In 1999, then prime minister, Tony Blair, outlined a plan to encourage more young adults into higher education (HE). The percentage of young adults going into HE in 1999 was 39%; the government was aiming for 50% attainment during the next century. As of the 2017/2018 academic year, this has all but been achieved (the number sits at 49%), although it’s Theresa May’s Conservative Party that is now at the helm. 

Since 1999, the landscape of HE has become increasingly tumultuous, although much of today’s antagonistic discourse surrounding HE can be traced back to the final years of the 20th century. It was in 1999 that tuition fees for universities were first introduced. The government’s decision to launch a £1,000 per-year tuition fee (£1,647.51 in 2017 accounting for inflation) for HE courses was met with indignation by students and politicians alike; since then, costs for such courses have increased exponentially to their current level of up to £9,250 per year. 

Funding has become an increasingly important issue in higher education. UK universities have moved from a period in which they were entirely state-funded to now being almost solely responsible for collecting and managing their budgets. Since 2012, undergraduate students have become the principal backers of their HE institution, so a report from the Economic Affairs Committee of the House of Lords into whether students are getting fair value on their investment appears particularly pertinent.  

The resulting report delivered some quite astonishing evaluations from members of the Economic Affairs Committee. Below we outline some of the most interesting details.  

Treating Students Fairly – Are Students Getting Value for Money?  

The report criticised the government’s oversimplification of the link between economic growth and HE. This pertains to what is described by the Economic Affairs Committee as a “skills mismatch,” in which companies are reporting shortages of graduates with technical skills. Typically, these skills are learned via vocational qualifications, yet demand among students for such courses is low. A secondary concern highlighted by the report questioned whether this low demand is due to the availability and quality of courses in the UK. Apprenticeships could very well fill the skills gap; however, there is still some confusion around the new apprenticeship funding method, and the “provision and quality [of apprenticeships] is again variable.”  

Vocational Qualifications – A Forgotten Area of Education? 

Another noteworthy addition to the analysis questioned why such low levels of students were studying vocational qualifications despite the attractive employability figures they produce, and why was there a “dramatic reduction of part-time study.” A drop of over 50% was found in students studying part-time between 2010 and 2016. 

The Marketisation of Higher Education  

The review spent considerable time criticising the lack of competition in the free market approach introduced in HE as a result of the 2012 funding reforms – “as evidenced by the lack of price competition.” Instead of having variable prices, the vast majority of HE providers charged Level 6 undergraduate courses at the maximum amount, presumably to avoid being seen as less valuable than competitors. Previously, the government attempted to align the Teaching Excellence Framework (TEF) ratings (gold, silver and bronze) with a designated yearly tuition fee rise; however, the House of Lords rejected the proposal, and the government has since placed a temporary freeze on tuition fees. 

Quantity over Quality? 

The marketisation of HE has also resulted in more pressure on providers to welcome ever-larger numbers of undergraduates in a bid to improve an institution’s financial stability. This has coincided with a significant rise in first-class degrees awarded (up almost 10% from 2012 to 2016), which the report argued would “attract students.” A further result of the marketisation of HE was the domination degrees have of the undergraduate market, resulting in lowering of “demand for other types of higher education.” This has also had an impact on further education (FE), with changes to funding disproportionately affecting FE providers: “The system accentuates the perception that routes into higher education that begin in further education are inferior to the A-Level/undergraduate degree option.”  

Regarding TEF, the report went on to criticise the dependence the government has placed on the mode of evaluation, calling it “too general to relay much information about the quality of an institution or course.” Ensuring quality in HE requires strict criteria that may not be present in the TEF; these measurement tools are likely to be used by professionals in the secondary education sector to aid students in choosing their next step and, thus, should paint as accurate a picture as possible of the HE provider. 

New Government Apprenticeships – The Solution to Student Concentration?  

Much like part-time study, the role of apprenticeships has been sidelined mainly due to the focus on undergraduate degrees. To address this, the government has created an apprenticeship scheme and set a target of three million new apprenticeship starts by 2020; however, the report argues this shows a priority for “quantity over quality.” Instead, efforts should be focused towards directly addressing the skills shortage employers highlight, as well as making students aware that apprenticeships are “just as valid an option as the academic route of sixth form and university.” 

Student Loans – Truly Progressive?  

The student loan system was also targeted by the committee, with its seemingly “progressive” nature lauded by supporters brought into question: “Graduates who only just pay off the loan within the 30 years will pay far more in real terms than higher-earning graduates who pay the loan off sooner;” this is the essence of a regressive tax. The current interest rates were also examined, with the conclusion being that the rate should be brought in-line with the government’s money borrowing costs, and interest should not be charged on the loan until the student has graduated.  

Maintenance Grants – Making a Comeback? 

On student finance, the committee argued that maintenance grants are a necessity for those from disadvantaged backgrounds, with student loans “insufficient to cover day-to-day living expenses; and… [they] impose the greatest burden on students from the poorest households.” The reality of HE is that improved social mobility comes at a higher financial cost for those from deprived backgrounds.  

Student Loans – A Ticking Time Bomb for the Government?  

Alongside student finance, the report also looked at the government’s relationship with student debt. The conclusion reached was that the large cost of student finance on the taxpayer is unlikely to be seen – this is due to student loan write-offs only being included in the budget after the 30-year expiration date, by which point the government may have sold off the loan, meaning “the write-offs never hit the deficit.” Presumably, the loan would be sold off to a third party for a fraction of the cost, resulting in a loss for the government; however, the need to report the loss would be eliminated. 

Depending on future economic health, taxpayers may be asked to cover costs of unpaid student loans if they’re not sold off, with the report calculating “the 2047/48 government [will have] to find an extra £8.4 billion to cover expected losses on the 2017/18 student loans.” Likewise, the lack of clarity and transparency about the proposed repayment timescale at which students will pay back their loans results in the public being unaware of the true cost of funding higher education. Until such figures are provided, taxpayers and students cannot have a fair debate about the positives and negatives of the current loan format. The Telegraph’s Charles Moore commented that “the amount of debt in nominal terms for which taxpayers will be liable by 2049-50 will be £1.212 trillion, or, to spell it out in frightening numerals, £1,212,000,000,000. That is well over half this country’s entire current annual GDP.”  

How are you affected by the UK’s approach to HE financing? Do you find the system fair, or should taxpayers cover the cost of HE like many countries in Europe do? Comment below and let us know. 

Interested in studying an undergraduate qualification for around £3,000 less per year than an equivalent university course? Contact UKCBC’s course advisors today to find more. 

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