15….)

We were told that the 2012 changes to England’s student funding system would boost the number of part-time students at university. But new data released by the Higher Education Statistics Agency confirm that such predictions were wide of the mark. In fact, there were 30% fewer new, part-time, first degree enrolments on undergraduate programmes in 2013-14 than there were in 2011-12.

Prior to 2012, part-time study was rising in popularity. The Browne Report into English higher education recommended that those studying for an undergraduate degree part-time should be given the same access to funding, proportionately, as those studying full-time. The previous method of up-front fees, it claimed, “put people off from studying part-time and stopped innovation”.

The subsequent government white paper, Students at the Heart of the System, accepted Browne’s recommendations about finance for part-time study and went further still, promising “a more diverse sector with more opportunities for part-time or accelerated courses, sandwich courses, distance learning and higher-level vocational study”. According to free-market logic, with universities deregulated and therefore more responsive to student demand, flexible learning would become the norm and part-time enrolments would rise.

Big drop in part-time students

The graph below tells a different story. The annual number of new students enrolling part-time on a first degree fell by 15,820 (20.3%) in 2012-13, then by a further 8,005 (12.88%) in 2013-14. As a result, the proportion of all new undergraduate students that are enrolling on a part-time basis has dropped from 14.11% to 10.37%.

 

The slide is a cause for concern because many part-time students are “from backgrounds under-represented at universities”, according to the white paper. They are the “forgotten” group in higher education, their absence not receiving the attention it might because of a tendency for public discourses to focus on more positive trends among young, full-time students.

As the second graph shows, although enrolment rates for new, full-time, first degree undergraduates dipped immediately after the fee rise, they recovered in 2013-14. This recovery allows claims to be made that higher fees do not deter demand for higher education. Applications from lower socio-economic students also appear to have risen within this group since 2012. However, enrolment rates for new, part-time, first degree undergraduates have not recovered from their dip.

 

Even for full-time students, it may be premature to hail the 2012 system an unqualified success. A lack of meaningful labour market alternatives to higher education may skew the figures for the current crop of students. The number of young people choosing to study abroad, though still lower than leaders of independent schools imply, continues to rise. But, as a former leader of the National Union of Students Aaron Porter points out, the main reason to be cautious is that the data relied upon for good-news participation narratives generally exclude the huge number of students who are not full-time.

Why are part-time students disappearing?

Claire Callender, a higher education policy researcher at Birkbeck College, notes that part-time students face problems with eligibility criteria, and that employers may be increasingly reluctant to fund higher education courses as fees rise. Campaigns by the government and by individual universities may implicitly target the “typical” (young, full-time) student.

Drives like Universities UK’s “Part-Time Matters” aim to address the problem through clearer communication to those considering part-time study. Yet opportunities are not distributed equally between institutions – and more selective universities may find part-time students limit the speed with which they can launch and withdraw degree programmes, as market forces ostensibly demand.

Burden of fees

The effect of higher fees on part-time students is also poorly understood. It could be that those students most likely to be part-time are also those most likely to worry about placing themselves in substantial debt. The Sutton Trust charity demonstrated that the 2012 student loan system requires that graduates pay off their debt for longer than under the previous system, and that they repay more in total.

Budding part-time students may be deterred disproportionately, especially if their opportunity cost is greater because they already have work. Cost-benefit analyses soon become less straightforward, and the “graduate premium”, so often cited by advocates of the 2012 system, becomes less directly relevant.

The government white paper characterised the 2012 funding changes as “a major step in terms of opening up access” and predicted that “up to around 175,000” part-time students would benefit. In reality, the opposite has happened. This fall in part-time undergraduate enrolments, if not reversed, will have significant consequences for the make-up of higher education and, in due course, for the nation’s workforce.

Manchester Asks… Prof Les Ebdon

A couple of weeks ago, I hosted a University of Manchester public event at which the Director of the Office for Fair Access, Prof Les Ebdon, responded to pre-recorded questions from staff, students and alumni.

One of Prof Ebdon’s key points was about the under-performance of Black and Minority Ethnic (BME) students. According to Prof Ebdon, the issue is now “bigger than access into university” for such students.

Prof Ebdon was responding to a question asked by undergraduate student, Aasia Hanif, in which she cited HEFCE research showing that the likelihood of students from some minority ethnic backgrounds being awarded a good degree was lower than that for other students with the same entry qualifications.

“It happens at nearly every university,” said Prof Ebdon. “The expectation for those students is lower than the expectation for white students.”

Prof Ebdon described university as “the best investment you can make”. However, when pressed on the complexity of student loan model, he conceded that “the advantages of the system take a lot of explaining to people who just see the headline £9,000 per year”.

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In response to a question from Diana Khasa about the lack of encouragement received by some would-be applicants, Prof Ebdon urged universities to address the “myth” that young people from non-traditional backgrounds don’t fit in.

However, he also acknowledged important differences in the quality of advice, information and guidance received by students from different educational backgrounds.

“When I go into a fee-paying school, they’re usually very hot about university admissions,” said Prof Ebdon, before recalling his own difficulties navigating the university admissions system, which he described as “a complete lottery”.

“But lotteries are usually random,” I said.

“You’re absolutely right,” Prof Ebdon replied. “It isn’t a lottery. It’s a loaded dice.”

Prof Ebdon talked about “continued improvement” in the young participation rate of students from the most disadvantaged backgrounds. However, in response to a question about mature students from Student Union Campaigns Officer, Clifford Fleming, he accepted that participation rates for some other groups had fallen since the introduction of higher fees in 2012.

For mature students, Prof Ebdon advocated a “more flexible provision” noting that “ministers believe there are big opportunities in Distance Learning.”

“The picture is changing all the time,” added Prof Ebdon, pointing to “remarkable success” in admissions with minority ethnic groups, but noting that the increasing under-representation of ‘working class boys’ was “building up quite a significant social problem.”

When asked about access to postgraduate study by Clive Agnew, my University’s Associate Vice-President for Teaching and Learning, Prof Ebdon agreed that this was a growing area of concern. “Postgraduate admissions is the new glass ceiling for Widening Participation and we’ve got a problem with double glazing.”

Prof Ebdon also maintained that the Widening Participation agenda should not stop at the point of admissions, noting that non-traditional students “are likely to need extra support” once at university.

Finally, responding to a question about employability skills posed by Director of the Student Experience, Tim Westlake, Prof Ebdon said: “Students with professional parents very often have access to networks which enable them to understand what goes on in particular professions. They have a much wider range of professions that they know about. But students from non-traditional backgrounds may not have experienced that.”

Are counter-arguments to a Graduate Tax wearing thinner with every new RAB estimate?

Last week’s news that the 2012 student fee system is likely to cost more than the one it replaced was met with silence by those who previously blamed public opposition to it on “a failure of presentation”.

For some, the solution involves lifting the cap on fees further. So when Channel 4 newscaster Cathy Newman suggested to David Willetts that another rise was on the way, his response was that it “could be“.

For others, like John Denham, the answer is to introduce shorter degrees and to cut fees by having employers part-fund students.

Somewhere between the two, advocates of a Graduate Tax point out that, if levied at the right thresholds and subject to appropriate limits, such a contribution has the potential to raise more revenue in a way that’s more progressive.

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Often, the very idea of a Graduate Tax is shot down in flames, and today it was the Social Market Foundation’s Director, Emran Mian, who smeared it as “a terrible policy at a terrible time“. “If Labour does adopt a graduate tax policy,” he said, “it will be making a grave mistake.”

But are the counter-arguments to a Graduate Tax wearing thinner with every new RAB estimate?

According to Mr Mian, “everyone earning over £10,500 would have to make a contribution” and repayments would be “unlimited, both in terms of the total amount due and the period over which it is to be paid”.

Really?

Could repayments not be levied on earnings over, say, £21k, as the current system does? And could a Graduate Tax not cease 30 years after the degree is completed, as loan repayments now do?

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The underlying objections of Mr Mian, who headed up the supporting civil service team for the 2010 Browne Review, seem to channel those of Nicholas Barr, who rejected a Graduate Tax on the grounds that universities should “face a system that encourages competition“.

The problem is, changes to the funding model made in the name of “austerity” begin to look ill-conceived when the tax-payer is left footing an even bigger bill.

And Mr Mian’s piece doesn’t acknowledge one of the main problems with the £9k system – that high-earning graduates end up getting their degree for substantially less than their middle-earning counterparts.

That’s not to say a Graduate Tax is without any problems of its own, of course. Hypothecated revenues would need tightly ring-fencing to stop future governments dipping their hands into the till, and the Russell Group are right to point out that “the prospect of incurring a punitive tax liability would create incentives for those who anticipate higher earnings to avoid paying“.

Some wealthier graduates may indeed drift overseas to dodge their contribution.

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The SMF’s Chair, Mary Ann Sieghart, described Mr Mian’s piece as a “great demolition of the Graduate Tax“. And John Rentoul went further, arguing that the Graduate Tax has a “mythical quality of otherness shared in the old days by communism and in the new days by Swedish social democracy“.

But rather than dismiss the idea with a sweep of rhetorical flourish, wouldn’t it be better to commission some detailed economic modelling and make long-term comparisons with a £9k system that increasingly seems unfit for purpose?

Who knows? Maybe bigger loans and cheaper degrees aren’t the only two options?