- HEPI recently published a collection of essays on the issue of funding undergraduate degrees, curated by HEPI Director of Policy and Advocacy Rose Stephenson. Over the next few weekends, we will be running select chapters from that collection as Weekend Reading.
- We previously published a chapter by David Willetts, Minister for Universities and Science from 2010 to 2014.
- This chapter was authored by Chloe Field, Vice President Higher Education at the National Union of Students.
Higher education is not just broken right now: it is heading into an existential crisis. The current funding model is being shown to be completely unsustainable on an institutional level and on a personal level for students.
Tuition fees are plunging hundreds of thousands of students a year into huge amounts of debt before some even have a chance to enter the workforce. Maintenance loans barely cover the spiralling costs of rent anymore, let alone pay for food. Forget about having a social life, to even survive at university students must work long hours in precarious part-time jobs, affecting mental wellbeing and academic performance. In the NUS’s latest research with students who work while they study, 38 per cent said it had a negative impact on their studies.
All these problems, despite being exacerbated by the recent cost-of-living crisis, are a direct consequence of the current higher education funding system. Universities rely on funding mostly from student fees which, in turn, rely on a consistent and large student intake each year.
Therefore, institutions’ main priorities are making themselves look appealing to prospective students – and topping up their income with conferencing and summer lets – instead of focusing on the actual students studying currently. This means they must continue to expand their student numbers, leading to an even greater strain on resources and facilities – but with no additional money to alleviate that strain.
Running universities like businesses instead of establishments for educational growth and research leads to students being crammed into oversubscribed courses without sufficient resources being there, such as the ideal number of lecturers or affordable accommodation.
So, what needs to happen? Tuition fees of course should be abolished, but they are simply a consequence of the current system: the root of this is all about competition that brings us a race to the bottom, rather than incentivising comprehensive education and collaboration. Higher
education needs to be publicly funded and in public ownership, not only to ensure access for all students from all backgrounds, but also to make sure every single community has a stake in their universities, and that they are run as truly civic institutions. We must invest in all areas of education and build a system that will ensure a future for my generation and for our planet.
It would of course be unreasonable to expect the next government to completely upend the system and create a new one overnight. However, it is important for political parties to take this crisis seriously and at least pledge to change the funding model completely. There are also steps that can be taken in the immediate future, such as the reintroduction of maintenance grants in England. NUS UK has commissioned research from London Economics that shows the return of maintenance grants could be funded by simple changes to loan repayments. By keeping higher earners in the system for longer, it means that the extra payments made by them go into the system to make the money available for grant financing of poorer students while they study. It is an easy cost-neutral step that any government elected in the next year can implement to begin lifting the debt burden on students and move towards a publicly-funded model.
Education is a devolved matter, so I want to be careful not to undermine the responsibilities and autonomy of devolved nations. Currently Scotland has no fees for home-domiciled students. However, what is holding their system back is the marketised model that is spread across the UK and the fact that non-Scottish students must pay fees. This means universities will prioritise the intake of fee-paying students over domiciled students.
By breaking down that marketised model from a UK perspective, which includes removing fees for students studying in the UK, we then allow devolved governments to also do the same.
My proposal for a funding model for higher education, therefore, is in two stages:
- In the first instance, re-introducing maintenance grants, in addition to maintenance loans, to raise the total income for the worst-off students.
- Real interest rates of 3 per cent during study and 0 per cent to 5.5 per cent for postgraduate earnings between £27,571 and £57,570 (and 5.5 per cent thereafter) on maintenance loans.
- A stepped maintenance loan repayment model: 4 per cent on earnings between £12,570 and £27,570, 6 per cent on earnings between £27,571 and £57,570 and 3 per cent on earnings over £57,571.
- The repayment threshold will be uprated with average earnings growth.
- The debt would be wiped after 31 years.
This model would apply to English students studying anywhere in the UK. I would then propose that the next government makes a commitment to reviewing the funding model. I propose that abolishing tuition fees is crucial to this.
- Abolishing tuition fees for students. The cost of undergraduate education would instead be covered by non-repayable fee grants paid by government to universities. These would need to cover the true costs of education. For illustrative purposes, these would start at £9,250 and rise in line with inflation each year, to protect the unit of resource.
- Teaching grants for high-cost courses would continue to be paid by government, and these would rise in line with inflation each year, to ensure continued teaching quality. This has been modelled and polled in a bundle with reintroducing grant funding.
My generation has heard for our entire lives that there is not enough money for big ideas or to improve our chances. But as we see calls for cuts to inheritance tax and see a student loan repayment system that favours the wealthiest in our society, it feels like there is money available, but there is a government making a choice on who gets to benefit. Every government has this choice. We are asking the next government to choose young people, choose students and choose a future by investing in education.