Funding HE in the wake of Browne

November 19, 2010 - HE politics

The Higher education policy institute (an independent think tank) have recently published an analysis of the Browne review and the governments subsequent proposals on student funding, and it makes for interesting reading. You can read the details on the HEPI site here; the “executive summary” is fairly short and readable.

The department for Business, Innovation and Skills (BIS) have published the simulated dataset used in the construction of policy on HE funding and HEPI have re-run this evaluting some of the assumptions made; notably projected graduate earnings, and the “break even” figure in terms of return against borrowing (RAB). HEPI claim their figures show that the new funding regime may end up costing the government more than the current system. In particular Browne’s assumption of an average male income of 99k at 2016 prices fails to take into account the fact that there are equal (if not greater) numbers of female graduates, and that women earn less than men (21% less than men, right now). Add to this the fact that income for central government comes from the interest paid on loans, and that students with richer parents will chose to pay the fees upfront whilst poorer graduates may avoid paying it back (thus avoiding this “contribution”), the government’s RAB assumptions seem more than a little ambitious. Interestingly HEPI seem to think that student numbers will stay the same – I am afraid I don’t share their optimism and reckon the threat of increased debt will make many think twice about a university education. I know I would have.

If these figures are correct (given that both Browne & HEPI are relying on simulated data, this is far from certain, but the HEPI criticisms of the underlying assumptions seem persuasive to me) the proposed funding changes run the risk of failing to reduce public spending in any meaningful way. They will however have two major implications: introducing more of a market element into HE, and moving HE expenditure away from public borrowing, as loans do not come under this heading. The latter of these is a financial trick (HEPI actually describe it as “smoke and mirrors”). The former?

Well, if HE is a market, it’s an imperfect one. For a start, universities will face caps on the fees they can charge and the number of students they can recruit. Whilst some students choose an institution based upon the NSS (National Student Survey) score and other league table measures, I do not think it follows that making the money follow the student will necessarily drive up teaching quality and so on. Students also choose a university based upon a number of criteria outside of the control of the institution – distance from the parental nest, availability of good nightclubs, performance of the local football team, quality of surfing opportunities nearby, rental prices in the private sector… And do we really want the nation’s 17-year-olds to be deciding what curriculum is covered? There are currently more people studying media studies right now than there are total jobs in the media, and similar statistics apply for other fashionable subjects (like forensic science).

One final implication of the new funding regime on universities is actually of great detriment to future students – and that’s not the increased debt. It’s the fact that drop-outs in the current system involve a financial penalty for the university, but in the future system, they’ll be a win. Institutions will get the fees up front and if a student fails to complete a year, for whatever reason, they’ll end up losing the money (but still bearing the debt). Attrition rates are published, but HEPI cite research showing that prospective students do not pay these much attention, assuming that the students who fail to complete are the lazy ones. I do not forsee a future in which institutions deliberately fail large numbers of students just to get their hands on the cash, but I do think that much of the analysis thus far has ignored the plight of those former students who’ll be lumbered with up to 39K of debt with no degree to show for it.

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