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Up for review: university fees and funding

  • 21 March 2018
  • By Andrew Wathey

This blog has been kindly written for HEPI by Professor Andrew Wathey CBE, the Vice-Chancellor and Chief Executive of Northumbria University. This blog has been written purely in a personal capacity.

There are a number of things to be welcomed in the announcement of the tertiary review, of which one of the most important is a commitment to the principle that those who benefit from higher education should contribute to its costs. As Damien Hinds has pointed out, there are two types of people who can pay for higher education – those who benefit and those who don’t – and the expressed preference in the Prime Minister’s speech for balancing the state’s contribution with a contribution from the first of these groups is surely right.

That was part of what the 2011 fee review was designed to achieve, and arguably the system was better understood when it was introduced. Under these arrangements, contributions are made via a marginal tax paid by graduates, until their obligation (framed as ‘debt’) is paid off or 30 years have elapsed from graduation. This, the current system, is socially progressive – only the top 20% of earners pay off in full and those in low-wage jobs, or taking family breaks, pay much less in total. And, though we have heard a lot recently about ‘students groaning under a burden of debt they will never pay off’ (if you are not expected to pay off in full, where is the problem?) and about three-quarters of graduates never paying it off (but the vast majority pay a reasonable proportion), we have heard much less about the counterbalancing benefits to the economy over the longer term in higher tax take and lower social costs. That must appear in some Treasury reckoning, or the system could never have been conceived in the first place. Recent claims that England has one of the most expensive systems in the world are not new, nor is the fact that they overlook greater state support in other systems, and much local complexity (e.g. US public universities charge much higher fees to ‘out of state’ students, often over £20,000, which reveals the level of in-state subsidy).

There are a number of pitfalls in the current exercise, which the Committee appointed to conduct the review will want to be wary of.

1. A fees cut might grab the headlines but it would leave a funding gap. Unless government replaced the money, it would mean bigger class sizes, poorer facilities and less student choice (because courses would close).
2. Higher-earning graduates benefit most from lower fees.
3. A return to a system where the number of places in universities is limited, and courses are seriously underfunded, would be bad for graduate skills and the economy, and bad for social mobility.
4. While our universities offer a world-renowned quality of education and develop the skilled graduates our economy and society needs, this can be maintained only with stable and sustainable funding.

But alongside these general points there are some more specific issues. There is talk of lower fees for Arts and Humanities courses, but the review will need to address the misconception that fees pay only for courses – and not for the world-class libraries, student mental health services, academic quality and examinations infrastructures, buildings (including some in Art and Design that are anything but cheap), and boilers, lifts and drains that universities have to maintain.

Greater support is envisaged for students studying Science and Medicine, but students in these areas already enjoy substantially more public subsidy, especially in Medicine where the system gifts the nation’s doctors 52% of the costs of study, and those studying many STEM (Science, Technology, Engineering and Mathematics) disciplines 14%. And then there is the important point that many graduates in the Arts, Humanities and Social Sciences are in fact well-paid and fulfilled: they dominate in the leadership of SMEs (Small and Medium-sized Enterprises) and are widely found in senior roles in business and industry, the civil service, and a wide range of other sectors. There is no shortage of opportunity for those who have acquired strong analytical and thinking skills through these disciplines. If there is an issue with the quality and employment outcomes of individual courses, that must of course be addressed.  But it is wrong to tar Arts, Humanities and Social Sciences courses and their graduates with the brush of inutility.

What might we hope to emerge from this review? There has been much commentary on student living costs and here some action would be welcome – for example, by restoring maintenance grants. The current system is hard to understand and needs to be easier, not only in its detail and real significance for personal finance, but also in terms of value for money. For most 18-year-olds, £9,250 is a lot, but this figure compares favourably with independent school fees in the UK or university fees even in the USA’s publicly-funded system. Alongside other major purchases, such as a car or a house, it also provides a good return on investment via higher earnings, quite apart from its social and cultural benefit to the individual. There also needs to be more flexibility for part-time students and those looking for accelerated qualifications, typically not 18-year-olds but the over-30s looking to change career or re-skill.

‘You don’t need to go to university to succeed’, some commentators have opined. That clearly can be true, but global trends suggest that other countries have reached a different conclusion, both for individuals and for national economies. We all need a university system that continues to offer a world-renowned quality of education and to develop the skilled graduates our economy and society needs. The chief lesson for the review panel is that this can be maintained only with stable and sustainable funding. Funding should be easy to understand and transparent, including how costs are shared between graduates and taxpayers. And the system should be as fair, accessible and progressive as possible, and to ensure that all those who are qualified and wish to enter higher education should be able to do so.

1 comment

  1. Anonymous says:

    While I appreciate Prof Wathey’s concern for Arts and Humanities graduates, I find his proposition that ‘there are two types of people who can pay for higher education – those who benefit and those who don’t’ and that it is ‘surely right’ that those who benefit pay is fundamentally myopic. After all, everybody benefits from properly qualified dentists, social workers, well-run councils, museums, or prisons, and schools, dont they?

    Indeed, one of the functions of a civilized society is that everybody contributes to society’s wellbeing and everybody benefits. Prof Wathey is correct, however, when he argues that the best-paid should contribute the most to higher education; surely that is the function of a progressive tax system? I hope that he overcomes his myopia to extend his vision beyond higher education; to see that HE is fundamental to a healthy society, and that the government should renew its commitment to funding HE through regular tax.
    His point that students should not be ‘groaning’ about their ‘burden of debt’ also rings a false note. Try telling that to one of your students, Prof Wathey!

    More to the point, by loading debt (whether illusory or real) onto the individual, government has figuratively washed its hands of the debt, wiping it off the collective balance sheet and placing all the risk onto the individual. Students are thus forced to consider HE as a risk/reward proposition and a purely financial transaction. Instead, why not argue that HE is a right for all, and particularly for those students from poorer economic backgrounds? The collective burden (if HE is a burden) of the costs are far more easily borne by the many rather than the individual. More to the point, perhaps, student loans are now accruing interest at 6% per year, far higher than any high street mortgage, inflation, and indeed many private loans. Surely this should be addressed as well, Prof Wathey?

    Like me, Prof Wathey is in favour of social mobility: well, the best way of ensuring that is to wipe out student debts, and allow our young people to follow their educational dreams without fear. Education does indeed offer a ‘good return’ but not merely in investment terms. Education should be free for all.

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