Table of Contents

INTERNATIONAL HIGHER EDUCATION

The Trouble with Fees

Michael Shattock
Michael Shattock is a visiting professor at the Institute of Education, University of London and is a former registrar at the University of Warwick. Address: E-mail: shattock@he.u-net.com.

On May 5th the new Labour government was returned to office with a parliamentary majority reduced from 161 to 66. While the dominant themes in the election were clearly the Iraq invasion and immigration, the decision to raise tuition fees for higher education students in England was the third most important issue on the doorstep. It was vociferously opposed, with conviction, by the Liberal Democrats, who could and did mobilize the student vote. The issue was also opposed, although one might have thought against their natural instincts, by the Tories. The issue was so controversial that it was only won by the government, even with its previous majority, by 5 votes in the House of Commons in 2004, and very obviously it would not have succeeded if it had been delayed until after the election.

It is difficult to see why the decision was so controversial. Fees of £1,200 are already in force for 2005–2006 for every undergraduate higher education student in England; and the new decision, while raising the fee level in 2006 to up to £3,000 (depending on the charge levied by the university), does not demand an up-front payment on entry because the fee is to be paid after graduation on an income-contingent basis, with the government paying the fee at entry. Under means-test arrangements students from disadvantaged backgrounds can receive up to £2,700 per annum in maintenance grant. Students will thus be better off during their period of study under the new arrangements and will only be required to pay after graduation providing they are earning over £15,000, as against the current average graduating salary of about £19,000. A strong, secondary argument in favor of the new scheme is that it requires the middle classes, which benefit disproportionately from the higher education system both in terms of entry (over 70 percent of the higher education student population is from the professional and managerial classes) and from salaries and career prospects on graduation, to contribute more to the costs of higher education than lower income groups, which benefit much less but nevertheless have to contribute to the costs through the tax system.

The new scheme, however, was opposed by an alliance of those who believe that higher education should be free and those who saw it as a “stealth tax.” A further strand of opposition came from those who opposed a variable-fees policy. The universities had campaigned for fees to be raised to alleviate the continuing financial stringency. The rector of Imperial College had publicly demanded that fees should be raised at Imperial to £10,000 per annum if the college was to remain internationally competitive. Variable fees introduced a market element—in fact only a tiny majority of institutions chose not to charge the full £3,000—but also left open in the future the prospect of the fee levels being allowed to increase.

To get the variable-fee policy through, the government had to concede two control mechanisms. The first was that a bursary contribution must be made, out of the fee income, to all students from disadvantaged backgrounds, and a new agency, the Office of Fair Access (OFFA), was set up to give approval to individual universities’ plans to charge fees against their proposals for bursary payments. The second was the creation of an independent commission to review the fee policy in 2009 and an agreement that no increase could be introduced except with the approval of Parliament after the commission had reported.

Thus, although one might see the introduction of variable fees as a further, timid, step in the marketization of higher education, the control on higher education numbers has not been relaxed to prevent the most prestigious universities from expanding (and enriching themselves) at the expense of the rest. Moreover the two control mechanisms themselves provide opportunities for future market interventions and uncertainty that severely limit the original intentions of the scheme.

In March OFFA published the bursary levels that universities were offering. They showed an astonishing range with as a general rule the most prestigious institutions (that receive the fewest suitably qualified candidates from disadvantaged backgrounds) offering bursaries of around £3,000 per annum and those institutions that have the least competitive intakes (and therefore the most candidates from disadvantaged backgrounds) offering between £300 and £500. Within these extremes there is a clustering around £1,000 to £1,500 per annum with very few post-1992 institutions exceeding £1,000 per annum. The institutional pecking order, established by the league tables, is thus replicated in the level of bursary offers, although it is becoming clear that there will be discretion within most university offer levels to recognize particular student circumstances. Some universities are also offering a range of extras such as free laptops, vouchers for bicycles, and cash incentives.

Surprisingly, however, a market in bursaries has stimulated concerns about the danger of intake shortfalls, and the combined risks of not benefiting fully from the fee increase and of the imposition of a “claw-back” by the Funding Council if targets are not met. As a consequence, universities are now plunging into a scholarship market (“golden hellos”) to attract students with high A-level scores irrespective of social class, also to be funded out of fee income. No list of scholarships available has been published but two conclusions can be drawn: the first is that the competitive market at the admissions stage has been greatly intensified and the second that overnight the student process of selecting universities for application has become immeasurably more complicated. Financial incentives have been added to more traditional concerns of choosing the right course, getting admission to a university whose league-table placement might help employment prospects, or picking a university in a particular location. The bureaucratic costs for each institution in managing these operations will further deplete the benefit of the additional income to be derived from the new fee structure.

The situation is further complicated by the fact that decision making on higher education is a devolved function to Scotland, Wales, and Northern Ireland. In Scotland the Liberal Democrats made it a condition of entering a coalition government with Labour that the decision in 2001 to introduce fees should be resisted, and the Scottish Executive has continued to follow this principle with the new structure. This has prompted special arrangements to charge English students choosing to enter Scottish universities, one or two of which are heavily dependent on an English intake. In Wales, where half of Welsh students choose to study in England, a complex consultation process is being undertaken to determine whether Welsh students studying in Wales will pay fees. In both Scotland and Wales the universities are concerned that the additional income apparently becoming available to English universities will make them less competitive in terms of salaries and research ratings. In Northern Ireland, still ruled from Westminster because of the present standoff in Northern Ireland politics, the decision to move to the new fee structure has been taken, but because of considerable cross-border student traffic this will create tensions with the Irish Republic, which has so far resisted the recommendations of an OECD review of its higher education system to charge tuition fees.

There is a temptation to see all this as presaging a widespread move in Europe to charge tuition fees, and indeed, a recent European Commission document could be seen as encouraging such a development. But as the narrowness of the vote in the U.K. House of Commons shows and the continued resistance in Scotland and Wales, the introduction of a substantial tuition-fee element to first-degree work undertaken by home students is deeply controversial, even in the most market-led higher education system in the European Union and even when the scheme is designed in a way that might not be thought unattractive to students. With its reduced majority, the Blair g.overnment may even find it difficult to retain the newly introduced system when Parliament reviews it, as it is committed to do, in 2009. At the very least it is unlikely that the advocates of raising the £3,000 limit much in 2009 will be successful, and, as a consequence, the government will find itself under renewed pressure from the universities for a larger public investment in higher education.

[Online] Available: http://www.bc.edu/bc_org/avp/soe/cihe/newsletter/Number41/p9_Shattock.htm