Over in another corner of Wonkhe that Jim Dickinson is building a compelling case for serious problems within the student loan and graduate repayment system.
The whole article is well worth engaging with, but in essence he is arguing that because the composition of the student body – and thus the pool of graduates making repayments – has changed to the extent that the underlying government assumptions about repayment no longer hold.
Put it like this. Over the last decade or so students, proportionally, are doing different subjects at different providers. They come, proportionally, from different backgrounds – the mix of entry qualifications and ages has very likely changed too. And all of these aspects, we know from looking at LEO data will have an impact on earnings: and thus repayments, and thus the affordability of the entire loan system.
Lagging indicators
Like much in the financial world, our understanding of the contribution of higher education to graduate earning potential is founded on a series of predictions based on past performance. On one level this is problematic: nobody predicted that the (actuarially speaking) long-overdue global pandemic would happen in 2020 rather than any other year, nobody predicted that hype around large language models would build to such an extent that it would have an impact on graduate recruitment this year.
On another level this is simply the best available data: if we didn’t use past performance the only other option is to guess.
Whichever we choose, it feels like a worthwhile exercise to take at least some account of the way the sector is changing and has changed. So (with a little bit of HESA statutory data collection magic), that is what I am trying to do here.
The places they’ll go
Exhibit A, here, shows the proportional difference in student numbers by provider over a decade (2014-15 to 2024-25). You can filter by subject area at CAH3 level, allowing you to really get into the weeds of the growth and decline of quite small areas of provision – though by default I am looking at totals. And as you might expect, you can also filter by level and mode of study. While the dots show proportional changes over the decade – and that’s what we are sorting by – the bars underneath and the lines below show numerical changes.
The proportional indicators are notable in that the bits of the sector that have really expanded (looking at full time undergraduates here) are either what we loosely term “alternative” providers (largely for profit, have joined the state-funded part of the sector since 2017) or more traditional universities that have greatly expanded their franchise and academic partnership programmes in recent years.
In England and Wales the only constraints on the growth and decline of providers is the demand among prospective students. There is no strategic design behind changes to the shape of the sector beyond about 2012, and what we see now is the result of the absence of that strategy. Nobody in any centralised position of power decided in 2014-15 that things would be better if we increased the number of business and management students at Ravensbourne University (formerly a specialist arts provider) by 8,290 per cent over the course of a decade; or that King’s College London needed to spin up around 1,000 extra undergraduate psychology places in that time, from a starting point of just 25.
In both cases there may be a reason, but the reason was not linked to any assessment of societal need by the government on behalf of the taxpayer. The providers in question are responding to what the market will sustain – and they know if (eventually) there are concerns about graduate outcomes the Office for Students will be on them like a ton of bricks (one could argue that a cyclical process of inspections would get there a bit quicker, and on stuff like teaching quality too).
Disciplinary process
As is fairly well understood, business and related courses have seen sizable expansion in recent times. In 2014-15 just 15 per cent of undergraduate full time students took business courses – that had risen to 20 per cent by 2024-25. Again, it is worth labouring the point that this is purely the action of the invisible hand of the market: nobody has ever decided that what the UK needs is about 150,000 more business students but that is what we have been given.
The size of the student body overall has grown too, so for a subject area to grow as a proportion of the whole requires some substantial increases in student numbers. Going from computing subjects representing 4.5 per cent of all undergraduate provision to 6.8 per cent represents a doubling in student numbers.
That’s just at a top level – we can also drill into subjects at a much finer level of granularity (for ease of viewing you need to select a subject group of interest here). You might have spotted, for instance, a growth in social science subjects on the main chart, but may be surprised to learn that the fastest growing full time undergraduate subject within that grouping is health studies – a discipline that covers health and social care in public policy.
What is not clear is whether that subject has grown as a result of demand from the NHS, the Department of Health, or local government – or whether it has increased in popularity due to public interest.
Over in business and management you will be surprised to learn the growth has been focused in more general business provision – with the proportion taking courses linked to specific disciplines like management, tourism, accounting, and marketing falling over time. It appears that we are educating large numbers of business generalists – and it is not clear why this would be so.
Group work
You might have spotted that I have included a filter for “mission group” within most of the dashboards above. Loyal Wonkhe readers will recall that I am not a fan of the use of self-selecting membership bodies as a proxy for provider strategy or teaching quality, but the names are a well-known shorthand in the sector for both.
In coverage of undergraduate recruitment you will be familiar with the idea that the Russell group is growing at the expense of other providers, and indeed we can see that we are looking at an increase of just under 30 per cent over ten years. I tend to split the grouping into the big seven (Oxford, Cambridge, UCL, KCL, Imperial, Manchester, Edinburgh – very much a distinct subgrouping based on sheer scale and financial power) and the mainstream Russell group: the latter has an extra 72,000 full time undergraduates compared to 2014-15.
But in terms of proportional growth (which bits of the sector have gotten larger) these achievements are dwarfed by those of specialist providers: alternative providers are twice the size that they were, with those who happen to be members of IHE growing even faster. Mainstream specialist providers – arts universities and conservatoires, for example – may be small individually but have grown by 75 per cent over ten years.
So that’s one version of student choice: niche providers have grown to meet specific applicant interests, and the diversity of the sector has improved much as the politicians behind recent reforms had hoped.
Another version of that story could be told via the growth of franchise and partnership provision. It is fair to say that recent years have seen this part of the sector: originally a way to support niche provision (hello Doreen Bird!) and outreach, it has become increasingly associated with low quality, high volume provision at unregistered providers. Some growth at smaller modern universities is going to be due to that kind of provision, and we may be able to use charts like these to watch it unwind as larger delivery providers register with OfS and begin submitting their own HESA data.
In neither of those cases do we have a meaningful track record of salary benefits for graduates: something that the government would use to track loan repayments and thus the overall affordability of the sector. There is simply no data available given these patterns of rapid growth.
Into uncertainty
How little we really know about likely future graduate repayments means that there is always going to be an inherent risk in loan-backed student finance. Recent changes to the two major schemes (the threshold freeze for Plan 2, the longer repayment period and lower threshold for plan 5) can be seen as the government shifting large parts of this risk onto graduates themselves.
Comparing the affordability of various systems of higher education across countries is – whatever OECD says – a fool’s errand: the underlying differences in everything from underlying education systems to cultural norms and the state of the job market make a like-for-like approach nearly impossible. But it is fair to note that the UK spends less public funding (as a proportion of total sector income) than nearly any other comparable nation: while retaining what is widely regarded as a world-class system.
If a world-class system of mass higher education is what we need to flourish as a nation in an increasingly unstable world – to be clear, I am arguing that this remains the case – there needs to be a serious reckoning around the way we fund it. And if we are hoping that this results in a larger government contribution it is perhaps fair to assume that the government needs to be a lot clearer about what it is paying for.