Talk to most people with a passing interest in university funding and they’ll tell you two things: tuition fees are going up, and government expenditure is coming down. The former is bad news for students, while the latter is ominous for universities. Basically, higher education is in trouble.
This is certainly the easy story to tell: the furious students protesting outside Parliament; the university heads desperately trying to save their once-glorious institutions; everyone angry at the government. But is it fair?
Let’s start with government spending on higher education. HEFCE – the funding body for English universities – is allocated money over the financial year, but it allocates money to universities over academic years. That’s why the recent headlines about HEFCE allocating £200 million less for teaching next year don’t match with what HEFCE was allocated; which only had about £50 million less for teaching.
Back in the financial year 2000/01, HEFCE received just under £5.2 billion to allocate. In 2005/06, the year before the current top-up fees were introduced, it was just under £6.2 billion. Next year it will be just under £7.3 billion.
That’s quite a hefty increase, so what about these terrible cuts? Well, altogether, HEFCE will have £518 million less to dish out over the next academic year than it did this year, and there’ll be £51 million less for teaching. But it’s not really a £518 million cut.
You see, this year HEFCE had £250 million in money for buildings that had been planned for next year brought forward. So this year’s grant was inflated by £250 million, and next year’s has been decreased by the same amount. Take that into account, and the difference is only £18 million. That’s not so shocking.
Yes, the money for teaching is going down by £51 million (although it’s still about £50 million more than two years ago), and there’s not much money for new buildings. The government’s also asked for £600 million in ‘efficiency savings’ by 2012/13. But next year’s grant is still the second-highest ever. And when you consider that the £1 billion increase in HEFCE’s budget between 2005/06 and next year didn’t include tuition fee income, you start to wonder what all the fuss is about.
Ah yes, tuition fees. According to Universities UK, they give about £1.2 billion a year in extra funding compared to 2005/06. Not bad, even with the cuts, and Lord Browne’s review is currently considering whether to raise them from their current level of £3,225.
Not that the NUS is having any of that. They’ve been shamelessly, irresponsibly scaremongering about ‘record levels of student debt’, terrifying any new students who happen to come across their rantings. They’re right, of course – this year’s graduates will have racked up more in student loans than any before. But they’re missing a vital part of the story.
Student debt is not like credit card debt. You don’t have to pay it off no matter what. If you earn under £15,000 a year you don’t pay anything, and if you earn over that it’s only 9% of your income a year (in contrast, National Insurance contributions are 11%). I’d certainly like the repayment rate to be a bit more progressive – those earning less pay back a lower proportion of their earnings) – but it’s really not bad at all.
As an alternative, the NUS is proposing a graduate tax. This, they reckon, would fund universities without any need for government spending, but there are a couple of problems with it. Firstly, students who go to university and enter highly-paid jobs would end up paying for their education several times over, while universities would get nothing for educating someone who gets a degree then becomes a housewife/husband. That doesn’t really seem fair. And if the money universities got was dependent on how well their graduates were paid they might be tempted to cut courses that don’t produce highly-paid graduates, whereas at the moment there’s no reason for them to do this.
If the tuition fee cap is raised, it won’t mean students will be crippled by debt. The main argument against raising them is that this could lead to genuinely variable fees, but as long as in practice all the universities are charging the same there’s not really a problem. If different institutions started charging different amounts there’d be an incentive for students from poorer backgrounds to go to cheaper universities, and that’d risk undoing a lot of the good work that’s so far been done on widening access.
Of course, universities could do with a little more money, and it’d be nice if students didn’t need to take out loans to finance their education. But the spending cuts announced are not going to cripple our higher education institutions, and students aren’t going to suddenly be deprived of their education. So maybe everyone should just calm down.
