by David Craig
Whatever the method, some closures would help those universities which remain open to start thinking about providing greater value for the money they receive from their students and the taxpayer. Schools, hospitals, prisons and private companies all close, why should universities be exempt from a normal institutional lifecycle?
Drop the “Uni or bust” mindset
Perhaps the most disastrous error of the Great Expansion was that it was based on the clearly erroneous idea that university is the best possible solution for each and every school leaver of average or better ability. This has been compounded by an almost obsessional fixation on a three–year full–time degree as the default option for study. We urgently need to break away from this restrictive view of what Higher Education should look like and widen the choices offered to school leavers beyond a traditional university degree. This partly reflects the changing nature of the students whom universities will need to recruit over the coming years. It is also because flexible and part–time learning would help students and society to mitigate or avoid many of the harmful effects of the Great Expansion.
A part–time degree completed over five or six years will make minimal difference to the eventual age of a graduate in an era of rising retirement ages. It also offers many economic benefits to graduates. Research by Skandia suggests part–time study over five years, rather than full–time over three, enables graduates to earn £31,000 more in their working lifetimes.455
In addition, consider the cost of an Open University degree: “Our fee for a standard 30–credit module is £1,393, and for a standard 60–credit module it’s £2,786. Most of our students study 60 credits per year over six years for an honours degree.”456 This means total tuition fees of £16,716, rather than the £27,750 which is now typical for full–time undergraduates.
A student studying part–time whilst working and possibly living at home could graduate with considerably less debt even before taking into account their additional earnings, cost of living savings and the reduction of compound interest on student debt. More students studying part–time would result in more students living at home. This would either eliminate or reduce the cost of rent, whilst reducing the demand for rented accommodation in the buy–to–let sector. This would be bad news for buy–to–let landlords and foreign speculators enthusiastically building student accommodation, but good news for communities and first–time buyers – many of whom will be graduates. It would also reduce student debt and many of the wider social problems it creates.
Moreover, if taxpayers’ money can be spent on a degree, why not spend it on high value apprenticeships? Training young people represents a significant cost to companies. Government could fund willing companies, with the resources and capacity to offer a vocational training programme, through the Student Loans Company (or, better, tax breaks). This would substantially reduce the cost to employers of offering apprenticeships, thereby making the UK more attractive for employers, whilst helping to reduce the prestige gap between the academic and non–university vocational routes. It should also be possible to direct this funding at sectors where the UK actually has labour shortages, killing two birds with one well–placed stone.
Better information
“In the City, they call it a “false market”. This occurs when erroneous information, often deliberately circulated, becomes the basis for investors’ decisions. The result is illogical choices.” Jeff Randall, Telegraph (2012)457
The Great Expansion has created a false market in the admissions process to UK universities, with a distinct lack of accurate information about the outcomes from different degrees. This means many students apply to degrees without any genuine understanding of the long–term benefits and drawbacks they will entail. Instead, they are told the graduate premium is about £100,000 and assured in vague but emphatic terms that university remains a sound (and indeed a necessary) investment in their future.
Given the rising cost of a degree, such vagueness is no longer acceptable. It is especially unacceptable because the government already has the data to provide reliable information on the average returns from all universities and degrees. University comparison websites currently provide limited and misleading information on the costs and benefits of individual degrees, enthusiastically overstating the latter while carefully understating the former. As a result, they have ultimately benefited universities rather than students. Whilst these websites offer information about teaching and learning, they do not provide comparisons over time or against averages for the sector. Crucially, they also fail to show what type of jobs graduates find themselves working in, e.g. whether law graduates are working in law firms or, more likely, call centres.
At the moment, few universities provide clear information for this over a useful time period (say, five to seven years). Universities should be required to provide a clear and unambiguous breakdown of what percentage of their graduates are working in the relevant professions three years after graduation. This information should be highlighted on the university’s web pages for each degree and provided to comparison sites. If students could access accurate information about the real average returns from individual degrees and the chances of gaining a job, for example, as a solicitor, from a specific degree, this would dramatically impact on applications. If such information also allowed ranking and comparison between multiple courses and universities, it would shift the balance of power in applications towards the student.
Moreover, one would assume that the provision of accurate information would considerably reduce the demand for soft subjects where the returns were found to be minimal or even negative. It would also address the oversupply of lawyers, psychologists and social workers. Who would apply to a degree course which offered no realistic chance of a job in that profession? However it would also, possibly drastically, reduce the overall number of students applying to university – hence probably universities’ reluctance to provide this information to prospective students?
The raw data needed to produce this information is already available in the records of the Student Loans Company (SLC). The SLC has repayment data from each and every student who has taken out a loan in the last 20 years, including the course and university they attended and their salary over the period of repayment. In a 2011 report, Tim Leunig, the Chief Economist of the think tank CentreForum, articulated the full value of this:
“... there will be sufficient data for us to have a very good sense of the typical income and repayment patterns of graduates who have done different courses, at different universities. It is therefore possible for government to construct a table which records the likely loss to the government for each course at each university, with different levels of fees.”458
This data is based upon loans made by taxpayers. These loans are made to students by an organisation which is funded by the taxpayer. If the data is anonymised there is no good reason why it should not be made publicly accessible for each and every potential student, parent and taxpayer to access. This information would then be supported by similarly anonymised data from a variety of professional bodies and say, the social networking platform LinkedIn, to establish which degrees lead to professional careers and which do not. Applied correctly, this information could lead to degrees, departments and even whole institutions closing. Universities would be vociferously opposed to this data being made public for exactly that reason. Unfortunately, post expansion a large number of UK universities provide degrees which simply don’t benefit graduates, taxpayers or society as a whole. There is no good reason why this situation should be allowed to continue at the expense of either students and their families or taxpayers.
Cutting tuition fees
It’s been clear for many years that the numbers of graduates far exceed any job opportunities. Moreover, all the data indicates that this is leading to stagnation and even a decline in graduate salaries for the minority of graduates fortunate enough to even get graduate�
�level jobs. Furthermore, it’s becoming obvious to everyone, except of course government ministers, that less than half of all student loans will ever be repaid. In fact, with constantly rising tuition fees and accommodation costs, it’s likely that the level of student loan default will be well in excess of 60%. This is leading to an absurd situation whereby each year students borrow over £12 billion of which we can already estimate that at least £7 billion will have to be written off. So, if the current tuition fees system continues, millions of graduates will spend the first thirty years of their working lives struggling with debts we already know most of them will never be able to repay. This will prevent many from buying their own homes, getting married and starting families. And the financial grief these graduates will experience is quite pointless and even counter–productive. This is truly the Mathematics of the Madhouse.
The universities, naturally, are delighted with the current situation. Following the 2012 rise in tuition fees, huge amounts of money are pouring into their coffers allowing them to go on a spending spree on new buildings and other vanity projects. In fact, what we’re witnessing may be a university real–estate bubble. Moreover, no doubt vice chancellors will see their universities’ new–found wealth – what they’d probably call the “profitability” of their “multimillion–pound businesses” – as an excellent excuse for their remuneration committees to give them generous salary increases. But, if the university expansion bubble bursts, then we’re going to see a significant drop in student numbers and, as always happens during a real–estate bubble, many of the new buildings, being so enthusiastically put up by universities, will turn into ‘ghost campuses’ – great facilities but with not enough students around to fully use them.
There is therefore a strong case for stopping this lunacy. Instead of tuition fees increasing each year in line with inflation, they should be cut. Maybe they should be halved or, better still, set back at the pre–2006 £3,000–a–year level. In the short term, the government might have to chuck a couple of billion pounds the universities’ way to make up for the lost tuition fees income – the £13 billion+ foreign aid budget could easily cope with losing a couple of billion for a few years. For students, a cut in their debts from £50,000 to £60,000 down to nearer £35,000 would lead to an increase in the repayment percentage (by reducing the crushing burden of compound interest) and less damaging effects on their life chances. Moreover, a drop in universities’ income might discourage them from splurging their current cash surpluses on projects which will turn out to have been unnecessary once student numbers begin to fall.
In economics, there’s a theory called the ‘Laffer Curve’. This proposes that there’s a certain point at which increasing tax rates leads to decreased tax revenues largely because tax increases lead to changed behaviours – the higher tax rates rise, the greater are the incentives for people to avoid tax. Moreover, it also suggests that lowering tax rates can actually lead to increasing tax revenues. By ramping up tuition fees to extortionate levels, the government has moved into that part of the Laffer Curve where increases in fees will lead to reduced repayments – partly due to the pernicious effects of compound interest. Faced with mountainous debts, many students will move abroad or just give up on any attempt to repay their loans. Were the size of these debts to be reduced by introducing significantly lower tuition fees, then it’s possible (and even probable) that repayment levels would rise.
Greater choice for students
Further improvements could be made by extending the range of options for how and where study can occur. This could be driven by the Student Loans Company allowing more flexibility in the allocation of its loans. There are two obvious and immediate changes that could improve the range of choices available to students, reduce costs for taxpayers and bridge the gap between industry and academia.
1. Funding overseas study
“(UK) Undergraduates will rack up more debts studying in their own country than almost any other nation overseas, even when the cost of flights are added... only Australia, the United States and Canada were more expensive.”459 Telegraph, 2012
Funding overseas study already happens when UK undergraduates spend a year at international universities as part of a four–year degree based at a UK university.460 Unfortunately, this represents the limit to which the Student Loans Company is prepared to fund UK students to study overseas. Any UK student wishing to study overseas is obliged to fund themselves, which begs the question why?
As the fees for some international universities are much lower than in the UK, and the cost of living in many of these countries is also much lower, studying abroad could save everybody money. UK graduates studying abroad might not only develop useful language skills but also international relationships and networks with important economies, such as China, India or Brazil. The taxpayer would benefit from reduced fees, students from increased choice and UK universities from increased competition, although they might not see it that way (which is, of course, their prerogative).
For example, international students wishing to study at Peking University in China, now one of the world’s top 50 universities, face fees of around £3,800 per year, alongside much cheaper living costs than the UK.461 A Chinese website offering guidance to international students suggests that living and accommodation costs per year of academic study equate to around £3,130.462 This suggests that for £7,000 a year, a UK student could cover their tuition and accommodation costs at a top global university, learn valuable language skills and gain valuable life experience. Alternatively, they could take on much more debt to study at a UK university ranked much lower in the world to study for a degree which will offer them little, if any, graduate premium or other enrichment.
2. Recognising mature students’ experience
A major issue facing mature students before they apply to a university is the assumption that they should start studying from the same point as an 18–year–old. If, for example, a 38–year–old marketing manager, with no degree but 20 years of experience has to sit through the same Introduction to Marketing class as a school leaver, then this is clearly inefficient for the university and dispiriting for the mature and experienced student.
One way of addressing this is a process known as the Accreditation of Prior Experiential Learning (APEL). APEL allows a mature student the opportunity to sit down and discuss their work experience with an academic who will estimate how much academic credit and at what level this experience may be worth. This process has existed in its modern form for the last forty years and happens in the universities of all OECD countries in one form or another. In France, for example, it is enshrined in law. In the case of our marketing manager, this credit might make it possible for him to complete a part–time degree in two years.
Unfortunately, there are a limited number of universities in the UK that currently offer APEL. This is mostly a reflection of the fact that the government provides no funding for APEL and the process is not eligible for student loans. If this situation was changed, it could have a significant impact on UK universities’ ability to attract both mature students and customers from the business world.
Welcoming private providers
“Higher Education should be treated like any other service sector of the economy, with new competitors free to enter without first having to seek special permission from a government agency.”463 The Adam Smith Institute (2009)
One of the key arguments which have been deployed against opening the UK Higher Education system more widely to the private sector is that it will reduce standards and that quality will decline. Given the fact that public universities have utterly failed to maintain standards in learning, teaching and assessment during expansion, such an argument has become totally laughable. The current system has seen massive grade inflation, increased class sizes, reduced curricula, widespread plagiarism, systemic evidence of dumbing down, First degrees obtainable with an average score of 53% and exam
s being passed with marks of just 14%. Exactly which academic standards are being protected by the status quo?
By its very nature, Higher Education is not a market for companies desiring quick returns. Unlike UK universities, global private providers of Higher Education, such as Laureate and the Apollo Group, did not expand by providing a poor–quality service and worthless, over–priced, dumbed–down degrees to their students. The UK Higher Education system currently has one of the smallest private sectors of any developed country. Our Higher Education system would be more diverse, stronger and more competitive in the long term if it is opened up to private providers. The possibility of falling standards being driven by allowing more private universities into our Higher Education system is not a genuine worry. Rather, it is a plea from a special interest group (UK universities) for preferential treatment at the expense of their customers (students) and funders (taxpayers). Though one can hardly imagine the outrage and horror of Guardian readers were some of our worst–performing universities to be closed and then sold off to private companies.
Improving Fair Access
One of the most contentious issues within UK Higher Education is the extent to which students from state schools, particularly from disadvantaged backgrounds, gain entrance to elite universities. Much of the criticism directed at these universities has been ill–informed. This has seriously undermined the work that they undertake to widen access amongst disadvantaged students. National rows about elitism have simply reinforced inaccurate perceptions about the better universities amongst potential applicants and teachers.