Higher Education Funding: A Modest Proposal

With next year’s general election already looming there are signs that the higher education funding system is likely to be a hot topic. The Conservatives, for example, are reportedly considering removing the cap on tuition fees (currently set at £9K per annum) while Labour is talking about reducing the figure to £6K. Labour’s idea is likely to prove popular among potential students, it will result in a reduction of fee income to English universities of a third, potentially leading to wholesale redundancies and closures unless it is offset by an increased contribution from the taxpayer to offset this cut. Responsibility for higher education funding in Wales, Scotland and Northern Ireland is devolved, so Westminster policy does not apply directly there although the knock-on effect of changes in England would be considerable given the number of students who choose to study away from home.

The backdrop to these suggested policy changes is the obvious fact that the current system is unsustainable. Although there has not been a marked reduction in numbers of students applying to university since the introduction of tuition fees, it has become increasingly clear that the system of loans and deferred fees is actually costing the Exchequer more in terms of short-term borrowing than the old system. Moreover, there is a growing realization that the fraction of this cost that will actually be recouped in future is going to be much smaller than its advocates would like to admit. Recent estimates, likely to be revised upwards, suggest that 45% of student loans will never be repaid.

On top of this there is the problem that the so-called “elite” universities have not succeeded in “widening participation” (as the phrase goes). Oxford and Cambridge both continue to take about 40% of their pupils from private schools; many other institutions. My own institution, the University of Sussex, takes about 86% of its intake from state schools, which is about the average across the sector.

Although only a small fraction of pupils (about 7%) attend (private) independent schools, about 65% of those go on to University; only 24% from the state sector do. In my opinion, not all universities take widening participation seriously but even if they do (like we do at Sussex) it is difficult for higher education institutions to repair the divisions that arise much earlier in the education system.

The average fee per term for a day pupil at a private school in the UK is about £3400; this rises to about £7800 per term for boarding schools. Since there are three school terms per year this means that the average cost per year for day pupils is £10,200, well above the £9000 per year maximum fee for university tuition. That says a lot for how poorly funded UK universities really are, even with increased tuition fees, especially in STEM subjects which require expensive laboratories and other facilities. Moreover, private school fees are payable upfront while tuition fees for students in higher education are funded by heavily subsidized loans which do not need to be repaid until the student is earning more than a certain minimum salary (currently £21K pa).

When funding is tight it is particularly important that it should be targetted where it is needed most. For me that means to encourage more students from state schools to go to university. The principle I’d adopt here (and indeed in many other contexts) is encapsulated in the phrase “to each according to their need, from each according to their ability”.

Parents who have decided to send their offspring to private schools have, in my view, already demonstrated that they can afford to contribute to their education at a level considerably higher than the current tuition fee for university students. In such cases there is no need for a means test to determine whether they need support from the taxpayer; they have already done that calculation for themselves.

My proposal, therefore, is that students whose parents have decided to take their children out of the state school system should be deemed to be ineligible for state support for higher education. They should therefore pay the full fees upfront. I think there’s a case even for making such students pay for the full cost of their education which is not the £9K fee payable by Home/EU but the much higher fee charged to students from outside the EU, which is currently £17K at the University of Sussex. The money saved in this way should be used to provide better fee waivers and and maintenance grants for students from the state school system (on a means-tested basis). This could be accomplished by, e.g., a system of vouchers available to students from state schools in England; the rest of the UK could adopt a similar system if they wish. This would also be a step towards reducing the incentive for families to increase social divisions by taking their children out of the state system.

As well as driving greater equality and stimulating social mobility, my suggestion would also correct a number of anomalies in the existing system. One is that students attending English universities who went to Schools elsewhere in Europe (including Wales, Scotland and Northern Ireland) are entitled to the same financial support as English students. However, most students from outside the UK will return home after graduation and there is no effective means of making them pay back their fees and loans because these are currently recovered through the UK tax system. In effect, therefore, the taxpayer is providing free higher education for these students and it is one of the reason why the default rate on student loans is likely to be very high. In my proposal this loophole would be sealed; unless a student went to an English state school they would not have the means to access HEFCE support.

I have heard it said that this idea would remove choice. I don’t agree. Parents will still have the choice of sending their sons and daughters to private school if they wish. What it will do is remove part of the incentive for them to do that.

Across the UK over 80% of university students are from state schools, so the measure I suggest will not on its own solve the University funding crisis. On the other hand, I think it would at least be fairer than the current system. On the other hand, I’m not sure fairness counts for very much these days…

14 Responses to “Higher Education Funding: A Modest Proposal”

  1. This should also be extended to children of people who smugly go on about how they send their children to the local state school as if it makes them a hero of the proletariat, without mentioning that they only do so because they can afford the extra hundred grand for a house in its catchment area.

  2. Gill Tierney Says:

    Surprisingly naive from one whose views I usually enjoy.
    You neglect to include those who do not pay for their children’s education but do pay over the odds for property in “middle class ghettos” with great schools which are in effect “private” as those of lower incomes cannot afford to live in the catchment areas. These people are less transparent than those paying school fees but equally capable of paying for higher education.
    As with many things, it is not a simple as it first appears.

    • telescoper Says:

      Naïve? Possibly, but (a) I never said my proposal would solve everything and (b) I said explicitly that access to state support would be means-tested so that wealthy students would not benefit. I agree though that this would not help remove inequalities in the state school system.

  3. gowerdale Says:

    No, sorry Peter. Not with you on this one. I see no reason why those parents who have chosen to spen their money on their children’s education should be penalised in this way. Nor is it in any fair that 18 / 19 y.o.’s whose parents are not willing to pay should thereby be excluded from University. An absolutely dreadful idea.

    • telescoper Says:

      I don’t think it’s a “penalty”, just the removal of an unwarranted subsidy. If parents are prepared to pay up to £30K per year on school fees why should you expect the state to subsidise University?

  4. Anton Garrett Says:

    “On the other hand, I’m not sure fairness counts for very much these days.”

    Indeed! People who ensure a better education for their children by sending them to private schools are already paying twice, once through the tax system and another in fees; why hit them a third time? In African countries where there is no State education system parents will work their guts out to get a better start for their children than they had. I believe such motivations do not deserve to be penalised and I advocate a voucher system.

    “If parents are prepared to pay up to £30K per year on school fees why should you expect the state to subsidise University?”

    That’s a good question, although you seem to be advocating the removal of all State subsidy! Since it is in the interests of universities to take the best pupils, perhaps wider access schemes should be left to them to administer. But isn’t the root of this problem the fact that State education is not as good as private education in the school system that feeds into the universities?

    The usual explanation for that problem is that more is spent in private education per pupil. Let’s see. In 2012 the total UK government spend on education excluding tertiary was 90 billion pounds, on 9.6 million pupils of whom 620,000 were in private schools. So that’s 10,000 pounds per State pupil. Average private school fees were 10,200 pounds pa (more in the south, less in the north) according to the Independent School Fees Advice service, and 11,000 pounds pa according to to the Independent Schools Council 2012 Census. So the resources argument does not hold water – especially since the charge per private pupil is presumably an average that includes boarding schools where there are also boarding costs. State schools receive as much as private schools per pupil yet deliver an inferior education. 50 years ago essentially everybody who left the State school system could read and do simple arithmetic, which sadly is not the case today. Reform is overdue, but the only Education Minister to try it has just been sacked.

    The other issue is of course the great expansion of higher education under Major and Blair. That made it essentially impossible to fund the whole of higher education via tax revenue. In combination with the fact that money now follows the student it has led to an enormous expansion in Mickey Mouse courses. Those should receive no government subsidy whatsoever.

    • telescoper Says:

      I can summarise my views on the subsidy part by quoting the old phrase “from each according to his ability, to each according to his need”!

      • Anton Garrett Says:

        Nobody “needs” to go to university, but I take the point, if only because a nation that does not arrange for its intelligent poor to be educated in serious courses is missing out. However I think that this is best left to universities to arrange. Government is far too ideology-driven, and means tests are disincentives to hard work.

  5. Swift’s modest proposal was (I believe) intended as satire. There is a danger that people might interpret your title similarly, whereas I gather that it is a serious proposal.

    Do people who pay for their children to go to non-state schools (“private schools” or “public schools”, depending on your definition) do so primarily because the quality of education is higher, or because it allows them to meet the “right” people?

  6. I totally agree with you that the system of loans and deferred fees is actually costing the Exchequer more in terms of short-term borrowing than the old system. I hope something good will come out of the higher education funding proposal.

  7. […] More: Higher Education Funding: A Modest Proposal | In the Dark […]

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