Tag: billion

  • PXED — A $22 Billion Student‑Debt Gamble Investors Should Beware

    PXED — A $22 Billion Student‑Debt Gamble Investors Should Beware

    Warning to Investors: Phoenix Education Partners (PXED) may present itself as a cutting‑edge solution in career-focused higher education, but it’s built on the same extractive infrastructure that powered the University of Phoenix. With nearly a million students still owing an estimated $22 billion in federal loans, backing PXED isn’t just a financial bet — it’s a moral and reputational risk.

    PXED’s leadership includes powerful private-equity players: Martin H. Nesbitt (Co‑CEO of Vistria and PXED trustee), Adnan Nisar (Vistria), and Theodore Kwon and Itai Wallach (Apollo Global Management). Also in the mix is Chris Lynne, PXED’s president and a former Phoenix CFO intimately familiar with UOP’s controversial enrollment and marketing strategies. These are not educational reformers — they are dealmakers aiming to extract value from a student-debt pipeline.

    Higher Education Inquirer’s College Meltdown Index highlights how PXED fits into a broader financialization of higher education. Rather than reforming the University of Phoenix, its backers have resurrected it under a new brand — one that continues to enroll vulnerable adult learners, harvest federal aid, and operate with considerably less public oversight. 

    Whistleblowers previously documented that Phoenix pressured recruitment staff to falsify student credentials, enrolling people who wouldn’t otherwise qualify for federal aid. Courses were allegedly kept deliberately easy — not to teach, but to keep students “active” enough to trigger aid disbursements. Internal marketing also exaggerated job prospects and corporate partnerships (e.g., with Microsoft and AT&T) to entice students. 

    PXED may lean on a three‑year default rate (often cited around 12–13%), but that number is deeply misleading. Many UOP students stay stuck in deferment, forbearance, or income-driven repayment, masking the real long-term risk of non-payment. This is not just a short-term liability — it’s a potentially massive, multiyear financial exposure for PXED’s backers.

    There was a significant FTC settlement that canceled $141 million in student debt and refunded $50 million to some students. But the scale of harm far exceeds that payout. Untold numbers of borrowers still have unresolved Borrower Defense claims, and the reputational risk remains profound.

    Beyond financial concerns, there’s a major ethical dimension. HEI’s Divestment from Predatory Education argument makes a compelling case that investing in companies like PXED — or in loan servicers that profit from student debt — is not just risky, but morally indefensible. According to HEI, institutional investors (including university endowments, pension funds, and foundations) are complicit in a system that monetizes students’ aspirations and perpetuates financial harm. 

    For investors, the message is clear: Phoenix is not merely an education play — it’s a high-stakes, ethically fraught extraction machine built on a legacy of indebtedness and regulatory vulnerability.

    Unless PXED commits to real transparency, independent reporting on student outcomes, and accountability mechanisms — including reparations or debt relief — it should be approached not as a social-growth story, but as a dangerous gamble.

    Sources

    • HEI. “Divestment from Predatory Education Stocks: A Moral Imperative.” Higher Education Inquirer

    • HEI. “The College Meltdown Index: Profiting from the Wreckage of American Higher Education.” Higher Education Inquirer

    • HEI. “What Do the University of Phoenix and Risepoint Have in Common? The Answer Is a Compelling Story of Greed and Politics.” Higher Education Inquirer

    • HEI. “University of Phoenix Uses ‘Sandwich Moms’ to Sell a Debt Trap.” Higher Education Inquirer

    • HEI. “New Data Show Nearly a Million University of Phoenix Debtors Owe $21.6 Billion.” Higher Education

    Source link

  • Federal Court Blocks Trump Administration’s $2.2 Billion Harvard Funding Freeze

    Federal Court Blocks Trump Administration’s $2.2 Billion Harvard Funding Freeze

    A federal judge delivered a sweeping victory for academic freedom Wednesday, ruling that the Trump administration’s freeze of $2.2 billion in federal grant funds to Harvard University was illegal and unconstitutional.

    U.S. District Judge Allison Burroughs determined that the administration imposed the funding freeze in retaliation for Harvard’s refusal to comply with demands that would have violated First Amendment protections, including ending diversity, equity, and inclusion programs and screening international students for ideological biases.

    The ruling vacates all freezing orders affecting Harvard and bars Trump administration officials from enforcing those orders going forward.

    The administration froze Harvard’s federal grants on April 14, just hours after the university rejected a list of ten demands. While only one demand related to antisemitism concerns, six others targeted ideological and pedagogical issues, including restrictions on who could lead, teach, and be admitted to the university, as well as what could be taught.

    Judge Burroughs noted that the “swift termination” of funding occurred before the administration had learned anything substantive about antisemitism on campus or Harvard’s response efforts, suggesting the antisemitism concerns were “at best arbitrary and, at worst, pretextual.”

    The funding freeze halted work on critical research projects spanning multiple fields, including studies on tuberculosis, NASA astronauts’ radiation exposure, Lou Gehrig’s disease, and a predictive model to help Veterans Administration emergency room physicians assess suicidal veterans. Burroughs ruled that none of these affected projects had any connection to antisemitism.

    The American Association of University Professors (AAUP) celebrated the ruling as a landmark victory for higher education.

    “This is a huge win for all of American higher education, for science, and for free and critical thought in this country,” said Dr. Todd Wolfson, National AAUP President. “Time and again, Trump has tried to restrict speech and cripple lifesaving university research. As today’s victory shows, Trump’s war on higher education is unconstitutional.”

    Veena Dubal, National AAUP General Counsel, characterized the administration’s actions as “cynical and lawless, leveraging claims of discrimination to bludgeon critical research and debate.”

    The Harvard AAUP chapter also praised the outcome. “This historic ruling underscores the importance of free inquiry, truth, and the rule of law in a democratic society,” said Kirsten Weld, AAUP-Harvard Faculty Chapter President.

    Harvard President Dr. Alan Garber had previously stated that “no government — regardless of which party is in power — should dictate what private universities can teach, whom they can admit and hire, and which areas of study and inquiry they can pursue.”

    The Education Department pushed back against the ruling through spokesperson Madi Biedermann, who criticized Burroughs as “the same Obama-appointed judge that ruled in favor of Harvard’s illegal race-based admissions practices” before the Supreme Court ultimately overturned those practices.

    “Cleaning up our nation’s universities will be a long road, but worth it,” Biedermann said, suggesting the administration may continue its broader efforts to reshape higher education policies.

    The ruling establishes important precedent for protecting academic freedom and research independence from political interference. Legal experts note that the decision reinforces constitutional limits on government retaliation against educational institutions for their speech, curriculum choices, and admissions policies.

    AAUP leaders said that the victory demonstrates the importance of collective action in defending academic freedom, with faculty and administrators standing together against what they characterize as authoritarian overreach into university governance and research priorities.

    Source link

  • Trump Wants $1 Billion Payout From UCLA

    Trump Wants $1 Billion Payout From UCLA

    The federal government has frozen $584 million in grants and contracts at UCLA.

    The Trump administration is ratcheting up pressure on the University of California, Los Angeles, and seeking a $1 billion settlement, following concessions from other institutions, CNN reported.

    University of California president James B. Milliken said in a statement Friday that “a payment of this scale would completely devastate our country’s greatest public university system as well as inflict great harm on our students and all Californians.”

    Demands for a settlement come as the federal government has accused UCLA of violating civil rights law by allegedly failing to protect students from antisemitism as pro-Palestinian protests surged on campus last spring. The National Science Foundation and other agencies have since suspended $584 million in federal research funding, according to UCLA chancellor Julio Frenk. The New York Times reported that the administration also wants UCLA to put $172 million in a fund for victims of civil rights violations.

    UC system officials announced Wednesday they would negotiate with the federal government in the hope of reaching a “voluntary resolution agreement” over the charges.

    “Our immediate goal is to see the $584 million in suspended and at-risk federal funding restored to the university as soon as possible,” Milliken wrote in a Wednesday statement, adding that cuts to federal research funding “do nothing to address antisemitism.”

    UCLA was one of several institutions whose executives were hauled before Congress over the last two years to address pro-Palestinian encampments and alleged antisemitism and harassment tied to such protests.

    Should UCLA reach a settlement with the Trump administration, it would be the first public university to do so but the third institution to strike a deal with the federal government over the course of several weeks. Last month, Columbia University reached an unprecedented settlement with the Trump administration, agreeing to changes to admissions and academic programs and paying $221 million to close investigations into alleged antisemitism and restore some frozen research funding. The deal will be overseen by a third-party resolution monitor.

    Brown University also struck a deal with the federal government in July that did not include a payout to the Trump administration, but officials did agree to provide admissions data to the federal government and bar transgender athletes from competing, among other concessions.

    Federal officials didn’t respond to a request for comment Friday.

    Source link

  • Visa Processing Delays Could Cost U.S. Universities $7 Billion and 60,000 Jobs This Fall

    Visa Processing Delays Could Cost U.S. Universities $7 Billion and 60,000 Jobs This Fall

    Recent disruptions to student visa processing could trigger a 30-40% decline in new international student enrollment this fall, potentially costing the U.S. economy $7 billion and more than 60,000 jobs, according to a new analysis by NAFSA: Association of International Educators and JB International.

    The preliminary projections, based on SEVIS and State Department data, paint a stark picture for higher education institutions that have come to rely heavily on international students for both revenue and academic diversity. The analysis predicts an overall 15% drop in international enrollment for the 2025-26 academic year, which would reverse years of steady growth in this critical sector.

    “This analysis, the first to calculate the potential economic impact of fewer international students on cities and towns across the country, should serve as a clarion call to the State Department that it must act,” said Dr. Fanta Aw, executive director and CEO of NAFSA. “The immediate economic losses projected here are just the tip of the iceberg.”

    The projected decline stems from a confluence of policy changes and administrative challenges that have created significant barriers for prospective international students:

    Visa Interview Suspension: Between May 27 and June 18, 2025, student visa interviews were paused during the peak issuance season—precisely when students needed to secure visas for fall enrollment. When interviews resumed on June 18, consulates received a directive to implement new social media vetting protocols within five days, but with minimal guidance.

    Appointment Bottlenecks: Reports indicate limited or no visa appointment availability in key countries including India, China, Nigeria, and Japan. India and China alone represent the top two sources of international students to the United States, while Nigeria ranks seventh and Japan 13th among sending countries.

    Declining Visa Issuance: F-1 student visa issuance dropped 12% from January to April 2025 and plummeted 22% in May 2025 compared to the same period in 2024. While June 2025 data has not been published, the analysis suggests a possible 80-90% decrease based on the identified disruptions.

    Travel Restrictions: A June 4, 2025 executive order imposed restrictions on nationals from 19 countries, with reports suggesting another 36 countries could be added. These restrictions alone threaten $3 billion in annual economic contributions and more than 25,000 American jobs.

    The economic implications extend far beyond university campuses. International students contributed $46.1 billion to the U.S. economy in 2024-25 and supported nearly 400,000 jobs across various sectors including housing, dining, retail, and transportation.

    The projected 15% enrollment decline would reduce international student economic contributions to $39.2 billion in 2025-26, down from an expected $46.1 billion. This represents not just a loss to individual institutions, but to entire communities that have built economic ecosystems around international education.

    “Without significant recovery in visa issuance in July and August, up to 150,000 fewer students may arrive this fall,” the report warns, highlighting the narrow window remaining for policy corrections.

    Beyond immediate economic impacts, education leaders worry about long-term consequences for American higher education’s global competitiveness. International students contribute to research innovation, provide diverse perspectives in classrooms, and often remain in the United States after graduation, filling critical roles in STEM fields and other high-demand sectors.

    The timing is particularly concerning given increased competition from other English-speaking countries like Canada, Australia, and the United Kingdom, which have positioned themselves as more welcoming alternatives for international students.

    To mitigate what NAFSA calls a “devastating outcome,” the organization is urging Congress to direct the State Department to take two immediate actions:

    1. Provide expedited visa appointments and processing for all F-1 and M-1 students and J-1 exchange visitor visa applicants
    2. Exempt F and M students as well as J exchange visitors from current travel restrictions affecting nationals from 19 countries, while maintaining required background checks and vetting

    The report argues that these policy changes could help institutions avoid the projected enrollment cliff and preserve the economic benefits that international students bring to American communities.

    For institutions planning fall enrollment, the report suggests the need for contingency planning and advocacy efforts to address visa processing challenges. With the traditional summer months representing the final opportunity for students to secure visas for fall enrollment, time is running short for policy interventions.

     

    Source link

  • Bouquets or brickbats? How to interpret today’s announcement of £86 billion spending for research and development (R&D) to 2029/30

    Bouquets or brickbats? How to interpret today’s announcement of £86 billion spending for research and development (R&D) to 2029/30

    Nick Hillman, HEPI’s Director, tries to make sense of the Government’s new plans on R&D spending up to 2029/30.

    Perhaps the Speaker of the House of Commons will be unhappy the Government have pre-briefed the media on what this week’s Spending Review will mean for research spending. But what should the higher education and wider research community make of it?

    1. As the BBC story on the £86 billion reminds us, ‘Earlier this week, Reeves admitted that not every government department would “get everything they want” in Wednesday’s review’. We are meant to think the £86 billion is one of the rare exceptions, a surfeit of generosity (albeit with taxpayers’ money) – that is why it is being pre-briefed as a good news story a few days before the Spending Review itself. Ministers have even managed to squeeze positive endorsements from those tipped off in advance, such as the Russell Group. But let’s be honest, the Department for Science, Innovation and Technology (DSIT), which will oversee this £86 billion, is not getting what it wants. The £86 billion is thought to be a real-terms freeze; it is implausible to think DSIT Ministers have been lobbying the Treasury to stand still. If they had been, they would not have been doing their jobs. Some will wonder whether this explains why friends of the Secretary of State for Science, Innovation and Technology have been speaking up his chances of being moved to a bigger spending Department in due course.
    2. We have been here before. The proudest boast in the Government’s news release, apart from the total multi-year settlement of £86 billion, is of ‘a bumper funding package worth more than £22.5 billion a year in 2029/2030’. But hang on a moment; if Whitehall had more institutional memory, they might have worded this differently because it is five years since the Treasury, under a previous administration and despite being in the midst of COVID, boasted there would be public spending of £22 billion on R&D by 2024/25, just £500 million a year less and five years earlier than the new number for 2029/30. While the modesty of the new announcement might be partly excused by the sluggish economic growth seen since, it may also explain why the announcement seems not to have had the pickup in the Sunday newspapers that the Government would have been hoping for.
    3. A real-terms freeze is a cut in terms of the percentage of GDP spent on R&D, which is the usual way R&D spending is measured in the UK and internationally. In the past, policymakers have obsessed over whether the UK can reach 2.4% or even 3% of GDP on (public and private) R&D spending, putting such targets in many election manifestos. But by a stroke of the pen three years ago, the Office for National Statistics suggested the UK spends much more than we thought on R&D, meaning we had already hit the 2.4% target, overtaken the OECD average and even got close to the 3.0% ambition. So policymakers could claim they had already hit a target that had looked extremely stretching and shift their attention elsewhere. (The ONS’s change put red faces on those who had been lobbying for such targets, however: if the target you have been lobbying for has already been hit [even if it does not feel like it on the ground], what should your next move be? This is something no one quite seems to have worked out.) The new announcement is problematic in GDP terms because, if you assume any economic growth at all, then a real-terms freeze in research spending means a reduction in R&D spending as a proportion of GDP. The latest international data suggest the UK’s gross R&D spending  has been just above the OECD average (2.8% of GDP versus 2.7%). If the OECD average remains the same or (as has been happening) goes up somewhat, today’s announcement means the UK is likely to spend less on R&D as a proportion of GDP and once more fall behind our main competitors. (This is not absolutely guaranteed because today’s announcement is on public spending and most R&D spending is private spending. However, public spending on R&D is generally [though not universally] thought to ‘crowd in’ rather than ‘crowd out’ public funding.)
    4. It is easy for me to be a little cynical about all this because I was there when the same conversations happened between the Business, Innovation and Skills Department and the Treasury at the time of the 2010 Spending Review, which had a similar importance to this week’s forthcoming Spending Review. However, that experience also taught me that a flat settlement in a constrained environment can indeed be a win. The settlement in 2010 was flat-cash not flat real – in other words, it ignored future inflation, so was less generous even than the one being announced today. At one point during the 2010 negotiations, however, it had looked as if there would be actual cuts to the cash spent on research and development each year; expectations in the research community were running so low that, when flat cash was instead announced, it led to my boss, the Minister for Universities, being presented with a bouquet of white roses by the founder of Research Fortnight. 
    5. Today’s announcement is about the money but the Government’s spin doctors have also tried to focus on the uses to which the money is put. Voters are likely to find it hard to imagine what £86 billion spread over a number of years means in practice. However, as the Mirror reports, it could mean ‘In Liverpool, which has a long history in biotech, funding will be used to speed up drug discovery and in South Wales, which has Britain’s largest semiconductor cluster, on designing the microchips used to power mobile phones and electric cars.’ Those feels like things everyone can get behind, even if the focus on local spending may or may not mean a weakening of excellence as the key criterion on which to distribute research funding from central government. This focus on projects should also serve as a reminder to the research community that, whatever Ministers say now, there is likely to be more money available if they lobby smart in the months to come. After what was perceived as a good settlement for science in 2010, we still managed to secure additional funding at pretty much every subsequent spending review. There were lots of reasons for this to do with how effectively the Department lobbied (it helped having both a Lib Dem and a Tory Minister from the Department sit around the Cabinet table), George Osborne’s predilection for science (albeit generally for big new projects rather fully funding existing ones) and politicians’ ceaseless desire to have an exciting new building or two to don a hard hat for. Perhaps most importantly, the research community were ready with ideas of what additional projects should be funded whenever we went to them with the question; if we give policymakers the tools to lobby the Treasury in the years ahead, researchers could get more.
    6. Finally, I am left wondering what this five-year settlement means for the commitment in Labour’s 2024 election manifesto to ‘scrap short funding cycles for key R&D institutions in favour of ten-year budgets that allow meaningful partnerships with industry to keep the UK at the forefront of global innovation.’ It was always likely that this wording was a political trick to put the focus on the length of time rather than the quantum of money. But Spending Reviews are always about money and always have a fixed shorter timetable, so how this week’s announcement chimes with longer-term planning is an issue that won’t go away even if it primarily is for another week.

    Source link

  • Harvard Faculty, AAUP Challenge Trump Administration’s $8.7 Billion Funding Threat

    Harvard Faculty, AAUP Challenge Trump Administration’s $8.7 Billion Funding Threat

    In what legal experts are calling a landmark case for academic freedom, Harvard faculty and the American Association of University Professors (AAUP) have filed a lawsuit against the Trump administration, alleging unconstitutional attempts to control campus speech and governance through threatened funding cuts.

    The legal action, filed Friday, seeks to block the administration from withholding $8.7 billion in federal funding for Harvard University and its affiliated hospitals after demands that the university implement specific policy changes and restructure its operations.

    According to court documents, the administration’s Joint Task Force to Combat Anti-Semitism issued a demand letter on April 3 outlining “immediate next steps” Harvard must take to maintain its “financial relationship with the United States government.” These demands reportedly extend far beyond addressing antisemitism, including new speech restrictions, elimination of all diversity, equity, and inclusion programs, and mandatory cooperation with the Department of Homeland Security.

    “The First Amendment does not permit government officials to use the power of their office to silence critics and suppress speech they don’t like,” said Andrew Manuel Crespo, Morris Wasserstein Professor of Law at Harvard and general counsel of the AAUP-Harvard Faculty Chapter. “Harvard faculty have the constitutional right to speak, teach, and conduct research without fearing that the government will retaliate against their viewpoints by canceling grants.”

    The lawsuit comes after the task force chair announced on Fox News in March that “the academic system in this country has been hijacked by the left, has been hijacked by the Marxists,” and threatened to “bankrupt these universities” by removing federal funding.

    Harvard professors involved in the lawsuit claim the administration’s threats have already begun to impact academic freedom on campus.

    “The research and teaching of Harvard faculty have already been chilled by the Trump administration’s attempt to coerce the university into changing its curriculum and governing structure,” said Dr. Kirsten Weld, professor of History and president of the AAUP-Harvard Faculty Chapter. “If Trump can threaten to withhold billions of dollars from our colleagues unless we stop teaching about diversity and inclusion, he can make the same threat to try and stop us from teaching about science, his critics, or anything else.”

    The plaintiffs have requested an immediate temporary restraining order to prevent any funding cuts while the case proceeds.

    The AAUP warns that allowing such governmental intrusion at Harvard could set a dangerous precedent for institutions nationwide.

    “Our students and faculty members across the nation are terrified,” said Veena Dubal, AAUP General Counsel. “If the administration’s lawless and unconstitutional attempts to control speech and governance at Harvard are allowed to proceed, then any one of our institutions could be next.”

    Dr. Todd Wolfson, president of the AAUP, characterized the administration’s actions as “an attack on democracy and economic mobility” with harms that “will be so irreparable that they will last generations.”

    At the heart of the case is whether the federal government can legally condition billions in funding on compliance with policy demands that appear to target specific viewpoints and academic content.

    Nikolas Bowie, Louis D. Brandeis Professor of Law at Harvard and secretary-treasurer of the AAUP-Harvard Faculty Chapter, argues there is no legal basis for the administration’s actions.

    “No law in this country permits President Trump to suspend billions of dollars from universities like Penn, Princeton, or Harvard simply because he doesn’t like their policies on transgender athletes, their research on climate change, or the constitutionally protected speech of their students and faculty.”

    Legal experts note that the case could potentially reach the United States Supreme Court, given its significant First Amendment and separation of powers implications.

    Source link

  • More than 200,000 former Walden University students owe more than $9 Billion

    More than 200,000 former Walden University students owe more than $9 Billion

    The Higher Education Inquirer has recently received a Freedom of Information (FOIA) response regarding student loan debt held by former Liberty University students.  The FOIA was 25-01941-F.  

    Source link

  • More than 290,000 Liberty University student loan debtors owe more than $8 Billion

    More than 290,000 Liberty University student loan debtors owe more than $8 Billion

    The Higher Education Inquirer has recently received a Freedom of Information (FOIA) response regarding student loan debt held by former Liberty University students.  The FOIA was 25-01939-F.  

    Source link

  • 265,000 DeVry student loan debtors owe $5.2 Billion

    265,000 DeVry student loan debtors owe $5.2 Billion

    The Higher Education Inquirer has recently received a Freedom of Information (FOIA) response regarding student loan debt held by former DeVry University students.  The FOIA was 25-01942-F.  

    Source link

  • £11 billion of “Supplements” used for loans

    £11 billion of “Supplements” used for loans

    Given the relative absence of higher education from yesterday’s Autumn Statement, I turned my attention to the Department for Education’s 2019/20 annual accounts, which were published earlier this month.

    Regarding student loans, we have been in something of a hiatus since 2018, when Theresa May announced an review of post-18 funding and commissioned the Augar panel, which reported last summer. Although there were suggestions that we might get a long overdue response to the latter yesterday, we will probably have to wait now until the Budget next March, when the government will hope to have a better sense of its spending commitments.

    That leaves student loan finance in limbo with the small, nominal budget allocation for loan write-offs shored up by large “Supplementary Estimates” provided by parliament each February.

    This is in spite of an apparent “target RAB” of 36% and a budgeting process hanging over from 2014, when the old department for Business, Innovation and Skills (BIS) had responsibility for loans and was being “incentivised” to reduce the cost of the loan scheme. You can see both of these features still stipulated in the latest Consolidated Budgeting Guidance, but they represent zombie policy with little to no bearing on events.

    Why so? Well, DfE was given an extra £12billion plus back in February to supplement 2019/20’s budget for “non-cash RDEL” (mostly student loan “impairments”) of £4.7billion per year. (Student loans are “impaired” because the loans are worth less in estimated repayments than the cash advanced.) The supplement produces a total that is more than triple the original allocation.

    And… DfE managed to spend nearly £16billion of that last year. The accounts report an “underspend” of £1.1bn against that total.

    As can be seen from the table below, “Fair Value movement” for student loans amounted to a non-cash cost of over £14billion.

    £17.6billion of new loans were issued, a net increase of £15billion once repayments of over £2billion are considered, but the new impairments on post-2012 loans increased by £12.3billion; for “pre-2012” loans the stock remaining at year-end lost nearly £1.7bn when revalued.

    Although the nominal value (“face value”) of outstanding post-2012 loan balances is nearly £105billion, those loans are thought to be worth less than £50bn.

    The increases in impairments break down into a RAB charge and a stock charge.

    The RAB charge is the estimated impairment on new loans issued. That came to nearly £9billion, reflecting the latest understanding that only 47% of the £17billion+ of annual undergraduate loan outlay is now expected to be repaid in net present value terms. Ie, the RAB charge is 53%, well above the official target of 36%.

    The other £7billion was a write down on loans issued in previous years and is based on changes made to the model used to estimate loan repayments. Only £2.1billion of that downwards revaluation is attributable to Covid (the loans were revalued in July).

    The accounts make available a further breakdown of the modelling changes.

    The implications seem clear: HE is due a day of reckoning. From a financial perspective, the strongest measures would control outlay rather than boosting repayments. In cash terms, the former has immediate impact on finances, whereas the latter spreads the effect over decades and is politically difficult at this time.

    Tuition fees are to be frozen again in 2021/22 and we should expect this to continue. Announcements in FE suggest that the government would also like students to switch away from longer, more expensive HE courses. More radically, I would expect the government to be reviewing the Augar suggestions of tuition fee reductions and caps on places for certain courses (Recommendation 3.7).1  

    Back at the Conservative Party Conference, Rishi Sunak warned of “hard choices” to come and promised to “balance the books”:

    “Over the medium term getting our borrowing and debt back under control. We have a sacred responsibility to future generations to leave the public finances strong, and through careful management of our economy, this Conservative government will always balance the books. If instead we argue there is no limit on what we can spend, that we can simply borrow our way out of any hole, what is the point in us?”

    That final question invites some alternative answers, but the Spending Review’s focus on Further Education reinforces the idea that HE will be the required to balance the increased spending on the former.

    1 “We therefore invite the government to consider the case for encouraging the OfS to stipulate in exceptional circumstances a limit to the numbers an HEI could enrol on a specific course, or group of courses. It would be critical for the OfS to be transparent about the grounds and process for such an intervention and we can offer no more than a broad indication of what these circumstances might be. Where there is persistent evidence of poor value for students in terms of employment and earnings and for the public in terms of loan repayments, the OfS would have the regulatory  authority to place a limit, for a fixed period, on the numbers eligible for financial support who could be admitted to the course. The institution in question would remain free to recruit to all other courses without restriction. Such a cap system would clearly target the institutions that are offering poor value, rather than altering the entry criteria for individual students.”

    p. 102, Independent Panel Report to the Review of post-18 Education & Funding

    Source link