Government is right to not consider abolishing tuition fees, says new report

Post-18 education and funding: Options for the Augar review

EPI publishes evidence on options for post-18 education funding, ahead of government review.

In February 2018, the Prime Minister launched a review into the post-18 education system, led by Philip Augar. An interim report was expected in Autumn 2018, but has not been published.

The review is the first to examine post-18 education funding in almost a decade, and as well as considering tuition fees, will also consider the funding of wider post-18 qualifications and further education.

Today (2 May), six months on from the expected release of the review’s findings, the Education Policy Institute (EPI) has published a new report examining the evidence on the various policy options for the government.

The report scrutinises policy proposals on tuition fees, student support, and non-HE funding; it outlines the evidence for each policy option, before setting out recommendations on how the government should proceed.

Key findings

Proposals from the government and opposition parties to reduce or abolish tuition fees, or lower interest rates, would have a regressive impact.

• Most of the high profile options for reform would benefit higher earners, and have little impact on improving education access or quality.
• The government should publish a full analysis of the impact of any changes to fees and student finance, setting out the distributional effects on high and low earners, and those not in higher education.
• The cost to the taxpayer of abolishing tuition fees entirely would be substantial, with higher earning graduates as the main beneficiaries. There is little evidence that this would increase the participation of disadvantaged students.

To help address inequities between higher and further education funding, maintenance loans should be extended to 19-23 year olds pursuing vocational, level 3 qualifications.

• The government should offer more financial support to those pursuing study outside of higher education. Currently, vocational learners are not entitled to maintenance loans.
• Extending such loans would encourage more school leavers to take this route – which offers a significant wage premium, at a relatively small cost to the taxpayer.

The government should avoid a system in which tuition fees vary by subject or university.

• Proponents argue that varying tuition fees could encourage students towards courses with greater labour market demand, ensure tuition fees align better with future earnings, or better reflect the cost of running courses. But as these aims often conflict, it is not possible to deliver them all simultaneously.
• Varying fees by subject to steer students toward high demand courses has been ineffective when applied in other countries, with demand largely unresponsive to changes in price.
• Varying fees by institution may entrench inequality. Rewarding high graduate returns with extra funding may penalise institutions with high proportions of disadvantaged students.
• While varying fees to better reflect course running costs is workable, lowering fees across-the-board, with teaching grants topping up funding in more costly subjects, seems more feasible. This is less likely to discourage students from taking up costly courses, such as nursing.

Imposing a minimum academic standard to access university loans – a ‘UCAS tariff floor’ – should not be introduced without strong evidence that the majority of those denied loans would be better off pursuing other education routes.

• While students who would be prevented from accessing loans are more likely to have poorer outcomes at university, evidence suggests that a significant proportion still benefit from a bachelor’s degree: two-thirds who complete their studies go on to secure a first or upper second class degree.
• There is no evidence that such students would be better off in other education routes. Such routes are often lower-funded and poorly-signposted.
• A UCAS tariff floor would also disproportionately penalise those from disadvantaged backgrounds, undermining the government’s core aim of widening university participation.
• If the government did eventually proceed with this policy, there would be a strong case for using any savings to boost the attainment of disadvantaged students in schools.

Student finance

Reducing tuition fees: If the government does decide to reduce overall tuition fee levels, the reduction should be at least partially offset by increasing teaching grants, with priority given to high-cost subjects.

Abolishing tuition fees: The government is right not to consider abolishing tuition fees. Improved university access could be better delivered by more targeted investments to boost part-time and mature student participation and reduce the attainment gap at school.

Changing the student loan terms: The government should be clear on the distributional impact of its proposed changes on different groups of earners and should publish a detailed assessment alongside the review recommendations.

Reintroducing maintenance grants: There is no clear evidence that restoring maintenance grants will increase participation of more disadvantaged students. The government must develop a new strategy to boost its widening participation agenda. While the rate at which disadvantaged students entering university continues to increase, the ‘participation gap’, comparing the proportion of the most affluent students entering university, against the least well-off, has failed to narrow.

Education pathways for those leaving school

Introducing a minimum academic standard to access student loans: A tariff floor should not be introduced without robust evidence that a significant majority of those affected would be better off pursuing alternative education or training pathways. In the meantime, the government should monitor the impact of the Office for Students (OfS) in properly regulating entry standards and protecting the interests of students. 

Financial support for those taking vocational qualifications: The government should offer maintenance loans to young adults pursuing a first full level 3 qualification.

Part-time and mature study

Reducing part-time tuition fees: If the government does not make an across-the-board reduction in fees, it should consider introducing a teaching grant to lower tuition fee levels for part-time students.

Easing Equivalent and Lower Qualification (ELQ) funding restrictions: The government should introduce further ELQ exemptions in fields of study with high returns or strong labour market demand.

Commenting on the new report, David Robinson, Director of Post-16 and Skills at the Education Policy Institute (EPI), said:

“This analysis highlights the difficult policy choices facing the government as it attempts to reform post-18 funding. Big cuts to tuition fees or the interest rates on loans are likely to prove expensive and would predominantly benefit higher earning graduates, without improving university access or quality.

“There is a stronger argument for considering improving the funding of non-university study routes – including for technical and vocational education outside universities – which has traditionally received less generous funding and student support.”

Rt. Hon David Laws, Executive Chairman of the Education Policy Institute (EPI), said:

“The government’s Augur Review seems to have been delayed by the focus on Brexit, and perhaps also by tensions between policy makers in Number 10, the Treasury and Department for Education over what the government’s post-18 funding priorities should be.

“Our analysis shows that big cuts in tuition fees, such as those being advocated by both the Labour Party and some in the government, are likely to disproportionately benefit higher earning graduates without having much educational benefit.

“There is a stronger case for using scarce financial resources to improve support for the lower funded, non-university, post-18 routes, or for targeting extra spending at earlier phases of education, which is where more disadvantaged pupils start to fall badly behind.”

John Cope, CBI Head of Education & Skills policy, said:

“The review of post-18 education funding in England is a once-in-a-generation opportunity to join-up academic and technical education.  Continued delay around its interim findings has left businesses, universities and colleges increasingly unable to plan ahead and created uncertainty over fees, funding and student support.

“With the Spending Review on the horizon, clarity on the panel’s interim findings is urgently needed.  It’s time to end the financial neglect of England’s further education system and protect our universities.”

Mark Dawe, CEO, AELP said:

“It’s really strange after the Commons select committee chair has regularly called for rocket boosters to be put under degree apprenticeships that this report hasn’t even looked at them and discussed how they should be funded in future.  We expect over 100 universities to be on the apprenticeship provider register by the autumn ready to offer degree apprenticeships and the implications for the apprenticeship levy funding system are huge. 

“The ONS has just found that nearly a third of graduates had more education than was required for the job they were doing in 2017, so AELP has got to ask if the government’s review of post-18 education funding should be considering whether a third of the £15bn higher education budget should be redirected to higher level apprenticeships rather than full-time HE to ensure that learning is relevant to the chosen career.”

Education Secretary Damian Hinds said:

“We have introduced reforms to make sure that higher education is open to everyone who has the talent and potential – and there is a record rate of disadvantaged 18-year-olds going to university, but whilst we have made huge strides on access we now need to make sure that students are successfully participating in and completing their studies.

“Through the new regulator we are asking every university to draw up an access and participation plan for 2020-21 and I expect every institution to ask themselves what they can do to drive forward progress in improving both access and successful participation for students from disadvantaged and underrepresented backgrounds.

“Alongside this work from the sector, the government is also working to tackle the large gaps that still remain through the Race Disparity Unit, which is working to improve outcomes for ethnic minority students in higher education, including by making better information available and gathering evidence on what works to improve access and attainment for ethnic minority students.”

The University and College Union (UCU) has said that the government needs to do more than tinker with the current system if it wants to make serious changes to education funding. UCU acting general secretary Paul Cottrell said:

‘The prime minister called the Augar Review because the current system was so politically toxic. However, we have heard little in the leaks that suggests the review is looking at the sort of radical alternatives that would make life easier for students and guarantee funding for our colleges and universities.

‘We welcome the EPI report’s focus on making studying easier for part-time and mature students. We are pleased the report rejects some of the proposals that have been trialled in the press such as a minimum grades requirement to access financial support and variable fees linked to future earnings.

‘We do not agree that the cost of abolishing fees means that the government should reject the idea. Education is worth investing in and we need to develop a system that ensures big business finally pay its fair share.

‘A new Business Education Tax, which reverses cuts to corporation tax since 2010, would allow fees to be scrapped while ensuring that big companies finally contribute properly towards the supply of graduates upon which they rely.’

The union’s submission to the Augar Review can be found here.

The Prime Minister announced her intention to review post-18 funding 18 months ago, at the 2017 Conservative Party Conference. In February 2018, the review was formally launched. Its call for evidence began a month later, with Philip Augar outlining the panel’s priorities at an EPI Conference in March. The review was expected to publish its interim findings in Autumn 2018, with the government concluding the overall review in Spring 2019.

About The Education Policy Institute (EPI): An independent, impartial, and evidence-based research institute that promotes high quality education outcomes, regardless of social background. We achieve this through data-led analysis, innovative research and high-profile events.