The subject of tuition fees was in the news again this week, as Prime Minister Theresa May used a speech at Derby College to announce a year-long review of ‘Post-18 education and funding’ to be chaired by Philip Augar.
Originally introduced through the Teaching and Higher Education Act 1998, the topic of tuition fees has been one of hot debate throughout their 20-year history and with political parties and devolved governments championing different policies for higher education funding, its not one that is likely to subside anytime soon.
And so with yet another higher education review in its infancy, we take an early look at the issue, gathering expert opinion to look towards the future and ask; where do we go from here?
A brief history of tuition fees
The concept of a tuition fee was first proposed within The National Committee of Inquiry into Higher Education, set up by John Major’s Conservative Government.
In order to expand student numbers and resolve the issue of falling investment into Universities the ‘Dearing Report’ as it was more commonly known made 88 recommendations, including significantly recommendation 71 which concluded that, “graduates in employment should make a greater contribution to the costs of higher education in the future”
Presenting its findings in 1997, the idea of a student contribution was adopted in the Teaching and Higher Education Act 1998 passed by Tony Blair’s Labour Government and saw students starting the 1999/2000 academic year being charged an upfront, means tested, annual tuition fee of £1,000 and the withdrawal of maintenance grants, to be replaced by loans.
Fast forward to 2004 and the Higher Education Act passed through Parliament, again under Labour and Blair, but not without controversy as 71 of his own MP’s voting against at second reading stage.
Taking effect for the 2006/2007 year, tuition fees would now be £3,000 per year, but with payment being deferred until after a student had graduated and funded via a student loan. The measures also saw means tested maintenance grants reintroduced alongside loans.
The current tuition fees position can point its origins to The Browne Report (2010) and the decisions taken by the Coalition Government, led by David Cameron (Conservatives) and Nick Clegg (Liberal Democrats) from those recommendations.
And for the Liberal Democrats, who’s manifesto for the 2010 election promised to abolish tuition fees within 6 years, these decisions were to become an unwelcome defining point of its time in Government.
Rejecting Browne’s recommendations to remove the cap on tuition fees, The Higher Education (Higher Amount) (England) Regulations (2010) instead proposed the tripling of the cap on tuition fees to £9,000 alongside changes to the terms of repayment of student loans.
Passing through Parliament with a majority of 21, despite 21 Liberal Democrats and 6 Conservatives voted against party lines, the feeling of betrayal felt by students towards the Liberal Democrats and Clegg was to live long in the memory.
Come the 2015 election, the Liberal Democrats who had 57 sitting MPs going in, were decimated at the ballot box, returning with just 8 MPs and Clegg himself being the standout casualty as he lost his seat in the highly student populated Sheffield Hallam Constituency.
The final set of changes that bring us up to a current day position came about as a result of the 2015 Conservative Budget, which saw George Osborne abolish maintenance grants and proposed an increase in fees in line with inflation from the 2017-18 academic year.
The current position
With a system that has grown in complexity following legalisation changes and differing policy positions taken by the devolved governments within the UK, providing a clear and concise ‘current position’ proves difficult.
Additionally, there are also variants on the amount for the amount of maintenance loan a student can receive, with determining factors including where you study (in or outside of London, or abroad), how you study (Full or Part time) and for students under 25 their households taxable income, meaning those considering University really need to do their homework.
However, to provide an example, an English student starting University for 2018/19 academic year at institutions in England, Scotland and Northern Ireland, that have met the recently introduced Teaching Excellent Framework requirements, UCAS confirms they can be charged tuition fees of up to £9,250.
Those same students can also apply for a maintenance loan of up to £8,700 to help cover living costs, with the full award dependent on household income.
Interest for both loan amounts received would be added whilst studying at a rate of RPI plus 3% and then continue at an interest rate of upto RPI plus 3% dependant on income following graduation.
Subject to parliamentary approval, repayments of these loan amounts will only start once a graduate reaches the revised threshold salary £25,000 (currently £21,000), with repayments deducted at a rate of 9% of salary. If approved this revised threshold would apply for all student borrowers that started their course on or after 1 September 2012.
Other parts of the UK
The Welsh Assembly have chosen to retain tuition fee cap at the £9,000 level for all attending students for the coming year. Student Finance Wales also confirms that Welsh students attending University throughout the UK also have access to a range of maintenance grants and loans options available to them.
Scottish residents classed as a ‘young student’ attending a University within Scotland can make an application through Student Awards Agency Scotland who will meet the full cost of tuition fees. Student maintenance funding is provided through a mixture of means tested bursaries and loans.
Tuition fees for Northern Irish students attending University in North Ireland are capped at £4,160 (confirmed by UCAS). Although details of 2018/19 arrangements are not currently contained on Student Finance NI, details of the finance available for the 2017/18 year indicated a range of means tested maintenance grants and loans were available students.
An investment into your future?
Despite the eye-opening head line figures associated with tuition fees, there are some financial experts that would point to the system as being a valuable investment for future earnings growth, given the higher salary a graduate can expect to receive when entering employment and the unique repayment terms which will see any outstanding debt written following 30-years from graduation.
TV personality and creator of MoneySavingExpert.com Martin Lewis has been a prominent figure in challenging the misconceptions around tuition fees and highlights in a 20 point article on his website;
“Ignore newspaper headlines about students leaving university with £50,000 of debt. That’s a mostly meaningless figure. What counts is how much you’ll repay; for some that’s far more, for others it’s free.”
And government figures from The Department for Education (DfE) back this point up, with their own estimates suggesting that between 60-65% of students will never repay the full cost of their loans (with other respected bodies suggesting this percentage may be even higher).
Comment on these statistics, in evidence given to the Treasury Select Committee the then Minister of State for Universities, Science, Research and Innovation, Jo Johnson highlighted that The Government has always intended a significant proportion of student loan debt to be written of;
“it is a deliberate investment in the skills base of the country, which delivers benefits for individual students and for society at large.”
Future challenges
The future challenges for a government setting higher education policy remain largely the same as to the ones trying to be addressed when the first tuition fees were introduced; how best to fund a growing population of young people choosing to go on to higher education, whilst providing the widest access for students from all backgrounds.
The latest figures published by the government estimated that 49% of 18-30 year olds had gone on to higher education in 2016/17, with over 2.3 million students in total, including 1.7 million undergraduates in places at Universities throughout the UK.
This compares to figures produced by the Office of National Statistics (ONS), which showed there were less than half of that between March to May 1992 at 984,000 (people aged 18 to 24).
But naturally, this increase in participation brings its own challenges in terms of funding.
Although funding is now met through student loans, The Higher Education funding in England: past, present and options for the future briefing note (2017) by The Institute for Fiscal studies highlight that the upfront cost to government providing this support for the 2017/18 cohort of entrants was £17 billion.
With 96% of this figure provided through student loans, the IFS go onto estimate the expected ‘long-run cost’ of the 2017 system to be £5.9 billion, but with that figure highly dependent on a number of factors including future graduate earning levels and national policy decisions.
To further indicate this point, the IFS later estimated that Prime Minister Theresa May’s policy announcement in October 2017, that the earnings threshold would rise to £25,000 for student loan repayments for all who attended University post-2012, would increase the long-run cost by over £2.3 billion a year, representing a 41% increase.
Other key considerations include maintaining quality standards at Universities that have long enjoyed a worldwide reputation for excellence, producing a relevantly skilled workforce that adapts to the country’s economic demands, something highlighted by May in her speech announcing the Augar review;
“The UK’s participation rate in advanced technical education – teaching people skills which will be crucial for the future – is low by international standards. The latest annual figures show that fewer than 16,000 people completed higher qualifications through the further education system.”
What is the government’s position?
In her speech announcing the review, May confirmed the forthcoming review will focus on four key questions;
- How we ensure that tertiary education is accessible to everyone, from every background.
- How our funding system provides value for money, both for students and taxpayers.
- How we incentivise choice and competition right across the sector.
- And finally, how we deliver the skills that we need as a country.
One aim of the government appears to be to create a more varied market place for higher education, through the introduction of private providers, shorter ‘fast track’ courses and variable fees, with May commenting;
“the competitive market between universities which the system of variable tuition fees envisaged has simply not emerged. All but a handful of universities charge the maximum possible fees for undergraduate courses.”
The Higher Education and Research Act 2017 which created the Office for Students with enhanced powers in granting and removing ‘degree-awarding powers’ and the use of ‘University’ in providers titles certainly points to an environment being created to attract an increase on the small number of fully privately funded Universities in the UK at present.
May also indicated her displeasure that the current system sees “all but a handful of Universities charge the maximum possible fees for undergraduate courses” which had not been the intention when the removal of the cap on student numbers and increase of maximum tuition fees to £9,000 were introduced in 2012, suggesting the next wave of higher education legislation from a Conservative government would look to definitively address this issue.
View from a Universities perspective
Talking with Information Advice Manager at Teesside University, Chris Martin, who has been a leading figure in student recruitment at the University since 2005, would reveal why the changes made in 2012 perhaps didn’t quite pan out as the government intended;
“What Universities thought at the time was, if we charge less, we look cheap. No one wanted to come across as providing a lower quality.”
When asked whether Teesside University had gained specifically from the move to funding via tuition fees Martin commented that the University has, “always been well run financially” but also pointed to an emerging challenge for some Universities;
“since the removal of this cap (on student numbers) we have seen some of the more prominent Universities taking a greater number of students, which could have an impact on recruiting levels and funding for less prominent Universities.
And on the prospect of more private providers coming into the higher education sector in the UK;
“There would be a concern about the quality, standards and academic rigour being provided. Would students get the same level of education?”
But perhaps the biggest surprise was Martin’s response when asked him what changes he’d like to see the government introduce;
“Make it free!”
This was quickly quantified with by the addition “in an ideal world” and “it won’t happen” followed.
Back to free education?
But someone who believes this will be the model of future tuition fees is Labour MP for Middlesbrough and Shadow Secretary of State for Transport Andy McDonald.
Discussing the matter in his constituency office before May’s announcement, McDonald identifies himself as a direct beneficiary of initiatives of previous Labour governments that he referred to as “great gifts” and added;
“I think it’s the duty of each generation to ensure that those gifts are there for the ones that follow.”
Speaking about his background of growing up in Middlesbrough, before going onto study Law at Leeds Polytechnic that led to a long and distinguished legal career prior to becoming an member of Parliament, McDonald reasoned “it just wouldn’t have been possible for us to think about going onto higher education had the current system been in place”.
Confirming that Labours current policy remains in line with their pre-election promise “to abolish tuition fees” alongside the desire to reintroduce maintenance grants “because that is the other side of the tuition fee coin” McDonald confirmed it was an area he felt very passionate about;
“I don’t want my experiences to be denied to others. Burdening them with £50,000 of debt when they leave is criminal. We should abolish tuition fees and bring back nursing bursaries as well.”
That this particular policy has been popular, especially with young people, is naturally understandable, but critics will question the value and cost in reversing a situation that has very much evolved from the previous ages of free higher education.
When evaluating Labour’s policy position prior to the general election the IFS calculated;
“These proposals increase the upfront government contribution to higher education by £1 billion compared to the current system.
However, these policies would increase the government deficit by around £12.7 billion, of which £11 billion is from scrapping fees, because loans made to students don’t add to the deficit.
The forecast long-run cost is lower, at around £8 billion, because a significant proportion of student loans are not expected to be repaid.”
A lesson from north of the border
However, a litmus test on how reverting to back to free education might work could be gained from the devolved Scottish Government who scrapped the Graduate Endowment in 2008, restoring the principle of free education for eligible students in Scotland.
In a written response to questions put to John Swinney MPS, Cabinet Secretary for Education and Skills, Ashley Clarkin, Policy Manager of the Higher Education Funding Team confirmed;
“Education continues to be a fundamental priority of this government. We have invested over £1 billion per year since 2012/13 in higher education, resulting in an increase of a total number of funded places in Scotland from 121,365 in 2008/09 to 127,429 in 2017/18.
This commitment to free tuition means Scottish students studying in Scotland do not incur additional debt of up to £27,000, as is the case in the rest of the UK.”
Asked about the reciprocal benefits the policy has to the Scottish Economy, Clarkin’s response was;
“The higher education sector in Scotland is an essential catalyst in growing Scotland’s economic strength and we continue to work with the Higher Education sector and the Scottish Funding Council to maximise the impact of this.”
Where do we go from here?
With the notion of a ‘student contribution’ now an established concept, it would prove a remarkable political turnaround if higher education across the UK was to return to being free.
This is not to say that people who champion this position are wrong.
It is clear whatever stance you take on matter, whether its based on a principal of free education, or a practical one of those that benefit should contribute something in return, there is no overbearing right or wrong position. It is simply a question of personal priorities.
Given attendance at Universities across the UK are once again reaching record levels, it could be argued that the introduction of tuition fees has been a success, in providing Universities with greater and more secure funding to help maintain world leading standards, whilst not effecting the numbers that attend, quite the opposite.
Could it be that by adding a value to higher education, it has helped prospective students from all backgrounds associate the personal value of further education to their future?
However, suggesting tuition fees could be viewed has successful is not to say the current system is perfect.
Simplification of the various funding options, followed by a period of settled policy would certainly be welcomed.
A way to provide better provision and fairer costs for part-time students has yet to be found.
And it could be argued the current system places too much emphasis on University education at the cost of other options such as vocational qualifications or apprenticeships.
So there is still work to be done, but as a base to build future policy round it feels a good start. After all, this is a position that has been crafted and developed through years of well intentioned, reasoned and no-less highly controversial political decisions from governments of different colours.
So perhaps evolution not revolution is needed? Yet if the 20-year history of tuition fees has taught us anything; it is that change is almost inevitable; and that for whichever political leader enacts those changes, it is likely to prove one of the defining points of their political career.
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