Cut tuition fees?

Should University Tuition Fees either be reduced to £6,500 as some think a Tory working group might suggest or even abolished at Jeremy Corbyn hinted at during the last election campaign? Whatever happen, it is true that ever since Labour introduced fees in 1997 they have been a source of debate and controversy.

The hike to £9,000 by the Coalition didn’t stop the number of eighteen year olds flocking to higher education and the removal of maintenance grants also didn’t seem to make much of a different in numbers applying.  Even punitive interest rates of more than six per cent haven’t proved a deterrent to would-be graduates.

Now it appears the government might be re-thinking their policy on fees and recognising the fact that arts and humanities students are paying more for their degree courses than universities are spending on their education.

When the hike in fees to £9,000 was proposed, I suggested a fee of around £6,500 might be more appropriate, with the government topping up the cost of STEM courses to encourage students to study those subjects, if there were going to be fees at all. I am less certain that is the direction to go now. Reintroducing a cap on numbers that would inevitably follow government intervention in the fee market would risk disadvantaging those with the least social capital to game the system. When the number of university places were limited, fewer teenagers for disadvantaged backgrounds went to university than at present.

I recall the late Prof. Halsey once saying that the gap in higher education entry rates between different groups would only be reduced once all middle class children that wanted to go to university were able to do so and there were still places available. Reintroducing a cap on places might seriously affect the opportunities for higher education in some communities.

However, there is evidence that attending a university and studying some subjects in the arts and humanities categories doesn’t bring significant financial benefits and many graduates don’t work in occupations that either pay well or use their graduate skills. Nevertheless, the alternative for the government might be having to pay out similar levels of cash, if youth unemployment rates increased and present undergraduate frozen out of higher education swelled the ranks of the unemployed. That would have a direct effect on government expenditure, unlike tuition fees that both have the possibility of clawing some of the expenditure back and also having a less direct effect upon government accounts.

Now that might be a risk worth taking in a tight labour market, and where some would-be undergraduates could be channeled into apprenticeships at a lower cost to the government. But, it would undoubtedly come at a price with regard to social mobility. Such a price might not be worth paying, especially if there is a downturn in the economy.

Better, to try to make degrees more beneficial for society while recognising that some courses may be high quality, but will lack high earning capacity. Such is the nature of higher education.

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Participation in higher education

The DfE recently reported on the time series regarding entry into higher education. The data was updated for 2016/17 starts and can be found at https://www.gov.uk/government/statistics/participation-rates-in-higher-education-2006-to-2017 There are a number of useful tables that show the continued growth in participation by eighteen to twenty one year old either directly from another education establishment or after a gap. In the latest year that data are available for, 28% of the 652,000 eighteen year olds went straight into higher education. They were joined by 11.9% of nineteen year olds and 3.2% of those aged 20.

All the percentages up for all age groups and the percentage comes to 49.8% that is described as the initial participation rate (IPR). As might be expected, a greater percentage of eighteen year old women than men go directly into higher education; some 32.1% of women compared with 24.1% of men. As might be expected, the IPR for women is much higher overall at 56.1% compared with 43.1% for men. However, the gap tails off with age as numbers form the year group starting in 2016/17 tailed away. The IPR is still below that of many other G7 countries.

Sadly, the IPR for part-time students has yet to regain the percentages seen before the fee increase to more than £9,000. Some of this potential group of students may have transferred to degree level apprenticeships, but it is to be feared that part-time higher education at least at the undergraduate level, remains out of favour and is not being marketed by the higher education sector.

A small percentage of those entering higher education do so through the further education sector rather than at a university. The further Education sector accounts for just less than four percent of IPR for higher education and seems to be growing slowly. There is also no gender gap amongst those taking the FE route into higher education.

I couldn’t find a comment yet from HEPI, The Higher Education Policy Institute, about these data from the DfE. However, the concern for the higher education sector must be that they are facing a few years when the number of eighteen year olds in the cohort will be falling. If the IPR of the age group remains flat, then that actually means fewer students looking to enrol. This might partly account for the rash of unconditional offers as institutions seeks to plan their numbers, and hence their income, as far ahead as possible. The 17-19 age group in 2106/17 was around 20,000 smaller as a cohort than the previous year.

No doubt, if there is also a loss of interest from EU or other overseas students, then some courses and indeed faculties might find their cash position under pressure during the next few years. How legitimate is it to use tuition fee cash from popular subjects to support less financially viable departments? This is an interesting question that students as consumers might well ask. If you put a philosophy and ethics of business course in the business studies degree it may well be necessary to support the continuation of the philosophy department. If you don’t why should a future business mogul pay to support the department if it has no impact on his course?

One answer is, you are buying a university experience and not that of your course alone.

Are Education exports slowing?

Last August I wrote a piece on this blog about UK Education’s contribution to the export drive under the title ‘Buy British Education’. This followed a research report from the DfE. https://johnohowson.wordpress.com/2017/08/04/buy-british-education/

Recently, the DfE has updated the figures to include those for 2015. https://www.gov.uk/government/statistics/uk-revenue-from-education-related-exports-and-tne-activity-2015 This remains a good news story for UKplc. Our higher education sector accounts for two thirds of the revenue stream in 2015, up from 60% in 2010. Further Education, presumably following the crackdown on colleges and visa infringements, has seen a two thirds drop in income to around £320 million. It had been looking in 2010 as if the FE sector would break the Billion pound barrier.

Happily, the independent school sector has increased income by 44% between 2010 and 2015, and brought in some £900 million in 2015.How they might be affected if further sanctions on are imposed on Russia is an interesting question. Despite a fall in income generated between 2010 and 2015, Language schools still brought in nearly £700 million more than independent schools.

As I predicted last summer, publishing is now being affected as the marketplace adaptation to new technologies gathers pace. Although income has increased by six per cent between 20-10 and 2015, that figure looks derisory compared with achievements elsewhere.  Qualification Awarding Bodies did exceptionally well, increasing revenue by 73% over the period between 2010 and 2015, and brought in £250 million that year.

Taken overall, total education exports and transnational educational activity that earned revenue for the UK saw a 22% growth in revenue between 2010 and 2015 to reach £19,330,000,000.

Of course, all the income flows aren’t in one direction and it would be interesting to assess how much net contribution education makes to UKplc after cash flows in the other direction are taken into account. During the period 2010-2015 that great British institution, the TES, was bought by an American Group and if were it making profits they would presumably be flowing overseas along with some of the company’s contribution to its debt pile.

TeachVac, the company where I am chairman, hope to start making a modest contribution to these export figures through www.teachvacglobal.com our recruitment site for international schools. As it is based in England, our income can be regarded as part of the export drive.

However, there are some worrying signs behinds the headline numbers. The DfE point out in the latest Bulletin that between 2014 and 2015 total education exports and TNE activity grew by 3.0%, 1.7 percentage points lower than the rate of growth seen between 2013 and 2014. This reflects the slightly lower growth rate in total education related exports which grew at 2.4% between 2014 and 2015, compared to 4.4% in the previous year.

We must now await the outcome of the UK’s departure from the EU to see whether or not it affects income, especially fee and research income received from overseas by our universities. Perhaps, if overseas students had been excluded from the immigration figures, some who voted leave might have felt differently about the referendum: or perhaps not.

Top salaries in higher education

In 1995 the National Audit Office prepared a report for the Public Accounts Committee on severance payments in the publicly funded education sector after a furlough about the size of such payments. The current debate about the salaries paid to vice chancellors has an echo of the earlier concern with the methods used at the time to fund severance payments to top staff in our universities. Of course, as with most companies, there are now better governance arrangements and independent remuneration committees, designed to prevent the very political row that is currently underway about how much vice chancellors should be paid?

The business case is probably along the lines of that in order to attract top quality leaders you need to pay top salaries competitive with other parts of the world. This argument has been used by UK plc companies for many years, so the business people on remuneration committees can hardly object if university leaders advance the same argument in an increasingly global marketplace for higher education. There is also another argument that by becoming a vice chancellor you may forgo the success in your academic field, whether a possible Nobel or similar prize; a top selling text book or even just the satisfaction of teaching and research in your chosen field.

The alternative view that nobody in public service should be paid more than the Prime Minister usually ignores the non-salary benefits of a house in London and in the country and a non-contributable final salary pension that make up the total remuneration package of the leader of the government and just concentrate on the basic salary.

Where vice chancellors have probably made a mistake over the past few years of pay restraint is not to adhere to the same level of salary growth as the rest of their staff. If you are going to widen the differentials you need a cast iron public relations exercise in advance; to do so after the event always looks defensive and self-serving. Any head of human relations that doesn’t make that point clear probably isn’t reading the runes correctly.  Just saying the job is harder or more demanding isn’t enough?

The same is true for Multi-Academy Trusts where salaries of chief officers have risen over recent years, as I pointed out in a previous post ‘What is a CEO worth’ some time ago. The contrast between the pay of the chief executives of two of the larger MATs is around a couple of hundred thousand pounds. Is one underpaid?

The really interesting point with the university vice chancellors’ pay story is, however, that this time around, unlike in the 1990s, Ministers haven’t sought to pass the issue to the NAO and then the PAC, but have waded in directly. I assume that they see this as a way of diverting attention from other more concerning issues and putting the government on the side of the lecturers. Realistically, they are trying to close a stable door sometime after the horse has bolted and are only likely to catch universities that hadn’t adjusted their VCs pay to market conditions. Perhaps there should be performance related pay for senior university staff, but as large institutions they probably have to pay the heads of their professional service department competitive salaries and would you want the chief finance officer paid more than the vice chancellor? An interesting question.

 

 

Buy British education

At the end of July the DfE published a research report into ‘the UK revenue from education related exports and transnational education activity 2010-2014’ https://www.gov.uk/government/publications/education-related-exports-and-transnational-education-activity The higher education sector is by far and away the largest contributor to revenue in this sector, increasing from 60% to 66% of the total income during this period.

Non-EU student income across the higher education sector increased by around 30% in current prices from £6.56 billion to £8.55 billion between 2010 and 2014. Income from research and other contracts rose by around 56% in current prices from £0.77 billion to £1.19 billion over the same period. Interestingly, income from both the further education sector and from English Language training fell during this period. The latter, it is said, because courses were shorter in length, thus providing lower fee income. The FE sector now accounts for just two per cent of overseas income. Some of the reduction may have as a result of the crackdown on private colleges and potential visa applications from those that after entry didn’t actually become students.

Independent schools witnessed a 28% growth in income from their UK based operations. They will also have benefitted from the return to the UK of any profits from their overseas campuses established in recent years. The transnational income for the schools sector increased by some 47%, based upon an estimate of the trend data. The local spending associated with this type of activity is excluded from the figures when calculating the transnational revenue figure.

Education publishing, the most mature of the product sectors selling education overseas, saw only an eight per cent growth during the period 2010 to 2014, whereas education related equipment sales increased in revenue terms by 20%, based on the estimate of trend data and education-related broadcasting by nearly a third at 31%. Publishing may find it hard to grown in the future, especially if students continue to switch from paper to on-line sources for information and learning materials. Books generally carry a much high profit margin than resources in new technologies in the same way that print advertising is more profitable than on-line for many publishers.

After BREXIT, the value of EU sales will be added to those generated in the rest of the world. This should pride a one-off change even if registrations from EU students and sales to schools and students in EU countries actually fall post 2019.

Education exporting is an area where both the Business Department and the DfE need to work closely together to encourage exports of educational goods and services and to support both education trade bodies and individual exporters. Fortunately, there is plenty of demand, as is shown on the government’s exporting web site.  However, the range of countries is quite narrow and excludes large sections of the world, especially in the Americas.

There are new potential sources of income such as those from on-line courses increasingly provided by both universities and private sector trainers. This could provide some companies with a lucrative new form of income that allows them to export without ever leaving the comfort of their home base.

 

 

Grade inflation or more hard work

Last summer 29.6% of students taking A level Physics gained an A* or A grade in the examination. However, just 10.6% of students taking Media, Film and TV Studies that achieved the same grades. It’s worth recalling these figures when reading the reports of grade inflation in universities with more students than ever achieving First class honours degrees. (source for A level data: http://www.bstubbs.co.uk/a-lev.htm Source for University data: HESA) Agreed, the extra 4,000 student studying Physics at A level in 2016 compared with 2010 may be partly responsible for the decline of 3.5% in the number of A* and A grades during the same period, but that is to be expected with a widening of the pool of entrants into the examination. However, the top grade is open to all. Maybe there is some degree of selection here with only those needing the subject for university traditionally taking it at A level.

So, does the increase in student numbers at universities mean there is grade inflation and more should mean greater numbers of lower grades? In the end it depends upon what you want the marking system to achieve. Traditionalists, may want a normal distribution curve of outcomes with a bunching around the middle grades and only limited numbers expected to achieve the highest grades or to fail. This system is great for identifying the really high flyers, but does it disincentive everyone else? Should degree class reward hard work and are students working harder now that have to bear the cost of their university education through the fee system? Has a competitive job market through the years of the recession also signalled to students that outcomes rather than just the university experience matters? This takes us back to the A level results. Are there too many A* and A grades in Physics? Of course not.

Perhaps students are becoming pickier at both choosing courses and even modules within courses with a view to outcomes? To what effect does ‘drop out’ among student affect the outcomes of those that remain. Do students realising they selected the wrong course, perhaps during clearing, quit in larger numbers. We know students from poorer backgrounds are more likely to quit. Is this because they received poorer advice about which course to pick at what university and ended up doing the wrong subject?

There is lots more to explore behind the simple headline data. But, maybe there has been some grade inflation and university quality control mechanisms need to ensure that outcomes keep pace with learning. After all, that is what the external examiner system was supposed to achieve. What do these figures also say about the claim that A levels were being dumbed down and students were arriving at university knowing less and less well equipped for university life? Interestingly I had a conversation on LinkedIn about this point with a teacher in Essex recently.

Personally, I think the outcomes are a tribute to our students, but universities do need to ensure that they monitor their learning outcomes to keep pace with changes elsewhere.

Abolish tuition fees?

When I wrote back in April about the iniquity of the hike in repayments rates on student fee debt to 6.1% hardly anyone noticed https://johnohowson.wordpress.com/2017/04/12/debt-hike-for-teachers/ That’s the price you pay for being ahead of the game. Then came Labour’s abolish fees pledge during the general election and there is now a growing groundswell on the issue, further fuelled by the fall in applicant numbers reported by UCAS this week.

So far, few have tried to put the debate in even the wider education funding agenda, let along government funding policy as a whole. As I argued in my earlier piece, cutting student fees might mean losing or postponing some other project either in education or society more widely unless the funds can be generated from an increase in taxation somewhere else. There might also be the unintended, or I assume unintended, consequence of reducing further social mobility if the abolition of fees and their replacement with direct payment for university places by the government led to a cap on places. Those that could afford to pay for extra tuition might scoop the bulk of available places, leaving others less well-off to claim only any reserved places under government mandated schemes or unfashionable subjects in unpopular universities.

Earlier in the century there were schemes to help young people save for expenses like tuition fees so that they would not be the burden they now are seen to be. I am not sure what happened to them? It is interesting that the insurance market also never saw saving for tuition fees as a necessary product, presumably because parents with young children were seen as not having the level of disposable income to fund such schemes in advance. As I said in April, at the present time it would be more cost effective for families to increase their mortgages than to incur student debt in terms of current repayment levels.

The risk is that in the present political climate judgements will be made on votes to be won rather than sound economic or social policy. But, then fees were increased to £9,000 probably without much thought for either issue and certainly no rationale as to why a classroom subject would cost that sum to deliver. Anyway, the concern must be that a Conservative strategist sees abolishing fees as spiking Labour’s guns with young voters and so worth doing ahead of sorting out the mess with funding social care or even the NHS.

Although there are many worthy articles written about the rationality of government financing, in the end it comes down to plain old horse trading and what works politically. With the number of eighteen year olds set to fall, part-time students numbers already having been decimated and no EU students to pay for, the government could well explore a deal with universities of fees paid for home students, but higher full-cost fees for overseas and non-government funded students. The government could also rebalance the subject offering so as to demonstrate to Conservative voters that they have wiped out subject that shouldn’t be degrees and moved them into the new apprenticeship sector. That might play well with those that think there are too many students wasting three years at university. So, whether fees survive looks increasingly like a political decision based on electoral strategy and the date of the next general election.