Should Tuition Fees for UK Higher Education be abolished?
Introduction
HE in England can now be considered the most expensive in the world. According to a recent article in The Independent, HE fees in England are considerably higher even than the average fees paid by students in public universities in the US.[1] In much of the rest of Europe students pay a fraction of the fees charged by English Universities, while in some European countries, including Scotland of course, access to HE is free. This is a remarkable state of affairs considering that only 20 years ago, students in England did not have to pay any tuition fees at all. How did this all come about?
It started with the Dearing report, commissioned by the Conservative government under PM John Major and published in 1997. The report provided a vision for how quality in research and teaching in the HE sector could be enhanced to ensure that the HE sector “contributes to the whole quality of life.” To fulfil its purpose “in the development of our people, our society and our economy” (p.7). Many of the recommendations of the Dearing report stem from one simple presumption: That HE is the vehicle of choice for creating a learning society “where all are committed … to lifelong learning” (p.7). Once, it is accepted that this is indeed the purpose of HE, the very practical problem of how this mass participation will be funded presents itself.
As a solution to this problem, the report recommends that this increase in funding should partially come from asking students to make a contribution toward their tuition costs paid for by loans which they would have to repay once they start full-time employment through an “income contingent graduate contribution scheme” (p.333). The Dearing committee were not the only ones to argue that charging students for their tuition, while simultaneously providing loans to be repaid out of students’ future salaries, was the best way of immediately making more funding available for HE. Although not entirely uncritical of the Dearing report recommendations, Barr & Crawford (1998), for example, went even further by suggesting that income contingent loans should cover all living costs as well as the contribution to tuition costs and do away with student grants entirely. Indeed, they argued that students should pay for their tuition as they are the main beneficiaries, and that offering free tuition is unnecessary “if universal income-contingent loans are available” (ibid., p.76). Finally, the Dearing report recommends the government “shifts the balance of funding, in a planned way, away from block grant towards a system in which funding follows the student” (p.297). In other words, letting the amount institutions receive in funding depend on “student choice”.[2]
Given that the Dearing report set out “A vision for 20 years”, the passing of its 20th anniversary is clearly a good time to look back at how much the report has determined the shape of HE today and whether it currently looks anywhere near what the Committee envisioned. In this essay, I will attempt to analyse whether successive reforms of the funding model for HE, introducing increasingly higher tuition fees, together with changes in the loan and grant schemes have been successful in achieving the vision for HE set out in the report. First I will briefly discuss the introduction of, and successive increases in, student tuition fees between 1998 and the present. At each point I will evaluate the changes in legislation against the recommendations made in the Dearing report outlined above. This will be followed by a review of the current discussion around tuition fees with a particular focus on the discussion about whether HE institutions are providing “value for money”, before concluding by attempting to answer the question: Should tuition fees be abolished?
1998: Introduction of tuition fees
Following the recommendations of the Dearing report, the first labour government under PM Tony Blair introduced the Teaching and Higher Education Act 1998 which set a flat fee of £1000 to be paid by all full-time students except for the poorest 30% (UK Gov., 1998). The bill also introduced income-contingent loans to cover maintenance costs. The tuition fees, however, were meant to be paid from the parental contribution to students’ expenses. The legislation also lacked provisions for top-up fees, as recommended, albeit weakly, in the Dearing report.
2006: Top-up fees
The introduction of tuition fees in 1998 did not increase funding for teaching enough to drive the improvements in quality the government was looking for. Furthermore, the lack of provision for top-up fees in the 1998 legislation was heavily criticised, with Barr & Crawford (1998) arguing that “one of the desirable features of a mass system should be greater diversity of activities and hence greater diversity of costs” (p.78). Subsequently, in 2006, the government increased the maximum tuition fee universities could charge to £3000 for all students, and provided loans to cover the fees which were to be paid back after graduation if earning above a threshold income. At the same time, means-tested maintenance grants were re-introduced in addition to the existing maintenance loans in order to maintain accessibility for disadvantaged students.
As a result of these changes, the situation became much closer to the recommendations in the Dearing report in many respects. This level of fees increased funding per student by £8,000, while the reintroduction of maintenance grants increased participation from disadvantaged students. However, the increase in the maximum fee institutions were allowed to charge their students, which was introduced to allow universities to “top-up” fees to match the ‘real’ costs of their teaching, failed to create the desired diversity as almost all universities chose to charge the maximum fee. The variable fee was meant to drive efficiency through competition between institutions in delivering the best quality teaching for the least cost. However, it was felt by institutions that charging lower fees would be perceived as admitting to offering lower quality teaching, which no institution was prepared to do.
2010: Trebling of fees
In 2010, an independent review of higher education funding and student finance, the Browne report, was published. It concluded that although the increase in the maximum fee in 2006 had improved the funding situation to some extent, higher levels of funding were still necessary to raise teaching quality to the desired standard. They also criticised the lack of diversity in the top-up fees charged by universities, which restricted student choice, the cap on student numbers, which left some qualified students without a place at a HE institution, and the lack of support for part-time students. The latter could indeed be seen as a big obstacle to the vision of life-long learning expressed in the Dearing report.
The Reforms of Higher Education 2010 set out a new fee structure, taking effect in 2012, in which institutions were able to charge students up to £6,000, or up to £9,000 if they met certain criteria for widening participation. However, as with the previous introduction of variable fees, most universities decided to charge students the maximum, or close to the maximum, fee allowed, with an average fee charged in 2012/13 of £8,040. So, again, the diversification of courses and institutions aimed for by the reform did not occur.
2017: Differential fees and TEF
If it is accepted, as recommended in the Browne report, that student choice and competition between institutions is a fundamental feature of the HE system, the lack of differential fees is clearly a big problem. In 2016 the Conservative government published a white paper in which it announced that HE institutions would be able to increase tuition fees in line with inflation provided they pass a teaching quality test. Institutions could voluntarily take part in the Teaching Excellence Framework (TEF) in 2016/17 and the results were announced in April of 2017. Thus, the introduction of top-up fees, albeit modest ones, coupled with the TEF is a step in the direction of offering both diversity and choice as recommended by the Browne report and, to some extent, by the Dearing report.
Tuition fees and the vision of the Dearing report
So, after 20 years of experimenting with different levels of tuition fees, different models for student finance and making a step towards differential fees and student choice, what have we learned about the impact of a combination of high fees and deferred income-contingent loans on the shape of HE? Has the vision set out in the Dearing report been achieved? What is the state of the current debate around tuition fees?
Funding for teaching in HE institution and student debt
We start with the main argument for the introduction of student fees; the need to increase funding for HE teaching without excessively impacting the public purse. The chart below shows that each of the successive reforms has been successful in making more money available for teaching. However, it is also clear that the amount of public money spent through a combination of fee loan subsidy and teaching grants has not substantially gone down since 1998, and is likely to go up as it becomes clearer how much of the outstanding student debt will never be repaid. As these data show the amount of subsidy per student, it means the real cost of HE to the tax payer has increased dramatically as students numbers have increased year on year.
In the year that the first £9,000 fee students graduated, the student loan debt rose by 17%. Of those students, who on average face a £44,000 debt[3], almost three quarters are expected to never completely pay off their debt by the time their outstanding balance will be written off 30 years after graduation. For these students, the debt works “more like an additional tax on their income above £21,000, which will last until they reach their early 50s”. This could have serious repercussions, for example, on their ability to secure a mortgage. Perversely, with the abolition of maintenance grants the poorest students will end up with the highest level of debt, which can be as high as £65,000 for the most disadvantaged.
Participation in HE
Participation in HE by young people before the age of 30 has clearly gone up dramatically, with an increase of 26% over the period 1998/99 to 2011/12. The figure below shows the Initial Participation Rate (IPR) from 2006/07 to 2015/16. From this figure it is clear that, apart from a slight decrease in 2012/13, the IPR has continued to increase over this period, despite the increases in fees in 2006/07 and again in 2012/13. The slight dip in 2012/13 is likely a result of fewer 18-year-olds deferring their studies in 2011/12 to avoid having to pay the higher fees a year later, with a consequently lower number of 19-year-olds entering in 2012/13.
That is not to say that the introduction of tuition fees has not deterred some students from going into HE. A study by Dearden and colleagues estimates that, over the period from 1992 to 2007, for every £1000 increase in tuition fees participation rate decreased by 3.9%. However, this was partially offset by an increase in participation of 2.6% for every £1000 increase in grants. As tuition fees were significantly increased in 2012/13 at the same time as maintenance grants were significantly decreased, it is likely that these reforms have had a substantial negative impact on participation rates. With fees likely to rise even further over the next few years, its negative impact on participation is potentially going to increase.
However, much more substantial has been the impact of tuition fees on the participation of part-time and mature students. In 2012/13 fees for part-time students increased to £6,750, and are now £6,935. An income-contingent loan scheme is available for part-time students similar to the one for full-time students, but with narrow criteria for eligibility. Consequently, the number of part-time students starting an undergraduate qualification at an English university has fallen by 61% since 2010/11, with a drop of 8% in 2017/18 alone.
Participation of mature full-time students also shows a worrying decline, although not as dramatic as that of part-time students[4]. The figure below shows that the decline in the number of applicants aged 30 and over is particularly strong. Not shown is the already drastic decline of around 15% between 2011 and 2013.
Student well-being
The Guardian newspaper recently reported data they obtained from universities about the number of students who requested counselling, showing that in 2015/16 the number was 28% higher compared to 2013/14. The same article reported on data released by Hesa, showing that the number of students who reported mental health problems leaving university before completing their degrees in 2014/15 was 210% higher than in 2009/10.
There is no conclusive data linking higher tuition fees with a decline in students’ mental health. Some may argue that the increased demand for counselling services reflects greater awareness of their availability and a greater openness about mental health. Others may argue that more young people suffer mental health problems because of greater pressure to succeed. However, particularly telling are the experiences of the head of UCL psychological counselling services who comments in the Guardian article that “… the pressure for them today means many think anything less than a first is a failure.”
Where does this pressure come from? Could it be that at least some of the pressure derives from the mental burden associated with having to face an average debt of £44,000 (or £57,000) after graduation and the associated increased pressure on securing a well-paid job? It is no good arguing that repayment will start only when income exceeds a £21,000 or that any remaining debt will be written off 30 years after graduation. With students facing such levels of debt, combined with an uncertain labour market, it is no surprise that the most common reason students access counselling was anxiety, with a 43% rise over three years.
The debate around “value for money”
The main argument for the current system of tuition fees and loans is the presumption that students are the main beneficiaries of a higher education degree, and to some extent that is true. A recent study by the Institute for Fiscal Studies shows that the, so called, graduate premium has remained more or less constant from 1993 until the present, despite a fall in graduate earnings between 2008 and 2013. The study estimates that the graduate premium for 25 year old graduates is currently 25%, rising to 58% for graduates 35 years of age.
However, the picture is complicated by the huge differences in the graduate premium for different courses and different universities. The figure on the left shows figures from 2011 about the premiums enjoyed by graduates according to sex and the degree they studied for. Although the average lifetime benefit of a degree is around £120k for men and £80k for women, this is only the case for a few types of degrees, while the lifetime benefit of most degrees is lower and in some cases substantially lower than the average. Quoting the average lifetime benefit as evidence for the graduate premium outweighing the costs of tuition obscures the fact that this may not be the case for many types of degree, particularly for women. Moreover, the IFS study into the graduate premium goes on to predict that there are compelling reasons to belief that the premium graduates have enjoyed historically is not going to last into the future.
It is not surprising, therefore, that students have started questioning whether studying for a degree offers “value for money”. The figure below shows that the proportion of students who think they get poor to very poor value for money is roughly the same as students who think they get good or very good value for money.
This discussion over value for money has been fanned by government rhetoric about student choice, holding universities to account through value for money contracts, the establishment of a regulator and competition authority (the office for students), and university league table linked to TEF. However, the marketization of HE is hugely problematical for a number of reasons. For example, how can student choice be exercised in the absence of fee differentiation? In a normal product market, consumers should be able to choose not just based on quality, but also on price.
Conclusions
In the previous sections I have attempted to highlight some of the difficulties associated with the current system of funding HE teaching. In particular, I have focussed on the impact of tuition fees and the current loan system on funding levels received by HE institutions, participation levels especially of mature and part-time students, student well-being and whether the current system offers value for money. In this final section, I will discuss firstly what has happened to the vision for HE expressed in the Dearing report, and secondly answer the question set out in the title of this essay.
In my overview of the Dearing report, I highlighted that the overall aim of the report was to find a solution to the funding of HE that make it into a vehicle for creating a learning society in which everyone is committed to life-long learning. Undeniably, the successive reforms to HE funding have achieved a system that supports mass participation and delivers unprecedented levels of funding for HE institutions. Thus, it would appear, on the one hand, that the vision of the Dearing report has been achieved. On the other hand, however, I have highlighted the decline in participation of mature students, the increasing fragility of students’ mental health and potential impact of unsustainable levels of student debt.
The government appears to be committed to increased marketization of HE teaching, which will require increased differentiation between degree courses and institutions to reflect differences in both the costs of teaching and the potential graduate premium. The figure on the left shows estimates of how much it costs to teach different degree programmes. Courses such as veterinary science, medicine and dentistry are the most expensive to teach, while languages and social studies are the cheapest to teach. Universities could be compelled to charge different fees for courses in line with their different costs since asking some students to cross-subsidise the tuition costs for other students, as is the case at the moment, would clearly become problematic in a market system. Finally, The TEF could be extended to provide a platform for fee differentiation based on institutions’ efficiency in delivering high quality teaching.
However, apart from all the problems associated with the creation of a quasi-market of degree programmes, one should also question the wisdom of expressing the value of HE purely in financial terms. Indeed, academic institutions have historically operated under an entirely different set of values (capital), which students by and large bought into. The size of the debts accrued by students since 2012 and the possibility of the size of these debts rising in the future in the context of an uncertain labour market have forced the priorities of students away from academic values towards economic values in which tuition is considered valuable as a commodity of exchange rather than for its ‘intrinsic’ value. To put it in terms of the Dearing report, life-long learning is no longer a concern, as it has been surpassed in importance by economic betterment.
The government’s response to the debate around student debt has been to increase the threshold for repayment from £21,000 to £25,000, arguing that this would ease the debt burden as even fewer students will be expected to fully repay their loans. However, why create a system that lets students accrue huge amounts of debt that will never be paid back? Clearly the solution is to substantially lower tuition fees to a level that maintains the balance of public and private funding of HE teaching, while not completely drowning the message that the benefits of a degree go well beyond economic gain.
[1] This flies in the face of a casual comment made by the vice-chancellor of the University of Manchester about how “ridiculously cheap” universities are in England compared to the US (Rothwell, PGCert in HE event, 18 January 2018, Kanaris Theatre, The University of Manchester). Perhaps she was talking about fees paid at private universities in the US. Do we want to go to an American model of a two-tier higher education system?
[2] It has to be noted that these are just some of the recommendations made by the Dearing Committee in the report. However, for the purpose of this essay we concentrate on only these three.
[3] According to the Institute for Fiscal Studies the average debt accrued by students from the lowest economic backgrounds is £57,000 including interest (Belfield et al., 2017).
[4] However, because the majority of part-time students are also mature students, the decline in their numbers greater than these figures suggest.
[5] The Average Graduate Debt line was inserted by me based roughly on the average debt of around £50,000.
