Initial Response to the Report of the Independent Review of Higher Education Funding and Student Finance (the Browne Review) October 2010
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Introduction This document represents the initial response of the National Union of Students to Lord Browne of Madingley’s report on the future of higher education funding and student finance. My view on his report could not be clearer. It recommends a foolish and extremely risky approach to funding the higher education sector, with a rapid move to an unconstrained market of universities in which students pay almost the whole cost of teaching. It accepts at face value the lazy myth that competition on price between universities leads to higher quality, and it accepts at the falsehood that fair access can be achieved through so-called ‘needs blind’ admissions and a trade in bursaries. It ignores the probability that at much higher fee levels, prospective students – especially those from disadvantaged backgrounds – will change their behaviour and make judgements primarily on cost and debt. It fails to tackle the biggest questions in higher education, like how we should re-shape what the HE sector does and how it does it, to meet the needs of a very different economy. Instead, it imagines that these fundamental questions shouldn’t be ‘answered’ at all, but left to the ‘invisible hand of the market’ to resolve. This is complacent and dangerous. There are some elements of the report that we welcome. Given the position of graduates in today’s economic climate, we have been calling for support an increase to the threshold for loan repayments for some time, and so the proposal to raise this to £21,000 is welcome- especially since takes the lowest 20% of graduates by earnings out of repaying their loan altogether. We have long campaigned to bring part time students into the system and the proposed extension of loans to part time students could have a significant impact in widening access. And we are pleased that the panel has taken up our call to subject higher education’s regulation and accountability measures to a root and branch rethink- but we must guard against these being watered down in coming months, as they were in 2003. The sector should embrace, not dodge, the opportunity to be held to account for the promises they make to students. But overall the entire thrust of this report is wrong. It is desperately out of touch with the real world and apparently sees no problem with putting students and their families under huge extra financial pressure in a time of austerity. Ministers speak daily of having to make tough choices. The toughest choices of all are the ones yet to be made by thousands of hardworking families in a future under Browne’s plans: can our children afford to go to university, and can we afford to support them all? The government must not ask people to make those kinds of choices – it must reject this report.
Aaron Porter National President
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The overall balance of contributions Summary: The review considers the overall balance of contributions between the state and the individual. It begins by making clear that “Graduates will be required to make a greater contribution to the costs of higher education varying widely according to how much benefit they have received from studying”. It asserts that the purpose of the introduction of top up fees was partly designed to reduce the reliance of the system on state funding - but that that has not been achieved. To correct this imbalance, the review then assumes a large reduction in the funding available to institutions through HEFCE - equivalent to removing all funding from anything other than priority subjects as a “contribution” to wider reductions in public spending. Government would continue to have a “vital” role in providing public investment for priority subjects and providing students with finance to “ensure that no one has to pay upfront” for the costs of learning. It makes clear that it expects the government’s funding subsidies for teaching only to go into high priority areas- clinical training programmes, medicine and veterinary, science and technology and healthcare courses. NUS’ View: Effectively the proposals represent a wholesale abandonment of the cherished ‘Dearing Compact’, which calls for a tripartite contribution of state, individual and employer. Complacently and unfairly, the report argues that if there is to be an enhanced contribution by business, it will be through ‘the higher salaries paid to graduates’. This is an extraordinary claim (the graduate premium is likely to fall in the future, not rise) and merely provides an excuse for a higher contribution by students. It is shocking, and unacceptable. A structured contribution by big business must be secured. The review assumes that the “market” in HE courses can be left to decide what courses get put on and to determine course quality. In fact the proposed system will devastate several universities- as the additional contribution from richer graduates gets channelled into the richest institutions able to charge more. Those institutions that do best to widen participation that are able to charge least will be left to wither on the vine, and as richer institutions get richer and poorer get poorer elite institutions will be able to entrench their elevated position. The principle of public involvement in higher education, which has served the sector so well for so many years, has also been set aside. It is clear that the underlying objective in the report is a wholesale state withdrawal from the funding and subsidy of undergraduate teaching, with only subjects of particular importance getting funding. This leaves the state effectively pulling out of Higher Education altogether, acting mainly as a provider of student finance rather than teaching finance. The principle now recommended is that the state should stay out of higher education as much as possible and only intervene when absolutely necessary. That is not a vision for higher education that we share, and we condemn it.
The proposed fee mechanism Summary: The report proposes to remove the cap on fees altogether and instead put in place a levy on institutions as a proportion of fee income above £6000 per annum. This levy would be used to compensate the exchequer for the additional risks involved in lending higher amounts to students. The levy would reduce the total fee income of institutions by around 4% for every £1000 per annum charged above the £6000 point. This levy would be common to all institutions and programmes. NUS’ View: This levy is intended to act as a brake on institutions increasing fees to the higher levels, and thus to the development of very wide market differentials. It will fail on three counts. Initially, over the first few years of operation while demand for HE places outstrips supply, the disincentive for institutions to increase their fees to high levels will be insufficient – the vast majority will increase their fees significantly beyond £6000 per annum, and we would anticipate an initial average fee level much higher than the assumption in the report, as institutions test the boundaries of their market. Later, as demand for places decreases in the economic recovery, and supply increases with additional places and the arrival on the scene of more private sector providers, the ‘bottom will fall out’ of the market – resulting in vertiginous decline in the fees that can be charged by less prestigious institutions, followed by institutional struggle and collapse in up to one quarter of the HE sector.
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Finally, the reality is that where fees are charged at the top end, a diminishing proportion of them is actually spent on the front line, on what the student gets for their money. This is a hugely destabilising proposal in the long run that charges students huge extra fees that will not go to the front line to pay for their education. It is economically illiterate and grossly unfair.
The proposed repayment scheme Summary: The proposal in the report is to increase the threshold for loan repayments to £21,000, increase the ‘write-off’ period to 30 years, and leave the ‘repayment rate’ unchanged at 9%. The interest rate would be set at RPI+2.2%, which under current conditions would be 6.6% to the individual. Interest for people whose earnings do not exceed £21,000 would be charged at RPI only, and there would be additional relief for people whose repayments in a given year do not cover the interest that would have been levied. The £21,000 threshold would be linked to earnings growth. NUS’ View: The repayment structure is more progressive than the current system in terms of the payments of low-earning graduates compared to those of medium-earning graduates – but the highest earning graduates will continue to pay less (in some cases, considerably less) than graduates whose earnings are in the middle and upper-middle quintiles, by virtue by paying off more quickly than the expectation. The report indicates this is desirable because it is financially sound – but the price paid is that it is hugely regressive in the long run. The ‘incentive’ to pay off early is actually an opportunity for people to exploit their extant wealth to avoid interest payments and avoid playing any part in the balance of the system. It is also probable that people with the highest earnings will make a total contribution much lower in proportion to the benefit than those in the middle. The higher threshold does lift people out of making repayment, but only to the extent that they would not be making payments now if the threshold had been linked to earnings since the scheme began in 1998 – this is a mere correction of a long-standing problem and not a fundamentally progressive reform of the loan repayment system.
Poor engagement with the option of a graduate tax Summary: The report addresses the question of why a ‘graduate tax’ option was rejected. NUS’ View: The report offers a lazy and insubstantial critique of the ‘graduate tax’ option, in which a basic ‘pure’ graduate tax has been presented as the alternative (a model with lifelong payments, kicking in at the threshold for the basic income tax rate, and with no upper limit for contributions). NUS has never proposed such an approach, and it does not compare in any way to our Blueprint for funding higher education. It is hugely disappointing that Lord Browne has chosen to misrepresent our policy and proposal in this way, and has failed to provide a more substantial critique of it. We would surmise that he has taken this route because our own policy is more difficult to critique than his own ‘imagined’ graduate tax. The report shows that the review has failed to fully explore the possibility of securitisation of revenues through a bond issue, or a wider range of possibilities for linking their distribution to performance. Despite earlier promises to look carefully at this option, it appears that the review panel has dismissed it out of hand.
Maintenance Support Summary: Maintenance support would be simplified by creating one flat rate of loan, which is lower than the headline rate for current students living in the parental home. Whilst not explicitly stated, the inference is that this means scrapping parental home and London rates, as well as ending the loan substitution element of the maintenance grant, the lower final year loan rate and the means-testing of 28% of the loan as occurs now. The maintenance grant will be increased by c. £1,000 and means-test thresholds restored to the rates applicable in 2008/09. Mandatory institutional bursaries would be scrapped with an 'expectation' that selective universities will offer generous discretionary bursaries. NUS’ View: Given the scrapping of mandatory bursaries, guaranteed funding rises by less than £300 for the poorest students – with no guarantee that selective universities will offer bigger bursaries, or if they do that the system will be any simpler for prospective students to navigate, despite the claims in the report.
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Eliminating the London rate (if this is indeed the intention) is a terrible and thoughtless recommendation. In practical terms, the poorest students in London would lose around £1,500 in maintenance funding, whilst students in the parental home would benefit by a similar amount. Simplification of the system is again a welcome objective, and increasing funding to final year students (again, if that is the intention) would be good. The underlying assumption appears to be that increases to maintenance will offset any deterrence created by the increasing fees – and that with a simpler system this will be easier to sell to such students. However, it is far from clear that this balance of loans and grants will have the desired effect.
Availability of support – general Summary: The report claims that all students would receive full loan support from the exchequer, but also specifically recommends restricting loans in the future on the basis of attainment. NUS’ View: We believe it is essential for universal loan support to be provided. In a widening participation context, the proposal to restrict access to the student finance system on the basis of attainment is appalling. In the approach outlined, student loans would be denied to people whose qualifications are lower a specified UCAS tariff level, which would be determined by the government only after the UCAS application round. This is wrong on two counts: firstly and most importantly, we know that attainment is relatively low among disadvantaged groups and people in these groups would be most likely to miss the threshold, and secondly, applicants who may be on the margins of participation anyway will be unaware of whether or not they will be eligible for financial support when they apply. Even worse, the higher the fees charged at the ‘top’ end of the market, where there is a domination of students from relatively privileged social groups, the higher this ‘attainment threshold’ will need to be set and the more people from disadvantaged backgrounds may be excluded.
Availability of support – part-time students Summary: Part-time study would be brought into the system by extending the full-time fee loan arrangements (presumably on a pro-rata basis though this isn't stated). The threshold for qualifying for parttime support will be dropped to an intensity of 33% from the present 50% (i.e. from courses which take up to twice as long to those which take up to three times as long). Support would not be provided for more than 9 years. NUS’ View: Broadly increasing funding to part-time students is welcome. In all likelihood this proposal will mean significantly increased fees for part-time students. Whilst there is a grant funding for part-time student fees, this is means-tested and may not cover the full amount charged – and it is not clear what would happen to this provision. Debts of part-time students will therefore hugely increase. The exception to this is where business co-funds the course, and the assumption would also be that business funding would reduce as employers expect their employees to take up loan funding. On balance, while we do not support the general direction towards higher fees and greater debt, the principle of extension to part-time students is right, and we support it.
Regulation and Accountability Summary: The report asserts that the relationship between students and institutions will be at the heart of the system, highlighting that reducing public investment in higher education removes Government control. However some regulation is required to safeguard students’ interests and the ongoing public investment in higher education. It recommends replacing the current regulation framework of HEFCE, QAA, OFFA and OIA with a single Higher Education Council (HEC), arguing this will targeted regulation and provide greater autonomy for institutions. It states that the role of the Council would be independent from government and institutions. It would have five areas of responsibility: Investment, Quality, Equity of Access, Competition and Dispute Resolution.
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NUS’ View: Initial concerns rest on the ability of the regulator to perform a wide range of roles which at times may be in conflict with one another. Its role in enforcing quality standards across the sector is unclear when taken alongside recommendations that suggest that quality will be enhanced through consumer choice rather than sector wide standard measures. It may be that by bringing scrutiny of quality into a central, public body could drive improvement, but there is no evidence to underpin that claim. The report is silent on how the quality regime would actually change, and we suspect that no real change of content is intended, only a symbolic change of structure. The worst potential conflict of interests arises with the proposal for the HEC to subsume the OIA – the OIA is an efficient and effective body and there are very good reasons for keeping it structurally independent from sector bodies with responsibility for other areas. Although we reject the market approach fundamentally, within its own terms we are pleased to see recognition of the need for a regulator of competition – and this regulation aspect should extend as far as making judgements and intervening in poor and unfair practice by institutions that might not be appropriately tackled through action through the OIA. We would be very concerned about any diminishment of student involvement within the sector’s national infrastructure as a result of merging together the four main bodies. We would seek urgent guarantees about the role of student representation in the structure of a future Higher Education Council.
Widening participation and fair access Summary: According to the report, various public funds relating to WP would be merged to create one single Access and Success Fund. Funding will be focussed on low participation neighbourhoods. The current system of HEFCE WP Strategic Assessments and OFFA Access Agreements will be merged, and HEIs will agree a single Access Commitment with the new HE Council covering aims and targets on WP, though no minimum spend will be required. Scrutiny for those charging above £7,000 will be 'tougher' and a theoretical sanction that an HEI could no longer qualify for publicly funded students if the HEC did not feel the institution has committed enough effort to access. HESA statistics would be improved to underpin the new system. NUS’ View: This whole section is very woolly. There would be a simplification of the WP monitoring, improvements to HESA statistics and the proposal that OFFA would be scrapped/merged with HEC, all of which we would support. However, the report is very light on specifics regarding how WP strategies would be assessed, and how poor performance would be tackled - other than the HEI 'committing' to improvement. No minimum spend will be required, and there is no detail on how institutions charging over £7,000 would face a 'tougher' regime given the regime as described seems rather anaemic.
Student Choice and Quality Summary: The report asserts that student satisfaction is high, but that student satisfaction has not improved significantly in recent years. The report identified a need to sharpen the incentives for quality in our higher education system. It identifies that one option is to link funding to a measure of quality, but dismisses this approach. The report proposes that students will control a much larger proportion of the investment in higher education. It asserts that students will decide where the funding should go, and institutions will compete to get it. As students will be paying more than in the current system, they will demand more in return. NUS’ View: Assertions that measurers of competition will drive up quality in the HE sector are deeply flawed. Principles of consumer ideology rely on the choice of a consumer to be able to make ongoing consumption decisions about their purchases, with mobility between providers of goods and services – this has never been the case in higher education. It relies on a high level of information being available to consumers, but also on their capability to understand and evaluate that information, which is inherently and unavoidably limited in the case of educational provision, and also highly socially skewed. The report ignores this problem. If the driver of higher education is increased earning capacity on graduation it is difficult to understand why the review has dismissed the notion that assessing outcomes on graduation as being misleading. Whilst we welcome recommendations that seek to improve information, advice and guidance it is totally unclear how consumer choice will be responsible for driving up education quality in institutions or how this will be
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measured. The report is insufficiently clear on how the market will improve mobility, as opposed to quality – it offers no recommendations on fundamental questions of the shape and structure of the higher education sector, preferring to leave these to the ‘invisible hand’ of the market: a worrying approach.
Teaching Quality and Qualified Teachers Summary: The system proposed targets investment in priority subjects. The HE Council will therefore define minimum levels of quality for these programmes. The report asserts increasing competition for students will mean that institutions will have stronger incentives to focus on improving teaching quality. If they are not able to attract enough students, their funding will decrease. Students would also expect that those teaching them have a minimum level of skill in teaching. Teaching in HE is diverse and a one size fits all ‘licence to teach’ is not appropriate. It would be a condition of receipt of income from fees that institutions require all new academics with teaching responsibilities to undertake a teaching training qualification accredited by the HE Academy. NUS’ View: The suggestion that subjects that are targeted with greater public investment will have different quality measures than general provision will provide students with a serious cause for concern. The overreliance on consumer attributes to drive quality in provision is also concerning and there is currently a lack of evidence to suggests that this is true under the current system. NUS welcomes the increased emphasis on teaching support and the recognition that teachers in higher education should be equipped with the skills to teach, however we raise questions about the way in which this will be done and the time it will take to ‘up skill’ and assess those currently teaching in the sector. This is especially risky if evaluation and training of teaching staff becomes, as is likely given the overall direction of the report, subject to pressure of market forces.
Postgraduates Summary: The report recommends that no central support be extended to postgraduates. NUS’ View: It concludes that upfront cost is not a barrier to access and that instead it is ‘reasonable to suppose’ that the higher proportion of people from high social groups taking postgraduate courses merely reflects the pattern at the undergraduate level. This is again complacent and simply does not reflect our understanding of deficiencies of access at the postgraduate level, in which cost is very much felt as a major barrier for the majority of postgraduates who are not supported by their employer. The review has abdicated one of its major responsibilities and has missed an opportunity to pursue radical action on postgraduate support. This must now be urgently addressed by the government.
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