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.

This work by Doug Clow is copyright but licenced under a Creative Commons BY Licence.
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Author: dougclow

Data scientist, tutxor, project leader, researcher, analyst, teacher, developer, educational technologist, online learning expert, and manager. I particularly enjoy rapidly appraising new-to-me contexts, and mediating between highly technical specialisms and others, from ordinary users to senior management. After 20 years at the OU as an academic, I am now a self-employed consultant, building on my skills and experience in working with people, technology, data science, and artificial intelligence, in a wide range of contexts and industries.

13 thoughts on “Tuition Fees and the costs of HE”

  1. Interesting and thought provoking. IMHO it’s too early to speculate at least until we know how the remaining non-research university budget will be split.

    You briefly alluded to universities opting out of receiving the teaching grant — and mentioned UCL. Our provost Malcolm Grant is not positive on the subject. This is from last week’s newsletter about universities “going private” (a phrase I’m aware you correctly avoided).

    It is perhaps worth making some basic points. First, all universities in the UK like the LSE and UCL are already private. They are not owned by the State, nor are their employees civil servants. This is quite different from the position commonly found in continental Europe. UK universities are autonomous self-governing institutions. That is one of their strengths. However, they do not have the freedom of action of a private commercial company, for two reasons.

    First, they receive Government funding, in the form of support for teaching (still, just), and for research. That funding comes with conditions – for example, no university may presently charge a UK-EU undergraduate student a fee higher than the stipulated maximum of around £3,300 a year. When people talk of a university “going private” they usually mean foregoing this funding in return for being liberated from control over fees. Under existing rules, that would be a huge sacrifice. Students would no longer be able to postpone payment of the fee until after they graduated, and would lose entitlement to the Government-backed loan. As I mentioned 2 weeks ago, fees would have to be paid upfront and clinical and laboratory science subjects would lose supplementary State support.

    Second, universities are charities. Their resources may be used only for their charitable purposes. If there is a surplus at the end of a financial year, it may not be distributed to shareholders. It must go back into the business. It provides a fund to assist the institution through lean years, and to invest in priority areas such as equipment and facilities.

    It is not correct to assume that “going private” would convert a university into a for-profit institution. That would require a further step, which would not be possible under charity law and would require a new and separate legal structure.

  2. The problem with this Doug is that it keeps the eye on fees and the interests of universities. What the Con-Dem Government has done is to change the social position of HE and make it a market in which the student pays.

    The state will no longer off-set the cost of standard degrees i.e. all the risks and benefits of higher education are assumed to be personal and not a social or collective question. The government would like us to talk about fees (they will say that they protect the poor) and whether our instituions will survive – they mostly will for now and probably beyond the next election. I have heard nothing about the principle of this move.

    Education is not simply a private good, nor is it only a private matter. We pay taxes for public goods, police, firebrigade, army etc. Would it be reasonable in order to reduce the budget deficit to ask us to pay a private insurance for our cover? Perhaps the AA could oblige as the fourth emergency service.

    This is a similar step to what is proposed for HE. The state now only supports the ‘useful’ STEM subjects and those it might deem essential. Philosophers, historians, social scientists etc can just pay for their ‘own’ education. When an employer benefits from an educated workforce they can rest assured they will not have paid a penny for this.

    This is a strongly class driven agenda. Not in the poor versus rich sense of class but in the way it takes the state and taxes out of the equation and makes the student pay even though the benefits of education are shared. It benefits the employing class and penalises those who work for their living. To reduce state debt we are told it is OK and even progressive to land thousands of students with a mortage size personal debt when they leave HE.

    If the OU benefits from this disgraceful settlement and doesn’t oppose the outcome then it will besmirch the whole history of the institution.

    1. The principle is indeed something that’s largely overlooked, and yes, the idea that students are the only ones who benefit from HE is obviously wrong.

    2. As I’ve been pointing out elsewhere, saying “the government only pays for ‘useful research'” is highly misleading. Doug’s estimate in this article is that the tuition fees given to science subjects will just about cover the amount they cost above non science subjects to deliver as courses (lab fees, medical costs etc). It’s a big mistake to think of this as “science funded, not science not funded… lucky old science”.

      If we want to maintain the idea that student’s should choose their degree subject by their interest in that subject and their desire to pursue that degree as part of their future life then surely we must ensure the funding is at least such that the cost of doing a science degree is not more than doing an arts degree at an equivalently good university. We certainly don’t want to end up with a situation where students from a poor background are forced into a degree in geography they don’t want because they can’t afford the medical degree they would like.

      If Doug’s figures are right (and that remains to be seen) science students will be paying just as much as arts students for their own education.

      1. I think you are right Richard it is not either or in terms of science/non-science and the science subjects will also take the same hit if, as is likely, the state withdraws from funding HE teaching.

        There are games to be played however, and I have been party to some previously about what counts as science. The psychologists have a strong line on this and educational psychology has been a way of branding studies in education as a science ( a lab-based subject) and gaining higher levels of teaching grant.

        If we ignore the top band A and the base band D there are two grades of grant multiplier applied:

        B Laboratory-based subjects (science, pre-clinical stages of medicine and dentistry, engineering and technology) 1.7

        C Subjects with a studio, laboratory or fieldwork element 1.3

        As we know academics are good at games so I expect there to be a lot of this if banding of teaching grants is retained.

  3. So…
    … a young family, young kids, one of parents on £48k with graduate loan to pay off, other home parent/part time (which incurs nursery fees – this family is dislocated from family because of chasing the £48k job); trying for a mortgage on a starter home. Graduate needs to cross train to an ELQ, other partner wants to do an OU degree. Happy families?

  4. At the moment about one in four new OU undergraduates get their fees paid from a financial assistance fundbecause they are on a low income (Usually “benefits”)

    If fees rise and these people are told to take out loans then I am sure most of them will not register.

    In fact my surveys show a large proportion of fee-paying OU students are averse to loans.

    1. As a fee paying OU student I certainly would not have chosen to go into debt to study and as somebody who isn’t particularly materialistic would have been satisfied with a lower salary. Sad that the world only seems to be catering for greedy people today rather than those who want to study in order to make the world a better place. And, more to the point, one wouldn’t be able to trust the government to keep its word about repayments. The banks might have to call in all their loans next time they make a mess of things – especially now we are back in the unregulated boom and bust type of economy.

    2. How many students are, like me, hobby-students? I met a few students at a recent revision weekend and most of the group I talked to were doing OU degrees for enjoyment with no need of them for career development. One student was on to her sixth OU degree, even with some double-counting that’s an awful lot of third level courses^W modules! I can’t imagine such students taking out loans. I benefit from a staff-fee waiver but if that wasn’t to rise to fully cover the costs a new fee structure I’d almost certainly stop studying. There’s obviously a question as to whether the state and, in my case, the OU should be funding my enjoyment. But could losing these students in some areas affect the viability of some courses?

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