A new cap or a new price?

The government today responded to the Browne review recommendations.  A few brief details on government proposals:

  • A rise in the tuition fee cap up to a possible £9,000 (including a lower cap of £6,000);
  • higher interest rates on loans, up to 3% above inflation;
  • students pay back once they earn above £21,000;
  • slightly higher maintenance grant for students from families earning below £25,000;
  • Introduction of £150m ‘National Scholarships Programme’;
  • greater loan support for part-time students.

For greater detail, Times Higher Education have put together the main detail in the proposals.  There will be a lot more discussion throughout the week across the media, that’s for sure.  Then there’s the small matter of a demo in London on November 10…

Wordle: David Willetts - 3 Nov 2010, response to Browne & HE proposals

Just after the majority of teaching funding was slashed by the government, universities are going to have to find a lot of money from elsewhere.  So it’s unlikely that institutions will want to charge less than £9,000 if possible.  As with many capping exercises of the past, expect to see the cap become the price. Chances are that £9,000 will become a standard figure, with £6,000 being charged by any universities that cannot work toward the extra agreements.  Whether or not you agree with a full marketisation of higher education in a cap-less system, it’s hard to see a variable rate up to £6,000 or £9,000 do more than push the standard price up across all institutions.

This situation is clearly one in which the financial burden will be placed on students.  Those in favour of these changes are keen to say that it is graduates, not students, who will pay back the debt.  These graduates are still the same individuals, regardless of what you call them.  Students don’t pay up front at the moment, so the government is not proposing any type of revolutionary change.

Today’s proposals appear to be more of an offsetting exercise in regard to government debts. People won’t be saddled with credit card or mortgage style debts, but neither are they faced with that under today’s system.

Graduates will likely pay back more over 30 years.  The lower debt we currently have, coupled with a cut off of 25 years, is not much different to a higher debt and a cut off of 30 years.  The only real difference is the amount of time many individuals spend paying money back.  Some call this a stealth tax.  Some say that NUS and other opponents to fee hikes are scaring potential students unnecessarily.

Yet these proposals will make an impact.  And alternative measures have been offered.  For example, NUS released a blueprint outlining a graduate tax long before the Browne review was announced.  That graduate tax was essentially ignored.  The type of graduate tax dismissed in the Browne report was a basic, pure graduate tax; not the one offered by NUS.

For all the discussion going on today and all the debate within government, today’s proposals are not all that different to what is currently on offer.  Yes, graduates won’t find themselves having to pay scary amounts every month once they’re earning over £21,000, but those payments will go on for much longer than they do today, because:

  1. The fees will be higher;
  2. The interest rate will be higher than inflation;
  3. The cut off before remaining debt is written off will go up from 25 years to 30 years.

Some complaints regarding the graduate tax offered by NUS suggested that many graduates would have to pay back more than they do now.

However, at a time when fees are set to potentially treble, that argument cannot work.  There are pros and cons to everything.  Despite mentioning NUS recommendations, I’m not suggesting any particular solution here.  My main issue is that people are not being listened to.

And while debate rolls on regarding the future of HE, it’s difficult for anyone to sensibly debate the issues because the goal posts keep being changed.  Is it any wonder so many people are angry at Liberal Democrat moves to support higher fees when every single Lib Dem MP signed the NUS pledge that they would not support those very proposals?

Situations change and decisions do need to be updated based on new developments.  However, much of the situation was known when those pledges were signed and many alternatives had been proposed, including by Lib Dems themselves.

With an almost total cut in government funding for university teaching, much higher fees will not provide universities with extra income.  Those fees will also, therefore, result in no change to the student experience.  The individual is set to pay more for the same and, quite possibly, more for less.

It is, therefore, no surprise that so many students, academics, parents, and other individuals are unhappy with what’s happening in higher education right now.

As things stand, I imagine there will be a considerable turn out in London on November 10.  Mario Creatura recently said:

“I’m concerned that the decision to protest has been built on a foundation of emotive language gleaned from activists and the headlines which were ultimately based on Browne’s recommendation rather than what the coalition has actually said.”

Now the coalition has spoken.  Creatura was worried that the London demo may protest too many issues and cover too much ground.  But I feel this shows the magnitude of what is happening.

The Conservatives have been fond of saying “We’re in this together”, so why can’t people covering all aspects of higher education say the same thing?  The issues may be plenty and cover a large proportion of HE, but that’s exactly the reason why solidarity is necessary more than ever.

Far from diluting the noise, a collective effort may be exactly what’s needed to point out why the situation must be taken more seriously and with greater focus on the bigger picture.

The government wants students to have more of a say in what’s important to them regarding higher education.  I couldn’t agree more.  It’s time to speak up.

3 comments

  1. Martin – really, really good article. I would disagree with one thing in particular though, which is your belief that the £9,000 cap will become the price.

    Universities know their markets and they are increasingly – through scientific pricing and marketing research – working out what prices those markets can bear. Many middling to lower tier institutions know that they can’t charge £9,000 unless for ultra high value courses.

    I’d point you in the direction a White Paper that I co-authored when I was still a management consultant, having worked for 18 months with executives from universities big and small. You can find the White Paper here:

    http://www.evidenceconsulting.co.uk/Evidence-SKP%20English%20Universities%20in%20a%20deregulated%20tuition%20fee%20environment-June%202010.pdf

    All in all though, keep the good stuff going!

    1. Many thanks for the kind words, Nik. And cheers for the link. I’ve just had a quick glance and I look forward to reading the White Paper in more detail.

      Until we know the full detail of how universities can charge, as well as which institutions can/will go above the £6,000 cap, it’s tough to work out what will take place. Bursaries need to be available in the places they are needed most, so the system has to work… Something that the coalition seem keen on improving. The details will surely make a strong impact upon the amounts charged and who charges higher than £6,000.

      So until everything is set out, let’s just consider the unconditional cap of £6,000. That £6k is an important figure at the moment, perhaps more important than the conditional £9k. Massive cuts to teaching suggest to me that — as with current fees — a £6k fee will be pretty standard. If the game hadn’t changed and funding remained roughly the same, variation might have been rife; something your White Paper gives a sense of happening. However, after such extensive cuts, I don’t think it’s so easy, whether or not universities know their markets.

      The real change in goalposts is combining cuts with this new cap. Universities will have to fund teaching somehow now that the coalition is moving away from public funding. Even if some form of variation in charges occurred, my guess is that it would be minimal; certainly not a real visible market.

      Perhaps the market would occur more within the £6-9k territory but, like I say, we can’t easily delve into that without more detail.

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