Category: Fees and Funding

  • 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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  • Plotting the impact of an international fee levy

    Plotting the impact of an international fee levy

    There’s not many in the higher education sector that would have welcomed any part of the recent immigration white paper.

    The reduction in the graduate route time limit would have been difficult enough. The BCA changes to duties on providers in order to sponsor international students will cause many problems. The possibility of financial penalties linked to asylum claims for those on student visas was as unexpected as it is problematic.

    But it is the levy that has really attracted the ire of UK higher education.

    The best form of defence

    On one level it is simply a tax – on the income from international student fees, which is one of a vanishingly few places from which universities can cross-subsidise loss-making activity like research and teaching UK-domiciled students.

    Yes, the funds raised are promised variously to “skills and higher education” or just “skills”, and the suggestion seems to be that the costs will be passed on entirely to international students via rises in tuition fees. There’s not any real information on the assumptions underpinning this position, or credible calculations by which the proportion of students that may be deterred by these rises and other measures has been estimated.

    But details are still scant – the government has, after all, only promised to “explore” the introduction of a levy – and used the idea of a six per cent levy on international tuition fees as an “illustrative example”. We have to look forward to the Autumn statement (not even the skills white paper – remember joined-up, mission-led, government?) for more – and do recall that the white paper is a consultation and responses need to be made in order to finesse the policy.

    Thinking about impact

    There’s no reliable way to assess the impact of this policy with so little information, but we do know a lot about the exposure of each university to the international market.

    For starters here’s a summary of provider income from overseas fees since 2016–17 – both for individual providers and (via the filters) for the sector as a whole.

    [Full screen]

    The story has been one of growth pretty much anywhere you care to look – with only limited evidence of a cooling off in the most recent year of data. Some institutions have trebled their income from this source over the eight years of available data, with particular growth in postgraduate taught provision.

    In considering the financial impact of a potential levy I have used the most recent (2023–24) year of financial data – showing the total non-UK fee income on the vertical axis and the proportion of total income represented by the value of the levy on the horizontal. By default I have modelled a levy of six per cent (you can use the filter to consider other levels).

    [Full screen]

    Who’s up, who’s down?

    In the majority of large universities the cost of levy is equivalent to around two per cent of total income. In the main it is the Russell Group that sees substantial income from international fees – the small number of exceptions (most notably the University of Hertfordshire and the University of the Arts London) would see a levy impact of closer to three per cent of total income.

    What we can’t realistically model is university pricing behavior and the impact on recruitment. Universities generally charge what the market will stand for international courses – and this value is generally higher for providers that are better known from popular league tables.

    Subject areas and qualifications also have an impact (the cost of an MBA, for example, may be higher than a taught creative arts masters – a year of postgraduate study may cost more than a year of an undergraduate course), as does the country from which students are arriving (China may be charged more than India, for example).

    Some better off universities in the middle of the market may choose to swallow more of the cost of the levy in order to increase their competitiveness for applicants making decisions on price – this would put pressure on the currently cheaper end of the market to follow suit as well as direct competitors, and may lower the overall floor price for particular providers (though, to be fair, private providers are still better positioned to undercut should they have access to funds from investment or other parts of the business).

    There is an obvious impact on the quality of the provision if providers do cut the amount of fee income – and this as well could have an impact on the attractiveness of the whole sector. For more hands-on courses in technical or creative subjects, provision may become unviable overall – surrendering the soft power of influence in these fields.

    A starting point

    It’s not often that we see a policy proposal on university funding launched with so little information. Generations of politicians have learned that university funding policy changes are the equivalent of poking a wasps nest with a sharp stick – it may be something that needs doing but the short term pain and noise is massive.

    It could be that it is a deliberate policy to let the sector (and associated commentariat) go crazy for a month or so while a plan is developed to avoid the less desirable (for ministers) consequences. But the idea that international students will gladly pay more to support an underfunded sector is one that has been at the heart of university activity for decades – the only real change here is that the government feels it can put some of the profits to better use than some of our larger and better-known providers.

    In all of this there appears to have been little consideration of the fairness of putting extra costs onto the fees of international students – particularly where they personally don’t see any value from their additional spend. But this has been an issue for a good few years, and it seems to have taken the possibility of a tariff (which could be considered unfair to cash-strapped universities too) to drive this problem further up the sector’s agenda.

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  • Redistribution doesn’t work when there’s nothing left to redistribute

    Redistribution doesn’t work when there’s nothing left to redistribute

    Too many people across our country do not get the chance to succeed.

    So the government is committed to supporting the aspiration of every person who meets the requirements and wants to go to university or pursue an apprenticeship, regardless of their background, where they live and their personal circumstances.

    Those aren’t my words – they’re the words of the House of Commons’ HE supply teacher Janet Daby, who answers for actual (Lords) minister Jacqui Smith whenever a question comes up about universities or students.

    This answer is a typical one – in which she notes that in the summer, the department (for education) will set out its plan for HE reform and that it will expect providers to play an “even stronger” role in improving access and outcomes for all disadvantaged students.

    Specifically on financial support:

    Whilst many HE providers have demonstrated positive examples of widening access, including targeted outreach and bursaries, we want to see the sector go further.

    Back in 2014, partly to get “top-up fees” through Parliament, then secretary of state Charles Clarke announced that a new Office for Fair Access (OFFA) would be created – and that it would require universities to offer up some of their additional fee income in bursaries.

    Assuming that a proportion of student financial support should come partly via universities’ own budgets has always created a tension – between those who say that local decision making (aka institutional autonomy) is better at designing schemes that get the money to where it’s really needed, and those that argue that redistributing fee income within a provider rather than across the country means that financial support ends up being based not on need, but on the number of other students at your university that need it.

    We used to be able to see that clearly. OfFA used to track how many “OfFA countable” students each provider had and their spending on financial support, and it would generally show that providers doing the most for access tended to have the least to spend per student.

    Over time, direct student financial support declined in popularity. Research questioned bursaries’ impact on applications (unsurprising given how hard it was to find information on them), and it tended to struggle to find retention benefits from 2006-2011 – findings that then got extrapolated far beyond their timeframe.

    Pressure to demonstrate impact led providers to focus on entry and completion metrics rather than the experience students were having as a result. That seemed less critical in the mid-2010s when inflation was low and maintenance loans were cranked up to hide the fact that grants were eliminated. Students living at home (more likely from widening participation backgrounds) also got relatively generous maintenance support compared to their costs.

    Eventually, provider-level reporting on student financial support pretty much disappeared as the Office for Students started to emphasise outcomes over experience or spending transparency.

    But with maintenance support over the past few years some distance from inflation, and the income thresholds over which parents are expected to top up stuck at the level they were set at in the year that Madeleine McCann went missing (18 whole years ago), we really do need some sense of how the mix is panning out.

    So to help us to understand what’s been going on, for the fourth year running we’ve managed to extract some data out of OfS via an FOI request.

    The data

    Ever since the days of the Office for Fair Access (OFFA), HESA has collected data on the amounts of student financial support, and the number of students that helps, for each university in England – and here we have that data over the past few years.

    It covers four different types of spend on student financial support:

    • Cash: This covers any bursary/scholarship/award that is paid to students, where there is no restriction on the use of the award
    • Near cash: This includes any voucher schemes or prepaid cards awarded to students where there are defined outlets or services for which the voucher/card can be used
    • Accommodation discounts: This includes discounted accommodation in university halls / residences
    • Other: This includes all in-kind or cash support that is not included in the above categories and includes, but is not limited to, travel costs, laboratory costs, printer credits, equipment paid for, subsidised field trips and subsidised meal costs

    Some caveats: We remain less than 100 per cent convinced about the data quality, this doesn’t tell us how much money is going to disadvantaged students specifically, it doesn’t tell us about need (and the extent to which need is being met), I’ve yanked out most of what we used to call alternative providers for comparison purposes, and it only covers home domiciled undergraduates (and below, in terms of level of study).

    But it is, nevertheless, fascinating. Here’s the numbers for each provider in England:

    [Full Screen]

    If we nationally just look at cash help, in 2023/24 just over £496m went to just under 311k students – a spend per head of £1,598 – very slightly above last year’s £1,464 per head.

    But dive a little deeper and you find astonishing disparities. In the Russell Group the £ per head was £2,362 – about £40 up on the previous year. Across Million+ providers that figure was £726 – just £4 more than 2 years ago.

    Interestingly, per student helped, the Russell Group spent the same in cash help per student as it did in 2019. Maybe inflation doesn’t apply in elite universities, or maybe they’re getting worse at recruiting those on low incomes. Meanwhile the cash spend per student helped across Million+ universities has almost halved from £1,309 in 2019/20.

    Clearly all universities are under financial pressure – but what we see is almost certainly an artefact of redistributing fee income around a provider rather than around a country, and it appears to result in manifest unfairness.

    Even if we don’t adjust for inflation, spend per student helped has fallen for 45 universities between 2022/23 and 2023/24, and since 2019, it’s fallen for 56 universities. If we do apply inflation (CPI), only five are beating their 2019 SPH. No wonder students are struggling to come to campus.

    Some may say that it might be better just to look at what’s been going on under the auspices of formal, declarable access and participation work. HESA finance data now includes a look at expenditure – but not the number of students that expenditure covers, nor the total amounts invested pre-pandemic, and nor the amounts allocated in premium funding, all of which would aid meaningful comparison.

    Moving money around

    I tend, in general, to be a fan of redistribution and cross-subsidy. It can help reduce economic inequality, promote social stability, and ensure that everyone has access to basic necessities. It reflects a commitment to fairness and the idea that a society should care for all its members.

    As such, the logical bit of my brian never had much of a problem with the Charles Clarke/OFFA expectation – it was at least aimed at ensuring that everyone got to have a decent experience at university.

    But the redistributive effects of moving money around a provider when some providers (which already tend to be the richest) have fewer poor kids to spend it on never really added up.

    If you really wanted the system to be fairer, and for the most money to reach those who need it most, you might start by acting regionally. I doubt that John Blake’s regional partnership structures – which will involve cohort-level renewal for Access and Participation Plans will actually go as far as expecting providers in a region to pool their bursary or hardship spend – but there’s a very good logical case for that kind of approach.

    When students at Salford are getting £358 each in cash help while their neighbours at the University of Manchester are getting £1,829, there’s a very strong case for pooling the money.

    But even if that was to happen, beware the regional agglomeration effects. The region with the lowest higher education participation rate in the UK is the North East of England, at 33.4 per cent. London, with its 63 per cent rate, ought to be giving some of its spend on student financial support away to support participation up North.

    And once you’re there, you (re)realise what many said at the time of the Clarke announcement – that moving money around a university when participation in universities is so unequal to start with is no way to run a fair system.

    And even more importantly, it’s not fair on fee-paying students. When the assumption was that fees were a small part of the overall funding mix, we could say to students that the state’s contribution would be focussed more on those in need.

    Even with fees at £9,000, the redistributive effects of some paying much more than that through interest of RPI+3% and some much less via the repayment threshold and the cut-off – all while funding a moderately comfortable financial support system for all – was some sort of egalitarianism in action.

    But once the subsidy slips away, and students are expected to pay back almost all of the debt they incur, we end up expecting their personal debt to do what the state ought to do. And while it’s one thing for your fees to be spent subsidising other students at your own university, it would be quite another for them to be spent subsidising those at others in your region, or even around the UK.

    Then add in the fact that in UUK’s cuts survey, just under half of universities (49 per cent) say they may still need to cut hardship funding and 59 per cent say they may need to cut bursaries. Even if some sort of tougher APP regime was to find a way to stop that, that just means that wider cuts will fall on everyone – and so for some students, less and less of their actual contribution will end up being spent on their actual education.

    It turns out that the progressive taxation – ensuring that those with higher incomes contribute a larger share of their earnings to public services – is the much better way to promote economic fairness and reduce income inequality. Who knew?

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  • OfS insight on institutional closure lacks a firm statutory foundation

    OfS insight on institutional closure lacks a firm statutory foundation

    The Office for Students’ (OfS) insight briefing “Protecting the interests of students when universities and colleges close” is as much a timely reminder of where the law falls short when providers are at risk of closure as it is a briefing on how to protect the student interest under the current policy framework.

    As we set out in our Connect more report which explored, among other things, the legal framework for institutional insolvency, market exit and/or merger, the role of OfS in any institution at risk situation is already unhelpfully ambiguous. Its concern may be the student interest, but it is not empowered to prevent institutional closure (even if, as is often likely to be the case, the student interest would be best served by completing the course they registered for at the institution they enrolled in) – or even to impose order on a disorderly market exit.

    In the absence of express powers or an insolvency or special administration regime for higher education, OfS’ role becomes one of a point person, facilitating conversations with other agencies and stakeholders, but with no powers itself to prevent a disorderly closure. The tone of the briefing is collaborative and collegiate but, in a world where students are no better protected than any other unsecured creditor if a provider becomes insolvent, it’s doubtful that, under the law as it currently stands, the interests of students will be protected to the degree to which OfS desires.

    While OfS may be primarily concerned with protecting students’ interests, the trustees of those providers that are constituted as charities have a statutory duty to act in the best interests of the charity and to pursue their charity’s purposes. This duty will, of course, encompass the needs of present students but will also encompass past students, future students, research activities and much more besides. While no one would disagree with the general sentiment that “throughout the process [of institutional closure] the interests of students, and their options for continued study, must be kept in mind” – and the briefing does offer lots of useful ideas for how to ensure sufficient attention is given to the many types of students who will be affected – the elevation of student interest to a pre-eminent concern is not what the law generally, nor what OfS’ statutory duties currently require.

    University executive teams and boards may wish, therefore, to read OfS guidance in light of these realities, and be aware of the limits of what is realistically possible or likely to occur in giving consideration to the sort of scenario planning and preparation OfS advocates in the briefing.

    A herd of elephants

    OfS’ recommendations about the need to have suitably durable and maintained student records and to have entered into binding contracts with validating and subcontracting partners that contain clauses that deal realistically with the end of the relationship and contain adequate data sharing agreements clauses are all well made.

    But once things actually start to get tricky in real life there is a level of reliance on transparency, for example, in sharing information both with OfS but also with other organisations such as funding or regulatory bodies, or government departments, or even other institutions who might be prevailed upon to welcome displaced students. In the absence of a systematised notification process, any ambiguity about whose role it is to liaise with the various potentially affected stakeholders or the timing of any such communication has high potential to create problems. There are obvious issues raised by disclosing or revealing another institution’s “at risk” status, some of which may have the effect of accelerating the very process everyone is seeking to avoid.

    If OfS considers a registered institution is at risk of closure, it can impose a student protection direction under condition C4 of the conditions of registration. The briefing provides a helpful reminder of what a student protection direction might include and encourages regular thought about these issues to avoid the need for a provider to “improvise at speed and under stress if an institutional closure becomes possible.” That sounds very laudable at first glance, but it confuses the regulatory obligation with the real-world outcome. A provider at risk of closure may well come under pressure from OfS to produce a market exit plan and to map courses at a time when university teams have the least bandwidth to undertake such tasks. In any case, it is highly doubtful whether an insolvency practitioner would be bound by such planning in the event that a provider goes into an insolvency process.

    In scenario planning, OfS moots the idea that higher education providers might consider setting up “agreements in principle” with other institutions “to take on relevant students if one or the other closes” or even “possibly multiple agreements, for different courses and subjects.” It is surprising not to see competition law mentioned in this context. The higher education sector contains a broad range of institution types, with varied teaching and delivery methods, attracting students with different needs and expectations as regards learning and study.

    This means that in practice the providers that pair up to take on one another’s students in the event of institutional failure will need to be similar types of provider – precisely those that are in competition for students in the first place. As Kate Newman has argued in an article on the impact of competition law on higher education collaboration, it would be helpful if OfS and the Competition and Markets Authority could jointly consider these kinds of circumstances for the sector as a whole rather than providers having to navigate this complex legal territory on an individual basis.

    We’re also concerned that any such “agreement in principle” will not be legally binding and will have been reached at a single point in time, when conditions may be quite different to the time when the institutions seek to rely on them. There is a very real risk that unless these agreements are refreshed annually (a time consuming and potentially collusive activity) they will turn out to be like the original student protection plans in being not terribly helpful.

    A sector like no other

    In issuing its briefing OfS argues that “this sort of risk and contingency planning is normal in other regulated sectors,” citing the examples of customer supply contingency plans for energy suppliers and the need for banks to have recovery and resolution plans. However, both of these sectors have highly developed insolvency regimes. Drafting recovery and resolution plans is much easier to achieve when there is a viable insolvency process in place. Both the energy and banking sectors have special administration processes in place and there has been much recent press coverage on the water sector special administration process, in light of Thames Water’s difficulties.

    OfS encourages institutions to undertake extensive course mapping. However, given the scale of the financial pressures facing the sector, it’s doubtful how valuable such course mapping is likely to be where potential recipient institutions are perhaps equally likely to be at risk of closure. To be fair to OfS, the briefing stresses that mapping is particularly relevant for those institutions that offer specialist provision.

    And here, of course, lies the essential problem. As OfS states: “We have drawn on our experience of managing two relevant cases at small and specialist higher education providers during the past year, and of instances where there was a serious risk of a closure which did not materialise.” The counterfactual – closure of a large and generalist provider which does materialise – remains the biggest elephant in the room. While OfS’ openness in sharing its insights is to be welcomed, it does nothing to diminish the need for urgent structural change.

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