Posted tagged ‘tuition fees’

Tuition fees; or not; or what?

July 17, 2017

Perhaps unexpectedly, tuition fees moved centre stage in the recent UK general election. It is assumed by several commentators that the promise by the Labour Party to scrap tuition fees in England (Scotland has none) and restore free higher education played a major part in bringing out the youth vote and upsetting Conservative plans in the election.

Since then, the Guardian newspaper has carried opinion pieces by Christopher Newfield, Professor of English and American Studies at the University of California, Santa Barbara, and by David Green, Vice-Chancellor of the University of Worcester, calling for a policy change. Professor Green suggests a return to a version of the pre-2012 framework in which the cost of university studies was shared by the state and the student (he would now add ‘companies’ to the mix), while Professor Newfield wants tuition fees scrapped completely.

Each of these pieces contain some strange or unrealistic elements. Professor Newfield rather astonishingly suggests that the cost to the taxpayer of abolishing tuition fees would at worst be £48 per taxpayer per year. Even taking the most favourable options for this, such a sum would have to be paid by over 166 million taxpayers every year, which is several times the number of taxpayers actually available; and that doesn’t address the accumulated enormous student debt. Professor Green wants ‘companies’ to shoulder some of the funding burden; but apart from this being a somewhat vague class of funders, how would this be administered or enforced?

What both comment pieces have in common, however, is a search for a reason why one group rather than another should shoulder the burden. Professor Newfield, like many others, believes that education as a public good needs to be funded by the taxpayer. Professor Green sees more of a mix of stakeholders who should contribute, including (in some measure) the students.

I confess I find the public good/private good debate on tuition somewhat pointless, because it obscures the real social and economic issues and ignores to a large extent the needs of the universities themselves for adequate resourcing. The harsh reality is that free tuition requires the taxpayer to make a major investment in supporting wealthier sections of the population, often at the expense of poorer ones; it is ultimately a redistribution of money from the poor to the rich. The standard response to this is that this can be balanced by securing more revenue from wealthy taxpayers. The problem is that this isn’t ever done, and in any case tax revenues are never hypothecated, so that even if it were done there is no guarantee that the funds secured would be spent on universities (they almost certainly wouldn’t be during times of scarce public money). So free tuition tends to go hand in hand with inadequate university participation by less well-off sections of the population and the decline of the university sector during difficult economic cycles (something that pretty well everyone now accepts has happened in Ireland).

On the other hand, the payment of tuition fees funded by student loans, based on some sort of understanding of most university education as a private good, creates horrendous debts that will, in very many cases, never be repaid and thus create a huge financial liability that will have to be met at some point, but no one knows by whom. This system also punishes the disadvantaged, who don’t enjoy special financial support and who may find that their debts have left them facing negative educational equity, with the added salary value of their qualifications not matching the accumulated amount of their debts.

Three points seem to me to be totally obvious. (1) The state does have a direct interest in advancing higher education that is both inclusive and properly resourced; it absolutely must make a major contribution. (2) The state must provide baseline funding for all institutions and all subject areas, but must also target a significant part of its funding where it is most needed: participation by groups experiencing socio-economic disadvantage (and not just by removing the burden of fees but also by providing adequate financial support). (3) Students from all groups other than socio-economically disadvantaged ones must make a contribution to the cost of their studies.

I genuinely respect those in politics and other walks of life who argue as a matter of principle that university tuition should be free. But in practice this doesn’t have the intended effect. On the other hand, a student loan-funded system creates a huge problem further down the line and generates a highly arguable vision of what higher education is all about.

This is not an easy policy to get right, because emotions run high and political competition is involved. I hope nevertheless that I shall live to see a much better and fairer and more effective system of higher education funding than I have experienced to date.

Student debt gets political

August 2, 2016

A key issue in the current (and often strange) American presidential election campaign is student debt. There are a number of reasons why it has taken on political significance, but as an issue it was initially raised by the Democratic candidate Bernie Sanders, who in his election programme promised to make university education ‘free and debt free’. The issue has also been taken on board by Hillary Clinton.

The prominence of this issue is underscored by various reports and news items. A blog post published by the Federal Reserve Bank of New York has pointed not just to the scale of student debt in America, but also its socio-economic consequences, increasing the gap between rich and poor and creating ‘negative wealth’ in a number of households. This finds a resonance on this side of the Atlantic, with a British lobby group suggesting that for many graduates the lifetime salary premium secured by a degree is likely to be overpowered by the weight of debt.

All of this tells us that nobody has yet found the silver bullet for higher education funding that is effective in providing necessary resources for institutions while also being socially equitable. Free tuition, notwithstanding the proposals by Sanders, places institutions at financial risk; a loans-financed higher education based on high tuition fees creates unsustainable debt. Sooner or later politicians will need to face up to the fact that means-tested support is the only way out of this. Maybe the US election campaign will help.

Irish higher education: the funding dilemma

July 11, 2016

As Irish readers will know, yesterday saw the publication of the report of the Expert Group on Future Funding of Higher Education (chaired by Peter Cassells), Investing in National Ambition: A Strategy for Funding Higher Education. Its recommendations had been well trailed in advance of publication, so while they merit discussion of course they are hardly new. Indeed they are not new in another sense: most of what is analysed in the report, and indeed of what is recommended, had been analysed and recommended 12 years earlier in the OECD report, Review of Higher Education in Ireland. Very similar conclusions were reached back then, particularly in chapter 10 of that report.

The problem requiring a solution is not hard to state, and has been a matter of pretty solid consensus for well over a decade: Irish universities and colleges are seriously under-funded. The consequences include an increasingly unacceptable student-staff ratio, degraded facilities, high levels of student attrition, an erosion of international competitiveness. The solution is very easy to state also: more money. The conundrum for politicians is who should pay for this, or where this money is going to come from.

The Cassells expert group has identified three possibilities: (i) let the state pay for everything, but more generously than at present; (ii) maintain the current system of a €3,000 student contribution with additional state funding to make up the required amount; or (iii) an income-contingent loan system, under which higher education is free at the point of entry but where students contribute through re-payment of a loan once their income has reached a certain threshold after graduation. The report assesses these options, sets out the advantages and disadvantages of each, and in effect settles for option (iii), though not explicitly.

In the end this will not turn out to be a matter of choosing the best option, but of securing a policy that will not be damaging to anyone politically. The fate of Nick Clegg’s Liberal Democrats in the UK – who promised not to allow any increase in tuition fees but who were then in the government that did just that and ended up losing seats at the subsequent election – will be on everyone’s mind. If this is a problem that can be dodged it probably will be. After all, the OECD report has gathered dust for 12 years.

I confess I am hugely sceptical about an income-contingent loan scheme. Australia is held up as an example to follow, but the critical thing to note about the Australian model is that it has led to massive unpaid debts, estimated to lie at around or above a staggering AUS$40 billion. As the scheme also involves subsidised interest rates for the loans, it has been estimated that the cost to the taxpayer could be about the same as state funding for the system, but less predictable in its impact.

If it is our intention, as it should be, to ensure that access to higher education is unimpeded for those with the necessary talent, whatever their socio-economic background, then there are really only two options. One is full state funding: but this is meaningful only if that funding is generous enough to secure excellence, quality and international competitiveness. This in turn is unachievable unless taxes are raised to secure the necessary funds, and the revenues are hypothecated – i.e. ring fenced for expenditure on higher education only (which is not possible under current budget systems).

The other option is to have tuition fees for those who (subject to means testing) can afford it, free tuition for those who cannot, and perhaps loans-assisted fee payments for middle income groups.

There is no other realistic option that will actually work in practice and in the long run. There isn’t an easy silver bullet that requires no difficult decision by politicians. And because this is so, this report too may start gathering dust. I would love to think that I am wrong however, and that at least some steps will be taken to ensure that the erosion of excellence in Irish higher education is halted.

Negative educational equity?

October 5, 2015

The funding of higher education is something currently under review in a number of countries, including Ireland and Wales; but any debate around it raises issues not just of how an ambitious university system can be resourced, but also of the impact of a fees régime in a country that chooses to let the the students pay for some or all of the costs of their education.

It has now been estimated that in England the average student can expect to pay £63,000 for their university education – a sum consisting of tuition fees and living costs, and amounting to much more than the deposit for a mortgage to buy a house. While it is also clearly the case that a university degree will significantly enhance a graduate’s career prospects and salary expectations, there may come a point at which the cost is greater than the expected return; a condition sometimes described as negative educational equity.

One of the possible consequences of this state is that some may choose to look to higher education outside of England; and recent reports have highlighted the much lower cost of degree courses in some European countries, many of which are now being offered in English. There are apparently signs that some English students are availing of this opportunity, while international students are being put off from coming to England by the cost.

Therefore, while there is a strong argument for saying that free university tuition is something the taxpayer cannot afford, it can also be argued that a funding régime that imposes tuition fees on all students while the state detaches itself from the resourcing of higher education is equally unsustainable and may produce unintended consequences. University funding needs to reflect the value of higher education to graduates, but also the value to society. It is an area in which an ideological approach to what is right and what is wrong is very unlikely to be satisfactory. The reality is that, in order to have a successful system, the state must carry some of the cost, as must those taking the courses – where they can afford to.

Talking points: Getting poorer students to university

August 4, 2015

Throughout this week, I shall be raising, in a series of brief posts, some issues that I regard as being of current significance, inside and outside higher education.

One of the failures of almost every higher education system over recent years has been the inability to increase significantly the number of students from what one might describe as poor backgrounds entering university. Removing tuition fees has, where it has been applied, provided effective support to middle income groups, but has done little for the more seriously disadvantaged. Until recently it had been thought that, perhaps surprisingly, the English system (with loans-based tuition) had been most effective, but a recent analysis by the Vice-Chancellor of the Open University has called that into question, in particular because of the system’s apparent negative impact on part-time students.

There seems to me to be little doubt that the key driver of success is targeted support for the disadvantaged, with public money focused on this particular objective. Very few countries have shown themselves to be good at this.

Coming to grips (or not) with tuition fees

March 3, 2015

From the frequency with which politicians present promises or assurances over tuition fees before elections, we must assume that they believe that fees are an issue that can help improve a party’s electoral fortunes. Nick Clegg in England, Ruairi Quinn in Ireland, Alex Salmond in Scotland have all made emphatic statements or vows that they would not allow fees to be introduced or increased. This all but destroyed Nick Clegg, and caused Ruairi Quinn some serious problems in government. Only Alex Salmond was able to use it to advantage, though it is hard to say whether it has made any difference in actual votes for the SNP.

And now Ed Miliband has got in on the act. Under his leadership the UK Labour Party has promised to reduce the maximum tuition fee English universities can charge from the current £9,000 to £6,000, to be funded by curtailing pension tax relief for those on higher pay. As was quickly pointed out, this won’t help anyone very much other than graduates on higher incomes, and it seems even senior Labour politicians were sceptical about the benefits of the promise. Indeed it is striking that, given the high profile the Labour Party originally gave to the announcement, by yesterday it was not visible anywhere on the ‘issues’ page of the Party’s website.

It continues to be my view that the British government’s tuition fee policy is wrong-headed: as everyone including the government itself assumes, a significant part (perhaps the majority) of the debt run up by students under the loan scheme will never be repaid, leaving a major funding problem a little further down the road. None of that would be made any better by the Miliband promise, the only real impact of which may be to make insecure a significant part of university funding – including funding in Scotland, as it happens.

It is almost certainly good advice to politicians to leave this matter alone during election time. University funding is something that will be better handled by thoughtful analysis and discussion. The key issues are the adequacy of funding to secure international competitiveness, inclusive access to higher education, and the autonomy of institutions. These are more sensibly addressed in an atmosphere that is not distorted by the noise of the electoral marketplace.

I strongly doubt that Ed Miliband’s initiative will help him get into 10 Downing Street.

Higher education investment and the role of the state

November 25, 2014

A few days ago several thousand people took to the streets of London to protest against higher education cuts, tuition fees and student debt. The protestors carried placards and heard speeches that called for free higher education, the end of student debt and progressive taxation. It is unlikely that their cocktail of complaints and demands will be taken on board, at least in its entirety, by any political party seriously aiming for government in Westminster, but it is clear also that there is a fair amount of unrest in student circles in England. But in targeting tuition fees above all else, the protestors may be addressing the wrong priority.

It may be worth saying that the argument for ‘free’ higher education (which is of course not really free, but rather consists of tuition funded by the taxpayer) is not without its difficulties. The financial burden of university studies is not felt evenly by all sections of the population. Students with access to significant private resources will not necessarily be troubled much by tuition fees; but disadvantaged students will always be affected by general living and material expenses even where tuition is free. In other words, wealthier students will notice relatively little difference between having tuition fees and having none, while disadvantaged students will find it challenging to afford even ‘free’ higher education. This is one of the reasons why universal free tuition does not, contrary to what its advocates often assume, necessarily draw poorer students into higher education.

A much more significant factor in the social (and indeed economic) impact of higher education is state investment. Many European countries have tuition fees, though on the whole these are low by English standards. However, such fees supplement (rather than replace) state investment, so that the latter can be effectively targeted at genuine need, whether this is institutional (investment) needs or personal student needs. It is arguable that American universities achieved global prominence once the US government realised that higher education investment would generate massive economic benefits; and now US disinvestment is coming at a time when we can discern a gradual slippage by American universities in global rankings, while aggressive investment by China and others is allowing their institutions to advance. The perfect model of higher education funding is serious public investment, accompanied by affordable tuition fees and targeted support for poorer students.

Some countries seem to have lost a mature understanding of what the state’s role is in higher education funding. This needs to be recovered.