Tuition Fees and the costs of HE

I’ve done some back-of-an-envelope calculations about the costs of HE, and blogged about the Browne Review of HE. Now we have the Government’s response, which in summary is to lift the cap on fees to £6,000 a year, or £9,000 if certain conditions about access are met.

Anyway, here are my previous back-of-an-envelope calculations (see the original post, including comments, for the horrific details of how I made these numbers up), with some further development.

[Data in a Google Spreadsheet, should you want to do something more meaningful with them]

The main change is to divide the numbers I came up with for a total degree cost by three, to give a (misleading) per-year cost. The total degree cost makes more sense, but nobody talks about that so I won’t either. It means that the ‘Buckingham’ and ‘Open University’ numbers are a bit odd, since students there typically take two or six years to get a degree respectively, not three. But it works as a comparator.

Remember, these are really not the correct figures, and are almost certainly wrong by a long shot. For instance, this has the cost of a home degree at a UK university at slightly less than the £7,000 Browne said was needed just to sustain investment. And the cost of a degree is highly variable – I’m not touching the unit of resource multipliers here.

We won’t know the details of how the residual state funding for universities will be doled out until the funding letter in a couple of months or so, but the strong steer is that the teaching grant will go almost entirely to Science, Technology, Engineering and Medicine type subjects – which, handily for my convenience in doing these sums – is likely to mean that lab-based subjects, which cost a lot more  to provide, will be subsidised pretty much  to the degree (sorry) that they they cost more than the basic. Which means, essentially, that UK students are going to have to shift from paying the ‘fees’ figure on the left to paying the ‘Total / 3’ figure on the right. Or more.

With all those caveats out of the way, we can see from these figures why people are reacting the way they are. The Russell Group – who are probably going to be able to get their students to pay £9,000 a year – are happy: they’ll be getting more money, since the fees income will be more than the loss of state subsidy. The Million+ group, who are probably going to struggle to get students to pay £9,000 a year, or even £6,000 – are not very happy at all.  And students – who are facing having to pay three times as much as they do now – are really very unhappy. The nascent private HE sector is likely to be cock-a-hoop – not that any of the press reports I’ve seen have quotes from them, and they’d be wise to be circumspect at this moment of triumph anyway. I said I suspected that there “will be a substantial expansion of private provision of higher education in the UK”; I am now pretty sure there will: there is huge scope to offer very cost-competitive courses in particular areas. Look at the right-hand column: a potential student is facing £6,000 to £9,000 fees at a conventional university per year, or £3,333 with BPP.  And we know there is unmet demand for student places.

Up the other end of the spectrum, there’s the Interesting Question of whether Oxbridge – or some part thereof, or some minor chunk of the University of London (e.g. Imperial, UCL or LSE) – will decide that the £9k cap and the other hassle that goes with taking Her Majesty’s Shilling is not worth the remaining pennies on offer.

(cc) terinea on Flickr

So what about the OU?

I don’t know what will happen to our fees – it’s not my department, and I’m not close to the people who’ve been sweating blood and doing real sums on actual data to work out what we have to do. And they are not in a position to give a proper answer until we get the funding details in the grant letter. The official position is, quite reasonably, “We have been modelling figures but it will take several months before we know the full reality of the new funding environment we’re operating in.”

But my back-of-an-envelope spreadsheet suggests our annualised fees might need to jump from £1,800 to £4,700, a factor of 2.6 times higher.

So I suspect that OU students will be firmly in the ‘really very unhappy’ camp.

You must bear in mind that I could be way, way off the mark here – this is rough stuff, and I may well have missed something very important. And the details of the grant settlement are likely to be hugely important for the OU in particular.

The good news for the OU, of course, is that our students will have access to loans to pay fees on the same basis as students at other universities.

The big question for us is whether our students will – given access to loans – be prepared to pay higher fees. Ceteris paribus, they probably wouldn’t, but of course all the other universities are going to be increasing their fees, and probably by a higher multiple of the current ones. This is a big issue, and the OU has set up a campaigning site, FourInTen, “to ensure that part-time students are not overlooked” in this debate.

There are details that matter crucially to us – as you can see in the OU’s official response to the Comprehensive Spending Review,  there’s the prospect of undoing the ELQ funding bar, which particularly hurts us, and if the threshold for funding is reduced from 40 credits to 30 credits, we’d be in much better shape (otherwise, we’ll be wanting to cook up a lot of 40 point courses in a tearing hurry). There’s the they-can’t-possibly-mean-that-to-apply-to-us thing about funding being linked to UCAS points, which would make a complete nonsense of the OU’s open access policy.

I know our Martin Bean, our Vice-Chancellor, is chipper about the situation in broad terms: I hope he’s right. (He’s led us well so far.) But I personally can’t bring myself to be remotely happy about a situation where students are going to have to pay so much more, even if it isn’t up front.

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