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New report shows employer-sponsored degrees are around six times cheaper for taxpayers

  • 21 April 2016

On Thursday, 21st April 2016, the Higher Education Policy Institute will be publishing a new report entitled Making a Success of Employer Sponsored Education by Professor Dave Phoenix, Vice-Chancellor of London South Bank University and Chair of million+.

Nick Hillman, Director of the Higher Education Policy Institute, said:

‘One-in-ten students is currently sponsored by an employer. That is higher than many people realise, but not as high as it could be. Employer Sponsored Degrees are a great way to provide job-ready skills alongside an academic qualification. They deliver higher productivity for employers and higher wages for individuals. They are nearly six times cheaper than regular degrees for taxpayers and the students can emerge with no debt.

‘There has been general agreement for decades that employers should do more to train up their own staff. Policymakers are now responding by imposing an Apprenticeship Levy. But, unless we are careful, this could drive out tried-and-tested forms of higher education that are already backed by employers, such as employer sponsored degrees. We must not throw the baby out with the bathwater.

‘Employer Sponsored Degrees may not have many enemies but they have lacked firm advocates. This important new paper shows how they could come to play the crucial role envisaged in the Dearing report almost 20 years ago. Students, employers and taxpayers would all benefit.’

Professor Dave Phoenix, Vice-Chancellor of London South Bank University, and the author of the report, said:

‘London South Bank University has been providing high-quality employer-sponsored education for over 100 years. Today, we have nearly 7,000 sponsored students and 1,000 employer partners.

‘The Government’s new Degree Apprenticeships are a welcome addition to professional and technical education. I enthusiastically support them. But Ministers must ensure they complement rather than disrupt existing Employer Sponsored Degrees.

‘This report shines a light on the huge value of employer-sponsored degrees and shows how a good policy could become a great one.’

Notes for Editors

The report includes new analysis from London Economics showing:

A typical three-year undergraduate degree has a contribution of £14,973 from HM Treasury (£6,215 from tuition fee loan subsidies and £6,084 from maintenance loan subsidies, plus £2,674 from HEFCE teaching grant). Students contribute £12,561 (the proportion of their maintenance and fee loans that they repay).

A four-year part-time Employer Sponsored Degree has around £2,674 from the Treasury in HEFCE teaching grant. The rest of the cost is covered by employers, who make a net contribution of £31,412 to cover the fees (£24,860) as well as other associated costs. Students benefit by around £6,552 each, as their productive effort does not match their full salary combined with the employers’ costs for supervisory and administrative support.

The paper makes the following policy recommendations.

  1. Employer Sponsored Degrees should be promoted in schools and through the media in order to help employers attract suitable employees who want the opportunity to develop a career without incurring substantial debt.
  2. There should be funding parity between apprenticeships and Employer Sponsored Degrees to encourage employers to engage. Apprenticeship Levy funds should support Employer Sponsored Degrees as well as apprenticeships or there should be other incentives that are comparable with those for apprenticeships.
  3. Local Economic Partnerships should have a role in monitoring part-time higher education provision and, where it is threatened by market failure, supporting provision. Localised use of the Apprenticeship Levy should be considered in order to support Employer Sponsored Degrees on a targeted basis.
  4. The part-time premium should be reinstated to enable higher education institutions to maintain provision: in 2011/12 the premium was £66 million but, by 2013/14, it was only £26 million after being phased out for most part-time subjects.
  5. Further consultation should take place between the Government and universities committed to delivering professional technical education from Levels 3 to 7, with the aim of breaking down the Level 3 (FE) to Level 4 (HE) barrier rather than compounding it. This should include examining the simplification of funding and regulatory regimes.
  6. The impact of policy on Employer Sponsored Degrees and part-time professional and technical education should be considered for their effect on social mobility, equality and diversity, in line with wider official commitments.
  7. The Government should investigate the introduction of a Higher Education Salary Sacrifice Scheme to support students in employment. Upfront payments would be made to the education provider by the employer and then the student would pay their employer back monthly through their before-tax salary.

 

The Higher Education Policy Institute’s mission is to ensure that higher education policy-making is better informed by evidence and research. We are UK-wide, independent and non-partisan.

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