Category: Fees and Funding

  • Roll up roll up for the great higher education fire sale

    Roll up roll up for the great higher education fire sale

    Since the announcement, most eyes interested in “radical transformation” have been on the creation of a new “super-university” – Greenwich and Kent becoming the London and South East University Group.

    But The Times is reporting a very different kind of tie-up – which if it comes to pass could have much more interesting implications.

    It says that the University of Buckingham, the UK’s only “independent” university, is considering a £150 million sale to Global University Systems (GUS).

    It suggests that the potential sale could compromise the university’s Royal Charter, non-profit status, and academic integrity – risking its identity as a “free speech and research-focused institution”.

    Precedented

    If that sounds and feels “unprecedented”, you may not have noticed the extent to which everything from research parks to student accommodation are already (part or fully-)owned by private companies.

    You may also not have noticed any number of mergers, takeovers and fire sales among small private HE providers – many of which specialise in the kinds of franchised provision that have been generating considerable regulatory interest in recent months.

    There’s also Richmond, the American University in London. When founder Sir Cyril Taylor died in 2018, he bequeathed his for-profit company (American Institute for Foreign Study) to his own charitable foundation (Cyril Taylor Charitable Foundation).

    It created what former vice chancellor Lawrence Abeln called a charity “operating like a shell for a commercial company it wholly owns” – allowing commercial interests to control educational decisions through charitable structures while maintaining the appearance of independence.

    Abeln argued that the foundation used funding as leverage to demand governance changes, including his forced resignation, threatening the university’s survival unless commercial interests were satisfied.

    It mirrors concerns about the potential Buckingham sale – that once charitable educational institutions become dependent on private sector funding or ownership, academic independence becomes vulnerable to commercial priorities.

    Even when the charitable structure remains intact, the substance of independent governance can be hollowed out, creating what critics might term a “stealth privatisation” where commercial control operates behind charitable facades.

    Any number of things could be going on behind the scenes that already resemble that in universities that have breached, or are close to breaching, their banking covenants.

    But the wholescale takeover of a university with a Royal Charter? Really?

    We work at supplying HE

    Back in 2020, five men registered a UK company called “GGE UK Newco” in a WeWork near London Fields. Within four months, it had acquired university title, degree awarding powers, and registration with the Office for Students – a process that typically takes years for new higher education providers.

    The company pulled this off by purchasing the assets of the former Regent’s University London charity, including its degree awarding powers (awarded in 2012) and university title (granted in 2013). On September 29th, GGE UK Newco changed its name to “Regent’s University London Limited,” becoming the wholly-owned product of a partnership between the original Regent’s University and Galileo Global Education, a large international education provider with over 110,000 students worldwide.

    The transaction appeared to have bypassed normal regulatory processes entirely. While new providers typically wait around 180 days and must pass a Quality and Standards Review, no such review appeared to have been conducted for Regent’s University London Limited. OfS was largely silent on the specifics, raising real questions about transparency and whether standard due diligence procedures were followed.

    As DK noted at the time, the case was interesting insofar as it suggested that university titles and degree awarding powers can effectively be bought and sold as assets. With some independent providers still waiting on registration decisions, the apparent fast-tracking raised concerns about fairness and regulatory consistency, potentially setting a precedent for more financially-motivated restructuring in the sector.

    And there’s more

    Scroll forward to March 2023, when IU Group acquired the education and training activities of the London Institute of Banking and Finance through a structural split.

    The original Royal Charter charity was renamed “The London Foundation for Banking & Finance (LFBF)” and continues as a charitable foundation, while the commercial education business now operates as “LIBF Limited” (a wholly owned UK subsidiary of IU Group) trading under the original name “The London Institute of Banking & Finance.”

    That preserved the charitable Royal Charter structure while transferring the degree-awarding educational operations to private ownership.

    Then in 2014, struggling Ashridge Business School was acquired by Hult International Business School in what was described as both a merger and acquisition driven by Ashridge’s need for “financial salvation.” Hult provided a £50 million investment, and the schools completed an operational merger in 2015.

    Ashridge now operates as “Hult Ashridge Executive Education” – the executive education arm of Hult International Business School, with the historic Ashridge House estate serving as Hult’s flagship executive education campus. Unlike LIBF, this was a complete absorption rather than a structural split, with Ashridge’s independent existence ending as it became part of Hult’s global network of campuses across Boston, London, Dubai, Shanghai, San Francisco, and New York.

    And then there’s the College of Law.

    It can trace its origins to 1876 with the formation of Gibson & Weldon, a leading tutorial firm. In 1962, The Law Society created The College of Law by merging its own Law Society School of Law (founded in 1903) with Gibson & Weldon, establishing it as a specialist institution for training solicitors.

    It was formally incorporated by Royal Charter on 5 December 1975 and registered as a charity in May 1976, with the stated aim “to promote the advancement of legal education and the study of law in all its branches.” This gave it constitutional status as a chartered institution dedicated to legal education. And in 2006, it was granted degree-awarding powers by the Privy Council.

    So when it was sold to Montagu Private Equity for around £200 million in 2012, the transaction revealed just how valuable degree-awarding powers had become as tradeable assets.

    The deal involved splitting the institution – the original College of Law retained its Royal Charter and charitable status under a new Legal Education Foundation, while the commercial education business, crucially including those 2006 degree-awarding powers, moved to a newly created for-profit company called “The University of Law Limited” (originally incorporated as “Col Subco No.1 Limited”).

    DAPs, it seemed, could now be packaged and sold as part of a commercial education business – degree-awarding powers as an asset class.

    At the time, constitutional lawyers questioned how powers granted to a Royal Charter body could legitimately transfer to what was essentially a separate company. But the then responsible Department for Business, Innovation and Skills (BIS) maintained that the powers remained valid because the “whole education and training business” had moved to the new entity. The precedent was set – and so in 2015, when the University of Law was acquired by GUS, its valuable degree-awarding powers travelled with it as part of the commercial package.

    Or take Arden. Originally founded as Resource Development International (RDI) in 1990 by entrepreneur John Holden, the distance learning provider was sold to US-based Capella Education in 2011 as part of Capella’s international expansion strategy. The timing proved crucial – RDI was granted Taught Degree Awarding Powers in April 2014, gained full university status in August 2015, and was immediately put back on the market when Capella’s international strategy faltered.

    By August 2016, GUS acquired Arden for £15 million – demonstrating how rapidly degree-awarding powers could travel through corporate hands. The transaction showed DAPs functioning specifically as tradeable assets – Capella had effectively acquired a company that later gained valuable regulatory permissions, then sold those permissions onwards as part of a portfolio optimisation. For GUS, acquiring Arden provided another set of degree-awarding powers to add to its growing collection, which already included the University of Law.

    Royal charters

    But the potential Buckingham sale arguably represents a qualitatively different proposition from previous transactions. While ULaw, LIBF, Ashridge, and Richmond were specialist institutions operating in commercial-adjacent sectors – professional training, banking education, executive development, or niche international provision – Buckingham is the UK’s flagship independent university, purpose-built to demonstrate that alternatives to state higher education could thrive.

    Established in 1976 and granted its Royal Charter in 1983, Buckingham has operated successfully for over four decades as Thatcher’s “proof of concept” for educational independence. Unlike the struggling institutions that sought private sector rescue or the professional training providers that already operated in quasi-commercial spaces, in theory the sale of Buckingham would represent the commodification of the university ideal itself.

    It would also signal that even the most symbolically important Charter institutions – those created explicitly to preserve educational independence – could be subject to market forces when financial incentives align.

    Whether structured as a direct sale or following a version of a model of splitting charitable and commercial operations, a Buckingham transaction would force regulators to confront fundamental questions they’ve previously avoided. The Office for Students, the Privy Council and potentially the Charity Commission would need to justify why the commercialisation of Britain’s flagship independent university serves the public interest.

    If it happens, regardless of the technicalities of its legal structure, it would also establish that Royal Charter status provides no meaningful protection against commercialization, making virtually any institution a potential acquisition target – completing the evolution of degree-awarding powers from constitutional privileges into tradeable corporate assets.

    Back to the future

    As Mary Synge demonstrates in her analysis of university charity law regulation, universities are charities whose trustees have a fundamental legal duty to act “in the best interests of the charity” – not commercial interests, and not even student interests – at least as variously defined by politicians.

    When charitable assets and degree-awarding powers become tradeable commodities, this feels like a fundamental breach of charity law principles that have governed universities for centuries. The strategic goals of “maximising growth in income” that might benefit institutional finances are legally distinct from – and potentially in conflict with – acting in the charity’s best interests for public benefit.

    But the regulatory conditions that make the Buckingham sale possible have been deliberately created. Synge’s research shows how OfS has systematically weakened charity law oversight compared to its predecessor HEFCE, removing transparency requirements, diluting governance standards, and abandoning serious incident reporting.

    Where HEFCE demanded universities demonstrate compliance with charity law principles, OfS has reduced this to a mailing list subscription. The regulatory hollowing-out creates the conditions where transactions that should trigger intensive charity law scrutiny can proceed with minimal oversight.

    When the regulator tasked with promoting charity law compliance barely acknowledges charity law exists, constitutional protections become meaningless.

    Back to the future

    As ever, we’ve been here before – or at least the FE sector has. Back in 2016, FE Week got hold of a leaked government document that revealed the Department for Education (DfE) was actively planning for private sector acquisition of failing FE colleges.

    A draft “Framework for due diligence in the FE sector following area reviews” (a process which itself had nudged/inspired/funded a series of mergers and groups) specifically addressed the “acquisition of an FE college by a private sector organisation,” noting that private providers “may have different benchmarks and parameters as to what is acceptable in terms of both curriculum and financial performance.”

    BIS guidance published that March had already unveiled government plans to introduce an insolvency regime for colleges, explicitly stating that following area reviews, government would “no longer bail out colleges in financial trouble, but would instead allow them to go bust.” Sound familiar?

    Critics warned of potential “fire sales” where private equity firms could asset-strip college buildings and facilities, cherry-picking profitable courses while abandoning community obligations. And the University and College Union (UCU) pointed to American examples of private equity involvement leading to “derisory rates of graduation, crushing levels of debt and of course dubious value.”

    The Technical and Further Education Bill (2016) created a “Special Administration Regime” for FE – essentially corporate insolvency procedures for FE colleges with an “education objective” twist. One battle during debate on the Bill came when Labour’s Gordon Marsden attempted to protect publicly-funded college assets from private acquisition.

    Marsden argued that FE colleges represented decades of public investment – from 1950s local authority funding through the multi-billion pound Building Colleges for the Future programme – and warned that defeat would enable private equity “asset stripping” of educational institutions built with taxpayer money.

    But then Minister Robert Halfon rejected the amendment – arguing that student protection must override asset protection, even if it meant transferring publicly-funded infrastructure to private companies. When the division was called, Conservative MPs defeated the amendment 8-5, explicitly authorising education administrators to transfer college assets to private entities if deemed necessary for the “education objective.”

    It established the principle that educational assets, regardless of their public funding history, could be commodified and transferred to private ownership when market logic demanded it.

    Here in 2026, we have a Labour, not Conservative government. It is already “interested” in what’s been going on in the franchised for-profit sector. But it doesn’t seem to have been especially keen to question what’s been going on from a profit/principle point of view. And it’s not clear that what is planned in regulatory terms will be nimble enough to tackle the real questions that surround outcomes or quality.

    As is increasingly clear, the “line” between private and public interest has already been blurred by loans, accommodation, research parks and all sorts of other aspects of HE. What the government does or doesn’t do over a potential sale of Buckingham will tell us whether it’s interested in, or willing to, draw a line before the examples in blogs like this become much less obscure.

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  • The incentives don’t work they just make growth worse

    The incentives don’t work they just make growth worse

    The UK’s economy looks particularly bad at the moment.

    There is a Jeremy Hunt view of the world that while the UK is in a muddle with its money the foundations are strong. After all, the UK is still one of the world’s largest economies. There is the City AM view that the UK is in many ways fundamentally broken. And, there is the Resolution Foundation that predicts that many households will endure another decade of lost earnings.

    The UK’s particular malaise is manifold. The IFS talks about it as a result of “Low investment, policy mistakes, political instability, and Brexit,” (Covid didn’t help either). The result is what former LSE president and now advisor to Keir Starmer Minouche Shafik and founder of the Resolution Foundation Clive Cowdery have called a “toxic combination of low growth and high inequality.” Their view is stagnation is because of low records of investment in staff by business, regional inequalities, and the overplaying of the UK’s manufacturing strengths at the expense of its actual strengths in services.

    New advisor old problems

    As the country has ambled through its decade and more of low growth the university sector has expanded rapidly. As I wrote about in a paper for the Post-18 Project this presents a fundamental problem for people like me that believe in the economic utility of universities.

    The best version of the story is that universities have genuinely transformed the economic fortunes of some parts of the country, if not the entire country. A recent Centre for Cities report suggests there are some places that have become more prosperous through all the economic goods a university attracts to their place including students, knowledge workers, and some kinds of innovation.

    The second sunniest version is that the country would be in an even greater mess were it not for its universities. The gloomiest picture is that despite the enormous amount of additional public funding, increases in turnover, new research schemes, capital builds, and other fiscal levers, universities have not been able to get the country out of its fiscal funk.

    The rejoinder to this is that universities don’t just exist for reasons of economic utility. The problem is, as Jane Robinson has pointed out for Wonkhe, university’s social contract and the funding that flows to them is increasingly about how they choose to invest, the partnerships they build, the ways in which they grow their economies, and their role in regional development. Their ability to meet the challenges Shafik and Cowdery have set out is the bargain for further funding.

    This is fair enough. It is unreasonable for universities to expect more public funding in a tight economy without offering something in return. The problem is the things that universities are doing are often going under the radar and the things they might do better are often beyond their control.

    It’s not that universities don’t want to contribute to economic growth, it is that it is hard and government policy often makes it harder. To demonstrate, let’s consider Shafik’sand Cowdery’s triangle of growth; skills (as a key part of productivity), regions, and maximising the UK’s strengths.

    Start, stop, go

    Universities generally produce people with the skills the economy needs. They do not produce as many people with the skills the economy needs at pre-degree level, because the curriculum is usually built around undergraduate degree level qualification, but there is no other game in town when it comes to producing the graduate workers an economy requires.

    Universities will probably never provide all the sheet metal workers the country requires or fill the massive gaps in the care system but they will provide a good number of the nuclear physicists, programmers, engineers, lawyers, accountants, and managers the industrial strategy requires.

    The problem is that universities have almost no incentive to teach the things that the industrial strategy says the country needs. They may do so for academic reasons, civic good, inertia, research profile, specialism, or something else, but teaching the future home students in high-cost programmes is the exact opposite way any sensible university financial planner would arrange their portfolio of programmes. Programmes at pre-degree level have students for less time on them, with a less obvious market, and comparable individual unit costs. An even worse deal.

    To look at this another way the university which aimed solely to meet the needs of their local and national labour markets would have to ignore the financial reality they exist within. My own view is that on narrow economic terms it’s a good thing universities teach broad based curricula because the labour market is unpredictable and benefits from a range of skilled people to draw upon. The government view is that it’s not only necessary to entirely reform the skills pipeline but to provide more specific skills in AI, engineering, cyber, and other STEM related fields.

    The government has therefore created a misalignment between financial incentives and the labour market outcomes they are trying to achieve. To address this the government could increase university funding generally through strategic grants (probably not going to happen), boost other forms of income through relaxing visa regulations (absolutely not going to happen,) or improve incentives to teach home students in high cost programmes (we might get some inflationary fee increases).

    The alternative is to recognise that an entirely student demand led model is going to lead to some skills gaps. Various attempts to nudge students into certain qualifications (remember the adverts on cyber?) don’t seem to have made an awful lot of difference. Through the Post-18 project my co-authors and I argued that some HE provision could be commissioned:

    The Devolution Bill should make provision for mayoral combined authorities to convene a post-18 education and skills provision group with a diversity of provider and industry representation that can draw on the insight from regional growth insight centres to develop post-18 pathways, provision and partnerships. These groups could initially propose business cases for reprofiling of funding but over time could be given direct commissioning powers and/or direct injections of public funding to catalyse new provision aligned to national or regional economic growth priorities.

    The government can find ways of boosting or redirecting teaching resources or the country, in the long term, can have fewer graduates in high-cost degrees. There is no path to more students studying more expensive things in line with government priorities without resources to do so.

    Regions

    Regional growth is another area where the incentives make absolutely no sense. The UK is unusually imbalanced where second cities are comparably unproductive to many other large economies. One way in which to rebalance economies is to increase investment and the supply of skilled human capital.

    The single most important measure of skilled human capital in the university sector is Graduate Outcomes. Graduate Outcomes measure whether a student is in highly-skilled employment fifteen months after they graduate. Universities are regulated and placed in league tables based on this metric. The incentive for universities is to place their graduates where there are the highest number of available highly skilled jobs which is London. Even building a spin-out outside of London only gives a 6/10 chance the spin-out won’t migrate to the capital anyway.

    Universities do not have golden handcuffs to their places and the economic geography of London can too easily pull their economic goods away. Research excellence and impact is not measured on a regional footprint. Infrastructure investment does not follow where there is the greatest latent potential. There is astoundingly little policy that is place sensitive.

    In supporting the UK’s strengths universities are not often the primary beneficiaries of the economic growth they support. There is lots of stick for them to do good economic things but the carrots for supporting growth, particularly in local economies, tend to be the odd grant and bit of underspend like the Regional Innovation Fund. The government cannot be surprised about investment and talent flight where regional educational incentives are non-existent.

    Leave alone

    It can feel like the role of universities in the economy is both over- and understated. On the one hand they are not designed to, never will, and should not be expected to solve every problem with the economy.

    They will not bring back manufacturing, they will not rebalance regions on their own, and they will not fill all of the gaps in the labour market. At the same time they do a lot of good stuff as employers, innovators, anchors, coalition builders, contributing to clusters, attracting knowledge workers, and through educating students.

    The bit where the incentives do work is producing students for the knowledge economy. The part of the UK’s economy that has grown as manufacturing has declined. Universities have a reliable (if not predictable) income, their graduate outcomes are regulated (how well is a different question), and parts of the economy make good use of their graduate skills. If university marketing departments are to be believed this good employment is also one of their major selling points which through student recruitment then puts more funding back into the system. The incentives just line up a bit better.

    The problem is that universities are not only not always supported to get on with the job but they aren’t left alone to do so. It would perhaps be too much to hope for but welcome that the reshuffle leads to clear direction on what universities are expected (or maybe even regulated or incentivised to do) in the local economy, recognition for their national role and how they will continue to be supported to do so, and a clear sense of where they will be given a little boost but mostly left alone to keep doing the good things they are doing.

    Refiring the economy does not have to be about doing new things. It might be about doing old things in a more joined up, properly funded, and regionally focussed way. As growth goes to the top of the agenda, let’s not forget the work universities are already doing.

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  • The maintenance loan now covers only half of students’ costs

    The maintenance loan now covers only half of students’ costs

    I’m in two minds over whether it was a curse or a blessing – and I may be retrospectively overstating its impact.

    But when I sat down to watch a bit of telly back on Tuesday 13th May 2003, I had no real sense of the extent to which it would end up causing me lost sleep over silos.

    The Day Britain Stopped was a BBC1 docudrama, set in the near future, that explored how a devastating chain of events could leave the country completely paralysed.

    First, a national rail strike pushes huge volumes of passengers and freight onto the roads, overwhelming the motorway network.

    Then the M25 becomes jammed after multiple accidents, including one on the Dartford Crossing. Poor coordination between highways management, police, and emergency services slows response times, and conflicting rerouting decisions worsen the congestion, leaving rescue crews unable to reach incidents.

    Then severe delays ripple through the air transport system, compounded by diverted flights and congested airports. And these all lead to a mid-air collision between two aircraft near Heathrow – killing hundreds – as communication and coordination systems fail under strain.

    Gridlock

    I was thinking about The Day Britain Stopped on a campus a few weeks ago. Student leaders were explaining a proposal from their university to take 30 ECTS credits or so of most degrees (ie a semester) and turn them into a compulsory placement.

    A “mini sandwich” is not, all things considered, a terrible idea. Students would gain valuable work experience – which we know helps with graduate outcomes – and in aggregate there would end up being a moderate reduction in teaching and assessment costs.

    But on the assumption that it would often be unpaid, given the maximum maintenance loan is now significantly below the National Minimum Wage (when chunked out at 30 weeks for 35 hours a week), working full-time for a semester would pretty much prohibit students from earning the extra that many need to now.

    Just like the two teams each re-routing traffic down the same country lanes around the M25, it’s a classic case of not seeing the full picture – and when combined with the HE sector’s preference for policy over scenario planning, potentially disastrous. But nothing like that could be coming in the year ahead, surely?

    Britain’s best days are ahead

    This does nothing for my doom-mongering street cred, but back in May 2024 – when HEPI and TechnologyOne published work from Loughborough University on a Minimum Income for Students (MIS) – I allowed myself a little optimism.

    In a sea of information that seemed to be designed to entice participation rather than be realistic about the costs of it, I imagined that the headline figure – that students need £18,632 per year outside of London to achieve a baseline student experience – would start to adorn .ac.uk cost of living webpages offering budgeting advice to students.

    Given the methodology for calculating the MIS was close to that used by the Living Wage Foundation, and given the Westminster government’s intent to ask the Low Pay Commission to (to all intents and purposes) replicate that methodology for the National Living Wage, I even allowed myself to imagine for a few moments that government might commit to closing the gap between available support and liveable income. It surely wouldn’t be committed to a liveable income for work but not one for study?

    Alas, it wasn’t to be. Vanishingly few of the universities that offer “typical” or “sample” student budgets quote anything like that figure – and that’s if they offer one at all. International students are still misled into thinking that the maximum maintenance loan will cover their costs, parents are still completely in the dark about what they’ll really need to contribute, and many of the survival stories that I’m told by new student leaders every summer have gone from amusing to heartbreaking.

    The MIS report even recommended that when students apply to higher education, UCAS could compare the support available from the student’s home UK nation with their expected living costs. But at the time of writing, the admissions service’s webpage on budgeting instead offers “average” spend figures from 2020, and somehow omits the £2,110 that the source study found students spending when preparing for higher education.

    Governments, meanwhile, did little. This coming September, Scotland is offering up a freeze (real terms cut) on maintenance support, Northern Ireland has an increase that still falls significantly short, and both Wales and England are increasing the maximum by 3.1 per cent. A frozen means test threshold means even fewer will get that max in England – and right now both RPI inflation and CPI inflation are in fact running at 4.1 per cent.

    Update: It’s all worse

    As such, if last year’s report was like a warming sign, the 2025 update to the MIS report ought to be like a fire alarm. The update expands on the 2024 research by examining first-year students and those living in halls for the first time – and through focus groups across five UK cities, researchers found that first-year students face the highest costs of any student group – £418 per week including rent to reach a minimum acceptable standard of living.

    This represents a “first-year premium” of around £14-20 more per week than continuing students, driven by both “setting-up” costs (laptops, kitchen equipment, bedding) and “settling-in” costs (freshers week activities, food wastage while learning to budget, and higher social spending to establish friendships).

    The financial pressure on students has intensified dramatically across all UK nations. In England, even students receiving maximum maintenance support can only cover half (50 per cent) of their actual living costs, forcing them to work over 20 hours per week at minimum wage to make ends meet.

    That, I add in passing, is 20 hours more a week than most politicians’ alma mater allows students to work to have a fulfilling student experience:

    Studying at Oxford is an exciting experience with plenty of opportunities and a high number of contact hours. For this reason, paid term-time employment is not permitted except under exceptional circumstances and in consultation with your Tutor and the Senior Tutor.

    Students from different UK nations face different circumstances – Welsh students have 63 per cent of their costs covered by maintenance support, while those from Northern Ireland receive support covering just 42 per cent of their needs. The gap between what students need and what they receive has created what the researchers term a “hidden parental contribution” – one that now exceeds £10,000 annually for English families.

    I still regularly encounter those who expect to see mass dropouts as a result of the growing gap – but anyone that works closely with students will tell you that it’s a slow participation implosion that we’re seeing rather than a non-continuation explosion.

    Two-thirds of students now work during term time, the highest on record – pressure that is squeezing out various aspects of university life, as students report less time for independent study, fewer opportunities to join activities, and increased commuting distances. Many are experiencing a fundamentally different university experience than they expected, with a third having less disposable income than planned, and 1 in 5 buying fewer books or course materials.

    Over a three-year degree, the total cost of reaching minimum living standards ranges from approximately £59,000 in Wales to £77,000 in London, excluding tuition fees. And these figures are what students need not for luxury, but simply to participate fully in university life with dignity. Even living in accommodation that is “purpose built” for students, while providing important social opportunities, is typically more expensive than shared private housing – with rent making up to 47 per cent of total living costs in London.

    Thanks to Terry Nutkins, Gordon Banks and Let Loose

    One particularly pleasing aspect of the report is the “surprising” costs that so many miss when casting round the marcomms office for a couple of student ambassadors to cobble up a budget.

    Practical necessities include storage costs between academic years when halls contracts end, insurance for phones and laptops used outside accommodation, and mattress protectors for the “really cheap and uncomfortable” beds typically provided.

    First-year students face particular financial pressures during their settling-in period, wasting money on food while learning to shop and cook independently, plus ongoing laundry costs in halls that can reach £5 weekly for basic washing needs.

    Academic periods bring additional expenses, from extra food costs during exam sessions when students spend long hours in libraries, to transport costs for third-year students attending job interviews and graduate recruitment events.

    Basic costs related to social participation and mental health are also included. They include individual crockery and cutlery in halls to avoid hygiene issues when sharing with strangers, a £20 (!) annual personalisation budget for room decoration that prevents students feeling like they’re “in prison,” and £50 annually for clothing required for university social events and society activities.

    They are seemingly minor expenses – but they all add up, and they highlight how the “minimum” standard isn’t about luxury, but about enabling students to participate fully in university life, maintain their mental health, and avoid social exclusion.

    There’s also dehumidifier packs to combat poor ventilation and condensation from drying clothes, tabletop ironing boards to fit cramped spaces, and overdoor hooks because standard furniture is insufficient for storing belongings across shared living arrangements.

    Technical necessities include extension leads for inadequate electrical outlets and Wi-Fi boosters for poor connectivity, while protective measures like upholstery and carpet cleaners become crucial for avoiding deposit losses. Even basic items like door mats for communal cleanliness and shower caddies for bathroom storage represent additional shared costs when five people live together.

    Beyond accommodation, students face numerous individual costs related to campus life and practical necessities that all accumulate quickly. They include water bottles and Tupperware containers for daily campus use and food storage, delivery and returns costs reflecting modern shopping patterns, and small airers for bedroom clothes drying when shared facilities are limited.

    Admin costs like provisional driving licences at £34 become the most practical form of student ID, cheaper and more portable than passports. And there’s eye tests every two years with potential glasses purchases, and a small budget for everyday medicines and a couple of prescriptions annually – along with significant variations in personal care costs, the report particularly noting “the higher cost of hairdressing for afro hair in particular,” while emphasising that regular haircuts are deemed essential for being “presentable” and maintaining “self-respect”. Luxuries these are not.

    Parental contribution

    The report repeats last year’s calls for urgent, system-wide reform based on five principles: simplicity, transparency, independence, sufficiency, and fiscal neutrality. Key recommendations include increasing maintenance support so students can reach minimum living standards through a combination of government support and reasonable part-time work, providing a “first-year boost” to help new students establish themselves, and raising parental contribution thresholds so families only contribute when they themselves have achieved minimum living standards.

    The researchers argue reforms could be implemented without additional government spending – although the proposal is to reintroduce much-maligned but fairly progressive real interest rates on student loans, ensuring those who benefit most from higher education contribute accordingly. Sadly, they’re usually the loudest too.

    Without reforms, they warn of three critical risks – increasingly unequal access to higher education, declining quality of student experience, and threats to sector sustainability as students struggle to afford university attendance.

    But forgive me for the doom. Any or all of that will have to wait until at least September 2026, and even then is looking increasingly unlikely, given that the Treasury is said to be staring at a £41bn hole in its budget, and is currently borrowing the money on the bond markets to lend to students at an interest rate of 4.5 per cent – a far cry from 0.5 per cent nine years ago.

    And it could all be about to get much much worse.

    Basket cases

    Whether you use RPI or CPI is almost immaterial – it’s the basket of goods that matters, and neither basket captures the basket of a student typified in the MIS. Students spend more on food than the average consumer, and in that basket they’re less able to “trade down” through the brands.

    The Bank of England expects food inflation to be around 5 per cent Q3, rising to 5.5 per cent by the end of the year – higher global commodity prices, higher labour costs and Extended Producer Responsibility regulations that come into effect from October of this year all driving the change.

    In June, Beef and Butter were up at 20 per cent, Coffee was at 12.5 per cent and Chocolate was running at 16 per cent. Decent rent data is hard to come by – but it always seems to increase by more than inflation. If not included in their rent, energy prices have shifted from being a drag on inflation to providing a boost – Ofgem’s price cap for households is £1,720 for July-September 2025, almost 10 per cent higher than the same period last year.

    And the BoE’s key mitigation measure – to cut the Bank Rate by 0.25 percentage points to 4 per cent at its August meeting – might be helping students’ landlords, but it won’t be impacting student budgets.

    Meanwhile, if students have been steadily increasing their term-time work (both in numbers of students and hours worked), that could be a coming problem too. Employment growth has stagnated, and job vacancies have fallen significantly. And while two-thirds of students say they’ve been in work during term time, 89 per cent of applicants are now expecting to find work – rising to 93 per cent of care leavers, 94 per cent of international students and 96 per cent of estranged students.

    Either there’s lots of spare jobs going, or the UK may be about to run out of part-time work for students. That’s a problem few will see coming, will be almost certainly be worse in some cities than in others, and would be exacerbated if the usual ratio of students spending in businesses v those working in those businesses shifts significantly – both having grown gently in tandem as student numbers have grown. The need to convert more jobs on campus to those that students can do has never been greater – even if they sound like the first to have gone as teams have contracted in recent years.

    Some will find work that’s further and further away from campus, some will find work that’s more and more punishing on them both mentally and physically, and some simply won’t find it at all. Many – like the international student leader I met last week – will find themselves working for less than minimum wage just to pay their fees, in a country that couldn’t seem less interested in those sorts of labour market abuses if it tried.

    God forbid a student has a setback, an accident or a costly health problem. Or happens to be a student in a year when if nothing else, there will be major and un-modelled impacts on student housing supply as a result of dramatic reforms to the way that an already scandalously poor rental market is regulated.

    Implosions v explosions

    Maybe a crisis is coming – the classic unplanned-for crisis of the sort in The Day Britain Stopped, when various factors conspire in a single period to multiply each other into something that few saw coming. But even if it isn’t an explosion and we see non-continuation rates fall off a cliff, we can see what’s coming – students choosing to stay at home just as their local university closes courses, students choosing against the extracurriculars that would make up for the skills their course supplies but are no longer needed.

    Students breathing in the spores of black mould as they literally choose between heating, and eating.

    In the 2024 MIS report, the authors warned against any increases to maintenance support that would come at the cost of lower participation in higher education, “for example if an increase could only be paid for by capping the number of students who can study in higher education”. The kneejerk makes sense – neither governments, universities nor students are ever keen on measures that might limit opportunity.

    But offering students a loan that only covers half of their basic living costs, and then asking them to work a minimum 20 hours a week during term-time isn’t “opportunity”, it’s a scam – one that sells “student life” but for those on low incomes offers the kind of experience associated with labour market outcomes they’re less likely to achieve anyway, and one that allows lots of people to pat themselves on the participation back while plunging unsuspecting students into poverty.

    If the country really can’t afford mass participation in higher education, and students can’t afford to be students, the only morally right thing to do is admit it. And if telling students they need £21,126 per year to live on might put some of them off, then maybe it should.

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  • Dundee’s troubles and the state of the sector

    Dundee’s troubles and the state of the sector

    “Dundee University’s reputation soars,” shouted the front page of the Courier in 2004. Making the most of a rise in the league tables, the then university secretary highlighted the institution’s commitment to excellent learning and teaching, its outstanding research and its contribution to the local community.

    Fast forward 21 years and more recent press coverage has been less positive – the university’s desperate financial situation, rapid departures by senior staff, emergency government funding, threats of large-scale job losses and very painful sessions before the Scottish parliament education committee.

    A hard-hitting report by former Glasgow Caledonian principal Pamela Gillies put the blame on “poor financial judgement, inadequate management and reporting, poor monitoring of the financial sustainability KPI, a lack of agility in responding to a fall in income by the University leadership and weak governance in relation to financial accountability by the University Court” compounded by the “top-down, hierarchical and reportedly over-confident style of leadership and management” and “a culture in which challenge was actively discouraged.”

    The 64-page document is excoriating in its condemnation of senior officers and the university’s governors – a view shared by the select committee, where MSPs expressed their criticism in the strongest possible terms. Later events – including the departure of the interim finance director after a week in the job – have only made the agony worse.

    The financial collapse at Dundee inevitably raises questions for the rest of the HE sector in Scotland and the UK as a whole. Are the same weaknesses present in other institutions? Is higher education in crisis? And how should governments and the sector respond?

    Governance and management

    Before going any further, I must declare a personal interest – I was the university secretary quoted in the 2004 press article and I have retained an abiding affection for the University of Dundee since leaving in 2008.

    I also chaired the group that produced the latest revision of the Scottish Code for Good Higher Education Governance in 2023 – a document which Professor Gillies deems fit for purpose, provided institutions follow it carefully. However, implementing the code of governance, excellent as it is, will not be enough – we all need to learn lessons from the Dundee story and make sure that our own universities are protected from a similar fate. To that end, we ought to engage in an open discussion about what has happened and consider it from every angle.

    So far, the criticism has focused on the failings of Dundee’s senior managers and governors. In response, they have accepted that they should have spotted the financial problems earlier and taken avoiding action. That way, as one officer put it to the committee, they could have dealt with them “under their own steam”.

    Senior managers and the university court should certainly have been aware of the worsening financial situation in the second half of academic year 2023–24. Student recruitment fell in September 2023 and again in January 2024; meanwhile the international market was contracting and the UK government looked set to implement unhelpful policy developments as part of its anti-immigrant agenda.

    At that stage, the university’s executive board should have been keeping an eagle eye on the monthly management accounts, freezing all but essential staff recruitment and paring back expenditure. The failure even to recognise there was a financial deficit until October 2024 was a critical lapse.

    Reflecting on this, all universities will now be examining their systems, processes and culture to make sure they do not fall into the same trap. The sense of urgency will be especially acute in institutions which are running deficits – a plight that now affects many HEIs previously considered immune to such challenges. In Scotland, the cabinet secretary for education has urged the sector to address the problem of “unsustainable jobs” – apparently giving the green light to further staffing reductions.

    University courts and councils will be assessing governance arrangements and exploring how to strengthen financial scrutiny; some will also be reviewing the way they interact with their vice chancellors and senior teams. In doing this, they should ensure that senior officers and trade union reps are enabled to challenge heads of institutions and bring any concerns they have to the governing body.

    Model issues

    All of this is sensible, but the debate so far has largely ignored some fundamental points. Most importantly, the sector needs a different financial model – it cannot survive by placing ever greater reliance on the international student fee account. In England, the UK government has at least allowed the home undergraduate fees cap to increase in line with inflation but Holyrood has not made a similar move, and nor is it likely to before the 2026 Scottish election.

    The lack of funding will mean further retrenchments and cost-cutting in estates and IT budgets; unpalatable options such as delaying the national pay uplift or cancelling academic promotions rounds may also come into play. Against this background, Scotland’s politicians must step up – we need to treat university funding as a national problem which deserves an enduring solution, preferably identified through a review supported by all parties.

    Returning to Dundee, there is a reason why that university was so badly hit that goes beyond mistakes made by senior management. For at least 30 years, Dundee has been a powerhouse of life sciences research, with a special focus on cancer and tropical diseases. A glance at the 2021 REF results for biological sciences bears this out – there is Dundee, ranked number two behind the Institute of Cancer Research, ahead of Oxford, Cambridge, Imperial and many other universities with much greater resources.

    This is an extraordinary story – a relatively small, provincial university taking on and beating some of the greatest and best-funded institutions in the world; in the process, Dundee’s researchers have benefited humanity, not just in this country but also across the global south. Sir Alfred Cuschieri, Sir David Lane, Sir Philip Cohen, Cheryll Tickle CBE, Sir Pete Downes, Sir Mike Ferguson – the list of top biomedical scientists whose careers have flourished at Dundee is hugely impressive.

    However, this achievement comes at a price – even 20 years ago, Dundee struggled to generate surpluses which would protect the institution against a rainy day. As everyone knows, research funding simply does not cover the cost of the work it is supposed to support – universities have to cross-subsidise scientific endeavour with endowments, donations and international student fees.

    The challenge is even greater when much of your funding is from charities, which pay a lower overhead than government research councils. That left Dundee in an especially vulnerable position when the international student recruitment market began to contract in 2023–24 – a problem not shared by other universities with a fraction of Dundee’s research activity.

    Given what has happened, it is right that universities conduct self-audits and make certain that their own houses are in order. The Scottish government and the funding council should also seek assurance that Scotland’s HEIs are effectively led and managed. But the deeper question of how the sector should be funded still needs to be addressed, and quickly.

    As part of this we should recognise that world-class research of the kind nurtured in Dundee is something to be cherished; we should all back the recovery effort on Tayside. For my part, I believe strongly that the university will remain a powerhouse of research and excellence in learning and teaching for decades to come. With the right support, Dundee’s reputation will soon soar again.

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  • How funding policy has affected foundation year provision

    How funding policy has affected foundation year provision

    The coming academic year (2025-26) is the first in which classroom-based foundation year (FY) fees will be capped at a level below the higher level fee cap.

    For many who have experienced or supported foundation year tuition this is a retreat from a proven method for supporting people who have been failed by compulsory schooling in continuing their education. Critics would point to a few years of sustained growth, particularly in franchised provision, that is of more questionable quality and benefit.

    Foundation years are an anomaly in that they sit neither at level three (alongside other pre-university qualifications like A levels or the Access to HE Diploma [AHED]) or level four (alongside higher national diplomas, and the first years of both undergraduate degrees and higher technical qualifications). As such, they will face the worst of both worlds: level 3 funding (for classroom-based provision) covered by level 4 repayment rules and level 4 regulatory interventions.

    Why cut?

    In a ministerial statement that, in a dazzling display of self-awareness, actually used the phrase “fix the foundations” twice, the Secretary of State set a fee limit of £5,760 (the maximum current cost of an AHED, though in practice fees are nearer £4,000) as a maximum for “classroom-based” (non-STEM) foundation years on 4 November 2024.

    There’s a paragraph on the ostensible reasoning for this that is worth bearing in mind:

    The government recognises the importance of foundation years for promoting access to higher education, but they can be delivered more efficiently in classroom-based subjects, at a lower cost to students.

    This sounds more like an access-focused intervention rather than an attempt to cut provision, although it is rather divorced from the cost of provision. This is despite a 2023 report from IFF Research which noted that, based on the available data and on a series of interviews:

    the cost of delivering FY and the first year of a UG degree in the same subject area was found to be broadly similar

    Indeed, there were suggestions that FYs may actually work out more expensive, given the need for more contact time and the tendency towards smaller classes. We should leave aside for the moment the great difficulties we have in understanding the cost of higher education provision more generally, and note that the evidence base for this particular decision is weak. And there is, to be clear, a huge absence of meaningful data about FYs more generally – something DfE itself attempted (after a fashion) to remedy with an ad hoc data release in October of 2023.

    Review of routes

    If you were wondering where the impetus for this policy intervention originally came from, you have to look back to Philip Augar’s review of post-18 fees and funding back in 2019:

    We recommend that student finance is no longer offered for foundation years, unless agreed with the OfS in exceptional cases.

    In broad-brush terms, his argument was that foundation years did a similar job to some level 3 qualifications (specifically the Access to HE Diplomas) at greater cost: he characterised this as “enticing” underqualified students onto expensive four year degrees that may not be in their best interests.

    It was one of many largely arbitrary (and mercifully forgotten) Augar recommendations on higher education funding, to the credit of the previous government it was very much more aligned to addressing the value offered to students. As Michelle Donelan said in 2022:

    We also know that there are some people who need a second chance, an opportunity to get into higher education through a less conventional route. Often this route is through foundation years, but we think it is unfair that some of those who take advantage of this transformational opportunity have to pay over the odds. So we are reducing the fee limit for foundation years to make them more accessible and more affordable for those who need a second chance.

    Quantity and quality

    Okay. So, ignoring Augar, there’s never been an agenda to cancel or limit the availability of foundation years. The cuts are based (albeit on some quite shaky data) on reducing costs for students while maintaining affordability for providers.

    There is, however, widely reckoned to be a quality issue with some FYs offered via franchise or partnership arrangement – something which DfE did not appear to have considered in collecting data or commissioning reports.

    With the 2025 recruitment cycle mostly over, we now have the ability to assess how the sector has responded to these interventions via the Unistats dataset.

    As I never tire of telling people, Unistats is not perfect but it is useful. The big headline story we’ve tracked in recent years is a reduction in the number of undergraduate courses on offer overall – down 6 per cent between 2023 and 2024, and down a further 3 per cent between 2024 and 2025.

    Foundation supply

    But underneath this we lost one in ten courses with compulsory foundation years (courses that must start with a foundation year) between 2023 and 2024, and a further five percent between 2024 and 2025. The latter year also saw nearly 6 per cent of optional foundation years (courses that can include a foundation year if required) disappear.

    [Full screen]

    What about franchise provision? Using a unistats proxy (does the registered UKPRN match the display UKPRN, or is there an additional UKPRN for a different teaching location) it appears that the number of franchised compulsory foundation years grew from 90 in 2023 to 107 in 2024. This trend reversed between 2024 and 2025 (with numbers falling back below 80), but the number of optional franchised foundation years fell off a cliff after 2023: from 53 in 2023 to just 12 in 2024, and 13 in 2025.

    At a (top level) subject area the dominance of social sciences and business foundation years has declined a little – engineering foundation years have always been popular and have broadly persisted over the three years in question (and are the most popular by far at Russell Group providers). Among franchised provision business and management still dominates, but the last three years has seen a rise in the number of creative and engineering foundation years offered (largely with specialised providers as franchisers).

    Policy outcomes and policy intentions

    So, it all depends on how you take the impetus of the government’s change in foundation year policy. If it was a measure to reduce overall the number of classroom (non-STEM) foundation years it has had some questionable success, likewise if you believe it was a policy designed to limit the spread of franchised foundation year degrees.

    It is possible that it has driven savings within universities – allowing foundation years to be run more cheaply. This might explain things like the paradoxical rise in franchised foundation years in creative arts alongside a drop in non-franchised provision – smaller and less historically encumbered (and potentially lower quality) providers may be better at running these foundation years at a lower overall cost.

    Here’s who is offering these courses – and what they are.

    [Full screen]

    This defaults to FY provision in 2025 but is – with a bit of effort, a fascinating tool for looking over the complete three years of courses advertised to undergraduates.

    As usual, we are hugely short of data – the fact that unistats (of all things) offers the best lens on what is happening suggests that there’s nobody in DfE with an eye on what is going on.

    But rumours of the demise of the classroom based foundation year, or even the franchise model in providing this, are likely to be overstated. It remains to be seen, by whatever measure, whether the cut-price offer is as good.

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  • Seeing universities as others see us

    Seeing universities as others see us

    As the comparison between spending (per student) in Scottish and English universities comes into my argument later, Robert Burns’ famous lines from To a Louse seems a good place to start.

    O wad some Power the giftie gie us To see oursels as ithers see us

    We are very familiar with how we see ourselves. Higher education is facing an intolerable financial squeeze.

    In England the maximum fee which institutions are allowed to charge has only been been upgraded once, and only marginally, since the switch from state grants to tuition fees as the main source of funding for teaching 13 or more years ago. Its real value is barely 70 per cent of what it was then, although the Labour government has agreed to another – marginal – increase from 2025-26.

    In Scotland, where Scottish domiciled students pay no fees, public expenditure on higher education has similarly failed to keep pace with inflation.

    The substantial increase in full-fee paying international students, which many institutions relied on to fill the gap has ground to a halt because of less generous visa rules imposed as part of the backlash against large-scale immigration. The never-had-it-so-good years when growing your income was easy are over.

    Red ink

    Meanwhile costs have piled up. Higher education faces not only the standard inflationary pressures – higher wage, pension, energy, estates and other costs. As employers institutions must also pay higher rates of higher national insurance, without the possibility of passing on these extra costs (because of frozen fees and frowned-upon international recruitment). They may also face a levy on international students, although the Government has weakly promised that, if imposed, its proceeds would be redistributed within the system.

    As a result an escalating number of institutions are reporting deficits. The talk is all of transformation, a new code for everything from sharing back-office services to full-blown institutional mergers. The prospect of outright institutional failures cannot be excluded. Dundee has already come close, although not perhaps as close as initial alarmist scenarios suggested. Scotland, of course, still has a funding council able to intervene in such situations. In England the Office for Students has only recently begun to focus on financial sustainability, so it is far from clear what the fate of an English Dundee might be.

    That is our story – and we sticking to it. Rightly so, because it is almost entirely true, although it might help to convince others if it was not sometimes expressed in a spirit of aggrieved entitlement.

    The other side

    However, going back to Burns, we also need to think a bit more about how others see us. It is not simply that we are living in a post-truth world, so the marshalling of incontrovertible evidence while still necessary is now far from sufficient. This applies in particular to the toxically tangled issues of international students and immigration. No amount of evidence of the benefits of “soft power”, or economic multiplier effects, or of the way non-UK PhD students and post-docs have allowed us to punch above our weight in science and scholarship (same in the US, of course) will persuade those who fear they will have to live in, in the queasy but presumably deliberate phrase of the Prime Minister, “an island of strangers”.

    But there is no need to go down the post-truth rabbit hole. There are perfectly rational and plausible ways in which others can see us that are radically different from the way we see ourselves, ways that might appeal to politicians set upon from all sides by multiple clamouring claims for increased state support and to their officials focused on delivery and free-lance advisers thrilled by difficult choices.

    For example, these others might highlight the fact that spending per student on higher education, from all sources, is high by international standards. Among OECD countries the UK comes third, really second after the US because Luxembourg in the number-one spot is clearly a special case. In OECD’s book expenditure per student is substantially higher than in every other European country.

    Of course, international comparisons are notoriously unreliable because of the difficulty of making like-for-like comparisons and disentangling higher from wider tertiary education. Even the apparently simpler task of just comparing public expenditure and excluding private expenditure is fraught, as the difficulty of categorising expenditure on student loans in England has demonstrated. But, with all these caveats, it is still fair to conclude that UK expenditure per student is towards the generous end of the international spectrum.

    A counter ability

    The counter-argument is that this higher expenditure pays dividends because there are so many UK institutions among the top universities in global rankings. But there are clearly other factors that explain our stand-out performance, although Switzerland actually has more highly graded institutions in proportion to its population. Also our global eminence is essentially rooted in research not teaching performance, which is only relevant to expenditure-per-student in terms of cross subsidy. A better counter-argument is that, because of shorter course lengths – three-year undergraduate degrees and one-year Masters – and high completion rates, expenditure per graduate is pretty average by international standards.

    The same ‘others’, faced with evidence that funding per student in England is higher than in Scotland (spelt out, for example, in the recent report by London Economics for a Royal Society of Edinburgh conference), might not automatically conclude, as we do, that therefore funding in Scotland should be raised to the English level. On the contrary they might conclude that, because Scottish universities offer the same quality (whether measured by league tables, shares of competitively won research funding or external examiners’ and other reports on teaching) and the incidence of financial distress is not greater north of the Border, perhaps English funding levels may actually be (too?) generous…

    Of course, all Anglo-Scottish unit funding comparisons are compromised by the fact that undergraduate degrees are three-years south and four-years north of the Border. Historically the younger age of university entrants in Scotland, the lower intensity of Highers and persistence of “democratic intellect” general degrees may have justified the different course lengths. But there is now no difference in entry ages, Highers and Advanced Highers are clearly equivalent to A levels (as English universities acknowledge in their admissions criteria) and ordinary degrees have almost disappeared.

    Nor is it immediately obvious why, if an English system were to be adopted (which is not going to happen), Scottish graduates should be burdened with substantially more debt. The pressure for shorter, and less costly, degrees would clearly increase. But that is an argument for another time and place – and an educationally informed outcome could well be that English undergraduate degrees should also be four-year, which after all is the international standard in the rest of Europe, the US and almost everywhere else.

    Shiny new buildings

    The same ‘others’, faced with this prima facie evidence of  “inefficiency”, might also express some concern about the less-than-prudent management of some – English – universities since the high-fees regime was introduced 13 years ago. Was it really reasonable to plan, as the cranes went up on campus, on the basis that the tuition fees windfall would last for ever? Or that in crabby post-Brexit Britain the very considerable expansion in the number of international students would not provoke a populist backlash?

    They might even point back to historical precedents, and argue there is nothing fixed or sacred about any particular level of funding. Back in 1981 the former University Grants Committee bet on protecting the unit of resource – and lost. The student demand displaced by this vain attempt at protection flowed into the then polytechnics, creating the shape of higher education with which we are familiar today. When expansion really took off in the 1990s the unit of resource was further degraded, Better times only returned with the revival of public expenditure under Tony Blair and, crucially, Gordon Brown and, later, for a while, with high tuition fees.

    Finally they might channel, in a much more moderate way of course, Donald Trump’s threat to use the money he is withdrawing from Harvard to fund “trade schools”. There are plenty of influential people who argue higher education, and specifically universities, has been expanded at the expense of further education. This may demonstrate how little they know and understand about what actually happens in universities today, in particular post-1992 universities. But they represent an important strand of political, if not public, opinion which is hardly sympathetic to increased funding for higher education.

    To be clear, I am not endorsing this alternative viewpoint. My absolute preference is for a better funded higher education system, and also for increased public funding and a managed retreat from the narrowly transactional and crassly commodified regime imposed in England (do you really, Scotland, want to go there?). Nevertheless, surely it is important to remember Burns’ “giftie… to see oursels as ithers see us”. It can only only strengthen our arguments.

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  • Universities should be architects of economic and social transformation

    Universities should be architects of economic and social transformation

    Britain’s universities stand at a critical juncture.

    The traditional funding model faces unprecedented pressure as costs spiral and resources dwindle, while successive government policy reversals on international students and graduate visas have created a destabilising environment.

    These converging forces threaten the very foundations of our higher education system.

    Simultaneously, Education Secretary Bridget Phillipson is challenging universities to deliver more with less – driving economic growth and enhancing student outcomes amidst severe financial constraints. The message is unambiguous – transformation is no longer optional.

    The uncomfortable reality is that with public funding constraints tightening and international income streams becoming increasingly unpredictable, universities can no longer sustain outdated operational models.

    To survive and thrive in this challenging landscape, institutions must fundamentally reimagine their approach – aligning their educational offerings with national priorities and market needs, adopting innovative commercial service models, and leveraging emerging technologies at scale.

    Pioneering a new paradigm

    Aston University’s recent report, Pathways to Success, provides a compelling blueprint for institutional evolution in response to these pressures. By transforming into a more agile, resilient, and globally connected institution, Aston has prioritised both student success and tangible socio-economic impact.

    This strategic pivot beyond traditional funding sources toward a partnership-driven approach has already generated over £1 billion for the regional and national economy, with ambitious plans to double this impact by 2030.

    Today’s most effective universities function as anchor institutions within vibrant innovation ecosystems. The Birmingham Innovation Precinct exemplifies this approach, seamlessly integrating innovative research, commercial ventures, and community development.

    Aston has expanded this concept with its “city within a city” model — a dynamic urban environment featuring public spaces, start-up accelerators, business incubators, community maker spaces, and comprehensive residential, health and recreational facilities.

    This integrated ecosystem drives placemaking and productivity through collaborative place-based innovation.

    Across Britain’s post-industrial cities, such innovation districts are becoming powerful engines of regional economic renewal. Aston’s focus on talent retention has resulted in approximately 70 per cent of graduates remaining in the West Midlands, providing essential high-level skills to local industries for the long run.

    This retention significantly enhances economic resilience, while the university’s three-year support scheme after graduation ensures sustained impact through graduate success.

    The university has constructed a comprehensive innovation ecosystem that accelerates research commercialisation, featuring the Aston Knowledge Transfer Partnership Unit, Aston Business Hub, Enterprise Hub, and Aston University Ventures, as well as a portfolio of partnered accelerators such as SPARK The Midlands Accelerator.

    Collaborative efforts with other institutions through the Midlands Innovation consortium and its investment arm Midlands Mindforge, alongside large-scale research commercialisation projects funded by Research England and Innovate UK, further amplify this impact.

    The results speak for themselves – KTP projects are projected to generate £266 million in pre-tax profit for partner companies and create 541 new jobs within three years, with participating companies achieving an average 1,107% return on investment.

    The quadruple helix: A new framework for innovation

    Forward-thinking institutions are increasingly adopting the “quadruple helix” model — an innovation framework that integrates academia, industry, government, and society.

    This approach has transformed our stakeholder engagement, focusing efforts on health technology, net zero initiatives, digital and engineering technologies, and biological sciences — areas aligned with national priorities and offering substantial employment opportunities.

    We demonstrate leadership in sustainability, on track to achieve net-zero carbon emissions by 2028, becoming the first university in the region to achieve this milestone, supported by a £35.5 million investment through the UK Public Sector Decarbonisation Scheme.

    We have also secured funding to establish the first national Transdisciplinary Research Hub and Doctoral Training Centre, enabling and supporting decarbonisation projects across vast networks of businesses and healthcare providers throughout the West Midlands.

    Those who fear that commercialisation threatens academic independence misinterpret this model. Robust governance frameworks protect intellectual integrity while facilitating meaningful partnerships that enhance rather than compromise research excellence through measurable impact.

    However, widespread adoption of this approach faces significant obstacles, particularly outdated performance metrics that continue to prioritise publication counts and academic citations over student outcomes and real-world impact.

    The forthcoming sector reforms must address these antiquated incentive structures if Britain is to maintain global economic competitiveness.

    Building a sustainable innovation pipeline

    The project-based funding model that dominates British research support creates chronic uncertainty, undermining long-term planning and investment.

    What we urgently need are strategic, decade-long commitments that provide the stability necessary for substantial infrastructure development and deep industry collaboration.

    The government’s forthcoming 10-year R&D budget must prioritise strengthening university-business collaboration. Only through such sustained investment can Britain cultivate the robust innovation pipeline essential for economic revitalisation.

    Universities must simultaneously align their educational offerings with evolving market needs for advanced skills.

    While the government’s focus on skill levels 1-5 is important, it remains insufficient. High-value sectors — artificial intelligence, advanced digital technologies, advanced manufacturing, and medical technology — require sophisticated capabilities that can only be effectively developed at scale through university-industry collaboration.

    University-led programmes, co-designed with industry partners, can deliver intensive training in these critical domains through more agile, flexible, digitally enabled learning approaches.

    The corporate challenge

    We must confront an uncomfortable truth: the firewall between industry and education is rapidly vanishing. Global technology giants, such as Google, Amazon, Microsoft, IBM, and Siemens, are already among the world’s largest training providers.

    Before long, they will either embed their programmes inside universities or create rival institutions that funnel graduates directly into high-value jobs. Students will inevitably gravitate toward whichever pathway offers the strongest prospects for employability and rapid career progression.

    The response must be proactive rather than defensive. Universities should forge strategic partnerships with businesses, policymakers, and private education providers to develop flexible, omni-channel learning models that integrate traditional campus experiences with industry-embedded learning opportunities, supported by sophisticated digital delivery platforms.

    For centuries, British universities have been intellectual powerhouses shaping minds and advancing knowledge. But the future of our higher education system now depends on a fundamental mindset shift.

    Institutions must become more commercially astute and globally connected, while remaining deeply rooted in their communities where their civic mission finds its most powerful expression.

    We must embrace industry and community like never before. That means forging strategic partnerships, embracing commercial imperatives, and converting research and skills into measurable socio-economic benefits.

    We can no longer rely solely on our storied academic traditions. If British universities are to thrive in the twenty-first century, they must transform and become active architects of economic and social transformation — or risk fading into obsolescence as relics of a bygone age.

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  • Fixing the potholes in postgraduate funding

    Fixing the potholes in postgraduate funding

    A birds-eye view quickly reveals the inadequacy and complexity of UK postgraduate student finance, as four systems operate (and awkwardly overlap) in a world of high tuition fees and rising living costs.

    As practitioners, we have a much more ground level perspective: seeing how students struggle through these systems in practice and witnessing the winners and losers who result from a system that should, at least in principle, be equally useful to all.

    With the UK’s national funding agencies opening applications for 2025-26, now is the time to update our understanding of postgraduate loan options, and highlight anomalies. Doing so reminds us to spot the obstacles students may not see: the metaphorical potholes that can quite literally slow a student’s progress or stop them progressing at all.

    It also helps us ask whether some of these obstacles really need to be there.

    When moving to study reduces the amount you can borrow

    One major factor that prospective students often overlook is how changing their country of residence affects their eligibility for future funding – and how this can happen without them realising.

    Take this real-world example:

    • A student from England completed their bachelors and masters’ in Scotland
    • As many students do, they supplemented their Student Finance England (SFE) Masters loan with part-time work (at their university)
    • They chose to continue to a PhD, having found a supervisor and a place
    • However, their residency had been updated from England to Scotland… meaning they are no longer eligible for a SFE doctoral loan (despite having already received its UG and PGT support)
    • Because Student Awards Agency Scotland (SAAS) doesn’t offer doctoral loan, they were left in postgraduate funding limbo

    Whilst moving to study doesn’t affect residency status, moving to work does. This prevents people who have moved permanently to work from picking a preferred loan based on their address history. But it introduces perverse pitfalls that potentially incentivise against study mobility. And in some cases, like this one, it could hamper the chances of students from less affluent backgrounds – those who need to work while studying – from progressing to doctoral study.

    The easy solution here would be for each funding organisation to ensure that work during study doesn’t impact residency.

    When you better get it right first time

    Most of the PG loan systems restrict finance for candidates with equivalent or higher qualifications.

    Again, the design is fair in principle, but confusing in practice. Do students readily understand the difference between holding a postgraduate masters, an undergraduate integrated masters or a conferred “Oxbridge MA”?

    And is the principle actually practical? To take a slightly hypothetical example:

    Mark has an MA in Gothic Studies (yes, really). He paid for this himself almost 20 years ago (again – yes, really). He now wants to take an MSc in Data Analytics to support his work analysing prospective PG audience shifts at scale. A master’s loan would help him do so, but he can’t get one. Because he has a self-funded MA in Gothic Studies from 20 years ago.

    In an age of upskilling and reskilling, it’s worth asking if this is really what we want for the UK economy. And no, the LLE won’t help either.

    Should we allow access to the PG loan for courses in priority subjects, and/or where student finance hasn’t previously been awarded? It’s a conversation worth having, but there are no signs that the issue is top of anyone’s list of priorities.

    When the postgraduate student finance system penalises you for being… a postgraduate

    Postgraduate students are, by definition, older than undergraduates. As such, they’re also more likely to have children (or, indeed, other caring responsibilities).

    A childcare grant is offered in England to help support student-parents, but eligibility explicitly excludes anyone not receiving undergraduate student finance or receiving a postgraduate loan. This feels like a fairly difficult needle for a masters student to thread and a clear blocker to seeing more of the UK workforce taking advantage of postgraduate-level training (something Mark has drawn attention to before).

    Perhaps it is time to extend the existing Childcare Grant to postgraduates on similar age and earnings criteria.

    When you could borrow less but pay nothing back

    A more outlandish example, but one that also speaks to the unintended consequences of having multiple loan funding systems.

    Meet Ewan and Evan, two 59 year-olds, financially independent and planning to retire at 60. Both have enrolled on the same MSc History (Online, Part-time, 2 years) at The University of Edinburgh, starting September 2025 with a course fee of £17,100. Here’s where things differ:

    • Ewan is Scottish-resident and eligible for a SAAS loan of £7,000 which is paid directly to the university. He needs to find another £10,100 to cover the fees.
    • Evan, a Welsh-resident can access a SFW loan of up to £19,255, paid directly to him. After paying the course fees, he may have up to £2,155 remaining

    The likelihood is that neither will fully repay their loan given their age and the repayment thresholds. But whereas Ewan has had to find extra money, Evan has studied a masters “for free.

    While there’s no simple fix, it’s crucial that funding agencies continue to provide clarity on terms, conditions and eligibility criteria. Universities should also signpost where to find this definitive information and ideally clarify the difference in funding arrangements to help prospective students better understand their options.

    The importance of professional guidance

    Exploring the nuances of the loan system in this way may feel somewhat obscure, but it allows us to better understand the genuine confusion and frustration that prospective students often feel when navigating the complexities of postgraduate funding, particularly UK postgraduate loans.

    As professionals in the postgraduate space, our aim is not to encourage manipulation of the system, but we do need to understand how its unintended quirks can misdirect students and be ready to guide them when that occurs.

    We also need to stay updated on loan policies and repayment thresholds. That way, we can help students make informed decisions.

    The more we understand the nuances of postgraduate funding, the better equipped we all are to support students in their academic journeys.

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  • Tuition fees are a social contract with small print

    Tuition fees are a social contract with small print

    Amid continued growing global uncertainty, the First Minister has announced Scotland’s Programme for Government for 2025/26, its last before the Scottish election in May next year.

    Amongst its many promises is a commitment to “work with partners to secure a long-term and sustainable future for further and higher education”.

    Does that mean we can draw a collective sigh of relief? Well, not quite. Despite Scotland’s universities continuing to face an uncertain future, there’s little in the government’s plan for the next twelve months which is likely to give the higher (or wider tertiary) education sector much comfort.

    In March, the Carnegie Trust for the Universities of Scotland published our first research report, marking the beginning of a new direction for the charity as we seek to increase our impact and voice on issues of equity and inclusion in higher education in Scotland.

    The report by Ipsos highlighted public views on the value, accessibility and funding of universities. The study, the first of its kind in many years, was featured widely in the Scottish media, and appeared on the front pages of the Scotsman, the Herald and the Daily Telegraph.

    Most newspapers led with the headline figure that 48 per cent of respondents to Ipsos’ poll would support a change to Scotland’s university tuition fee model based on ability to pay.

    However, other than on Wonkhe, what wasn’t picked up by many was what the polling tells us about the varied ways in which age, geography and wealth appear to have shaped how Scottish people have experienced and benefitted from the current post-school system.

    Understanding the public’s views

    The Trust’s interest in commissioning the research was to fill a hole in the evidence base – the public voice having been all but absent from recent discussions around the future of post-school education and skills in Scotland. Whether we or our politicians agree with the public is not really the point. Instead, we have a duty to ask why those views exist and what they might mean for the future of the system.

    Alongside the 48 per cent who would support a change in the tuition fee model, a similar figure (49 per cent) expressed the view that studying courses that don’t directly lead to a profession is a waste of time. There are many ways in which higher education brings value to the individual and society underpinned by evidence, but clearly something in that messaging is falling short.

    As a Trust that has always championed funding across the full curriculum, and as someone whose own undergraduate degree did not point to obvious employment, that is a challenging outlook. However, it’s important to acknowledge this opinion and to reflect on the reasons why nearly half the Scottish public feels this way.

    In highlighting some of the nuance within public attitudes, we had hoped that the debate on funding might be able to move forwards from its current stasis – that the ground might be laid or a more open, grown-up and intelligent discussion on how we might address some of the challenges in the current system.

    Unfortunately, the immediate reaction from the government wasn’t to acknowledge the public’s opinions, but to double down on the current policy.

    I suppose, on reflection, this shouldn’t be surprising. Free tuition is a hallmark of Scottish devolution and a promise of what a modern Scotland would offer its people; part of a “social contract” between the government and its citizens.

    To question it would be to question the social and democratic principles which underpin it and, it follows, that stepping away from it, even showing a willingness to entertain alternatives, would be to betray those values. It would certainly involve admission and acceptance that, despite its aspirations, the policy does not necessarily reflect the reality of the structures in which it is implemented.

    But the reality is that free tuition sits in a wider operating context. The policy might be uniquely Scottish (at least in the UK), but as we have seen, the external factors that impact on it, are not within the current government’s direct control.

    Our report was published just days after the latest statistics showed a sharp drop in international students attending university in Scotland, and in the same week as the UK Chancellor’s Spring Statement which the IFS estimated will cut the Scottish Budget by £400m by 2030.

    It also came days before the Scottish Government announced that it had failed to deliver its interim child poverty targets, despite significant additional investment in social security. Continuing to operate the current higher education funding policy, already under strain, against this backdrop looks set to become considerably more challenging in coming years.

    What should the priorities be for post-school education funding?

    Delivering “free tuition” in the current context already means drawing lines in the sand. Currently these are drawn around full-time education (those studying part-time are means-tested and can’t currently access maintenance loans), the number of years of public support (for most people the length of the course plus one – the Trust picks up the tab for many students whose learner journeys are atypical), and around the number of places available to Scottish students (controversially capped according to the available budget and, as such, allegedly more competitive than rUK and international places).

    They are also drawn around undergraduate courses (there are no government grants available for students to access postgraduate study) and university funding itself, despite the implications for colleges and apprenticeships which come from the same portfolio budget. It’s these choices – and they are choices – which determine who benefits from post-school education funding and have led some people to claim the current system is not only unaffordable, but unfair.

    In defending the government’s policy, the Minister was unequivocal that “our support for free tuition is about more than ideology – it was founded on an equity-of-access approach [and] is based on simple logic”.

    This deserves some unpicking because there is a clear difference between a universal approach based on equality, where everyone gets the same, and equity, where resources are directed to those who need them the most in order to deliver equal outcomes.

    In a system of finite and diminishing resources, the former approach can simply serve to further embed inequalities as those with capital (be that economic or social) are better able to navigate the system, making them more likely to reap the rewards. Put simply, it’s not so easy to draw a direct line between free tuition and fair access.

    A more equitable approach?

    When Andrew Carnegie set up the Carnegie Trust for the Universities of Scotland, it was equity that was the driving force. His treatise on philanthropy, The Gospel of Wealth sets out that he saw it as the responsibility of those who were fortunate enough to be rich, to use their surplus wealth in a manner which would benefit society.

    Carnegie sought to instill this ideology within the Trust, to ensure that ‘no capable student should be de-barred from attending the university on account of the payment of fees.’ However, he was clear about who should benefit, noting that the honest pride for which my countrymen are distinguished would prevent applications from those who didn’t need the Trust’s assistance.

    He went further and built this benevolence into the Trust’s governance as it became the only one of his Trusts to date that could accept donations to:

    …enable such students as prefer to do so to consider the payments made on their account merely as advances which they resolve to repay if ever in a position to do so….

    In the first half of the 20th century this approach was instrumental in expanding access to higher education to enable individuals from disadvantaged backgrounds, including record numbers of women, to benefit from its rewards.

    By 1910 the Trust was responsible for funding around half of the students going to university in Scotland. To put that in today’s terms, that’s 50 per cent of students in Scotland from “widening access” backgrounds.

    Compare that to the current day. On paper Scotland has made impressive progress on widening access in the last ten years. Recent statistics show 16.7 per cent of Scottish first-degree entrants in 2023/24 were from the poorest neighborhoods.

    But as many have highlighted the current national indicator for widening access, SIMD20, is not a measure of household or individual deprivation, and therefore masks a complex landscape of inequality. In other words, in spite of nearly two decades of free tuition, inequalities exist and persist. Data on graduate outcomes suggests that those from wealthier backgrounds are more likely to complete their degrees and to benefit most in the labour market, and we can see from the Ipsos survey that those from high earning households are also less likely to support changes to funding in which they or their families aren’t direct beneficiaries.

    Is university still worth it?

    To demonstrate the success of free tuition, the government has pointed to the record numbers of students from Scotland securing places at university. But the rewards for those students are also changing. The IFS has noted a worrying downward trend in the graduate premium (the amount a graduate can expect to earn compared to a non-graduate) which has fallen by at least 10 per cent in the period 1997 to 2019.

    This perhaps explains why the Ipsos polling shows that the public are less certain about the value of attending university nowadays. The IFS also note issues of underemployment of graduates. In 2021/22, around a quarter of graduates who participated in the HESA graduate outcomes survey weren’t in graduate jobs and if we dive into access to postgraduate qualifications, where it’s suggested the wage premium jumps by around 20-40 per cent, we would be forgiven for questioning whether inequality has simply shifted further up the pipe.

    It is in this light that the Scottish Government response disappoints. Rather than showing desire to understand the views of their constituents, or to explore the evidence, we just keep returning to the same unqualified maxim, that access to higher education should be based on “ability to learn” rather than “ability to pay”.

    A more intelligent response would surely be to acknowledge the ideals and aspirations underpinning free tuition and engage in an exploration of whether those are being met through the current approach and, if not, how best to deliver them in the current context.

    Were that to happen we might instead be able to have a discussion, not about the concept of free tuition, but about whether it is possible to identify a funding approach that is at once “free”, “equitable” and “sustainable” and about where we might draw lines around public investment in tertiary education in a way that will best deliver on Scotland’s outcomes and ambitions.

    Injecting some democracy into the funding debate

    Central to the success of such a debate should also be a commitment to engage with the public on what they want from the post school system and how we can deliver that in today’s Scotland.

    Our sister organization, Carnegie UK’s Life in the UK 2024 index for Scotland shows that public trust in government and politics has reached a record low with nearly two thirds of people feeling that they have no influence over decisions affecting the country. That’s likely in no small part due to the gap between policy promises and the ways in which they find expression in Scotland’s communities. In this context, continuing to stick to a now decades-old policy position without attempting to evaluate it appears, at best, short-sighted and, at worst, undemocratic.

    To address this there are calls for more participative forms of engagement which have been shown to provide opportunities for diverse groups to be involved in decision-making; shaping and enhancing policy development to deliver improved outcomes that meet a wider range of needs. The Citizen Jury we’ll be running with Ipsos this year intends to do just that.

    It will bring together a diverse group of people from across Scotland to consider evidence on tertiary education funding and make recommendations for the future. This could be an opportunity to rebuild public trust and to develop a new social contract, one that is co-produced with citizens. Our political leaders in Scotland should care about that and not be too quick to dismiss the public attitudes we’re working to uncover.

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  • How to design an international student tuition fee levy

    How to design an international student tuition fee levy

    “The Government will explore introducing a levy on higher education provider income from international students, to be reinvested into the higher education and skills system. Further details will be set out in the Autumn Budget.”

    35 words that have put the sector into a spin, spun out tens of thousands of words of analysis and rebuttal, and set into motion a shared panic that the government is not only going to reduce the number of international students but tax the students that universities manage to recruit.

    Design

    The only things that we know about the levy is that the government has used a six per cent tax on international fees as an “illustrative example” in its technical annex, the government assumes this cost would be passed on to international students, and that passing on these costs will depress international student numbers by around 7,000. In terms of the levy design there is the promise that the money will be ringfenced for higher education and skills but which parts and how is not defined. It is of course also not guaranteed.

    The sector’s response has been to point out that reducing the number of international students and devaluing the unit of resource they bring with them will put additional financial pressure on universities. The impact will also be uneven with the largest recruiters of international students paying the highest levy.

    The government has made a hugely consequential policy signal with no details, scant impact assessment, and no analysis of the consequences. However, if a levy of some form is going to happen the sector should think carefully about which kinds of levy they believe would be preferable. Not all levies are built equally.

    Australia

    The idea for a levy seems to have come from the Australian Universities Accord. The UK government does not seem to have noticed that the idea was heavily edited and caveated in the final report but in the interim report it was noted that:

    The Review notes various submissions support establishing a specific fund that could be used for future infrastructure needs, as well other national priorities. This could include consideration of a levy on international student fee income. The use of this revenue for sectoral-wide priorities could reflect the collaborative nature of the sector in building a strong and enduring system. The Review notes further examination is required, including consideration of some level of co-investment from governments.

    There is a little bit more detail here but not much. Like the UK version the fund would be hypothecated toward higher education and used to fund things on a system wide basis. The politics on the face of it appear progressive that the institutions that benefit most from private capital, the flow of international students, pay a proportion of it back to fund public goods in the wider higher education system. The less progressive element is that international students pay once to their institution, they would then pay a levy which their provider would pass on to them in increased fees, and they then prop up an education system of a nation in which they are not permanently resident.

    The University of Melbourne did some follow up work looking at the implications of such a levy. Some of the issues they picked up are whether this would be a levy on all international students in all kinds of education, whether it is reasonable to distribute funding from high income to low income institutions, whether the idea of a levy in and of itself would dampen demand, and whether the impact of taxing income from individual providers is more harmful than the collective benefits they may receive from a shared fund.

    Depending how the government chooses to apply its levy we would expect to see very different results. An Australian model which redistributes funding from the wealthiest institution to the least wealthy would have a very different set of consequences to a levy which took a six per cent flat tax and put it into a general fund for infrastructure. It feels odd within a market based higher education system to make one provider dependent on the success of another. It also feels odd to make international students who are studying at a specific institution responsible for the health of the wider sector.

    Some would see an intra-university levy as a recognition that the success of the system is the success of each provider. Some would see it as an unjustifiable tax on the most financially successful institutions.

    New Zealand

    Australia’s Antipodean partner already has a form of student levy.

    New Zealand’s Export Education Levy is charged as a proportion of the fee international fee-paying students pay to their providers. Depending on the kind of institution this is charged at between .5 per cent and .89 per cent of tuition fees.

    The levy has a direct relationship between funders and beneficiaries. Although it is a tax on learners, and by extension a tax on providers, the funding is used for the development of the export education sector, a recovery scheme should a provider be unable to continue teaching, the administration of the international element of The Education (Pastoral Care of Tertiary and InternationalLearners) Code of Practice 2021 (this includes a range of safety, wellbeing and advice support), and the funding of the International Student Contract Dispute Resolution Scheme (a scheme for students to resolve disputes with their providers on contracts and financial issues.)

    This system has been in place with some variations and the occasional suspension since 2002. The international education system is much smaller in New Zealand than the UK and the amount of funding the levy raises is modest at close to three million dollars in 2022/23. The model in operation here is a relatively small tax to fund things which providers have a shared interest in. It’s not a direct cash transfer between providers but a collective pot to reinvest into the economic commodity of international education. The scheme was suspended during COVID-19 as a measure to support the sector, so its financial impacts are clearly not negligible, but post COVID-19 international enrolments are recovering strongly. Whether they would have recovered even more strongly without a levy is impossible to know.

    This is a light-touch, shared endeavour, we all should have some investment in international education, kind of a levy and it is not the only levy New Zealand has.

    The Student Service Levy is a fee applied to all student fees to fund non-academic services. The University of Auckland surveys students every year on what they would like their fees to be spent on and in 2024, in descending order by amount, funding was spent on sports, recreation and cultural activities, counselling services and pastoral care, health services, child care services, clubs and societies, careers advice, legal advice, financial advice, and media.

    This is a general levy but the principle has broader applications. It would be entirely possible to levy international student fees to pay for non-academic services. For example, university access budgets are effectively paid for by a levy on fees. This system seems fairer in some ways than a general levy. The place where a student studies is the primary beneficiary of their fees. From a policy perspective it would allow the government to move institutional behaviour toward things they care about by stipulating what the fee could be spent on. However, given that international student fees subsidy much of university work already it would again feel like they are paying twice. Additionally, if providers didn’t have to redistribute their funding on a national basis the providers with the most international students would be able to spend the most on non-academic elements.

    Where else

    It is also worth stating the government’s proposed levy would not function like the Apprenticeship Levy. The Apprenticeship Levy is a tax on employer’s payroll but employers are able to access the funds they contribute to spend on apprenticeships with any underspend clawed back by the government. Plainly, if government allowed providers to access the fees they contribute to the levy for the education of their own students there would be no point in having a levy in the first place beyond giving universities the political coverage to raise fees. Presumably, not an outcome the government is intending.

    The argument against a levy of international student fees will dominate the sector for months to come. Should a levy come to pass universities would be well disposed to think of which kinds of levy they might prefer. A model which redistributes funding across providers and if so which providers and for what projects. A model which internally redistributes funding toward student support. Or, likely the least popular, a model which allows the government to reinvest the funding broadly and perhaps outside of higher education.

    In making the case of the harm a levy could cause the sector may also win over more sympathy if it can explain which kinds of levies in which places have what kinds of effects depending on how they are applied. A levy may generally be a bad idea but some versions are much more harmful than others.

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