This piece was originally written for the student newspaper of the London School of Economics, The Beaver.
It is impossible to escape the growing argument over higher education funding and tuition fees in the media over the past six months. With each corner of the HE sector fighting over funding and a fragile coalition agreement preventing the Liberal Democrats from sticking to their long term commitment of scrapping fees, its clear that this explosive issue will be upsetting some.
The independent review into tuition fees and student finance, headed by former chief executive of BP, Lord Browne, is expected to present its report this month, after nearly a year of research. Depending on who you listen to, you may believe that the outcome is a foregone conclusion. With only one student on a panel made up predominantly of business leaders and university chiefs, it is easy to suspect that the review is a stitch up and will result in a recommendation that fees should increase. Indeed, the review has suffered several leaks which suggest this; the latest indicating that Browne favours a total lifting of the fees cap.
The political landscape surrounding this issue has changed significantly over the past year. Twelve months ago, increases in fees seemed inevitable; now a range of different options have been put forward from across sectors and has created a new debate about universities’ funding. The question is no longer “how high should fees go?” but instead, “how should students pay for their education?”
As it stands there are three serious options on the table.
The most simple is as following: the government may opt to ignore Browne’s purported recommendations and maintain the status quo, opting to avoid political backlash and upset to the coalition. This presents the biggest problem for the sector in many ways because the coalition, like the previous administration, is expected to make swathing cuts to universities in the near future. Some universities will be able to cope with this comfortably – as has been made clear by the LSE Students’ Union, the Russell Group and 1994 Group universities such as the LSE could still produce 4 per cent surpluses for up to ten years in this scenario – but most universities will have to stretch their resources to the limits. The class sizes in many of these institutions would likely increase, staff cutbacks would be on forefront of discussion and the position of the UK as a world class hub for education would be at risk. Whilst for the LSE, freezing fees is the best option, for the sector as a whole it is likely to do more harm than good.
Another option is to opt for what Browne is likely to suggest; an increase in fees by at least a factor of two, or perhaps even lifting the cap on UK fees entirely, bringing them in line with international student fees and creating a true market within higher education. This is the option preferred by Universities UK, the umbrella organisation for British higher education institutions, because fees have generated £1.3bn of additional investment in the sector, and many institutions are calling for an expansion of the system to allow for more during and after the forthcoming cycle of Government cutbacks. But this is probably the worst option for the end user of universities; students.
Not only does this increase the debt burden on students, up from an already staggering £24,000, but it also creates further strain on the Treasury, as currently, for every £1 that the Student Loans Company lends to pay fees and maintenance loans, it receives 67p back. This is wholly inefficient in itself, but when you consider that the Treasury also subsidises the interest on the loans as well, the system looks even more unsustainable at a time when the coalition is looking to make cuts.
It is also naïve for the sector to think that the Government won’t take advantage of this situation through its austerity measures. When fees were first introduced, it was on the provision that it would be additional income to the sector, not a supplement. In a new fees regime, no such promise would have to be kept and there is nothing to stop the coalition from making deeper than planned cuts if they feel universities can merely prop themselves up with fee income.
Poorer institutions will be affected the most as they find themselves charging lower fees than their cash-rich, prestigious rivals, to sustain student numbers and government funding. Again jobs will be on the line and the student experience will suffer; and the market would widen this cash gap over time making things worse.
As well as that, experience has shown that when fees increase for UK ‘home’ students, fees disproportionately increase for international students. In fact even with fees at their current levels, international fees have grown by an alarming rate year on year even though the National Student Survey has shown that they have contributed relatively little to improving the quality of experience for students studying here.
One of the main arguments in support of fees is that you can use higher fee income to target students from less well off backgrounds, who are generally also more debt-averse, with larger bursaries. That argument no longer stands on its own two feet however, as the Office for Fair Access, reported in September that bursaries are totally ineffective at doing just that.
The third option would be to radically change the system by introducing a graduate tax. The strength of the argument for such a system depends on the source of your figures, but it has certainly ignited discussion amongst the Liberal Democrats and the Labour Party as a viable alternative.
The National Union of Students, who first put forward the idea, have gained widespread support for the system which sees an end to fees and an introduction of a small levy for a fixed period on earnings with a maximum and minimum payment threshold. NUS claim that under such a system, a majority of students would pay less than they would with fees and that there would be far less reliance on the Treasury because the system would sustain itself.
This system has been attacked on many fronts, not least because it doesn’t solve the problems surrounding international student fees either, that it may lead to a brain drain as people move abroad to avoid the tax and that it is too costly initially for the Government to support as it would require them to pump billions of pounds in to the system in the first few years – something which contrasts with the coalition’s budget plans.
Coalition ministers have already reminded us that “it is the job of reviews to make recommendations and the job of Government to make decisions”, but just how easy this decision will be and how much more students will be expected to pay remains to be seen until the vote in Parliament.