NUS 'blueprint' on HE funding

10 June 2009

Director General of the Russell Group, Dr Wendy Piatt, said:

“A deep recession is not the time to be introducing a complicated new ‘tax’. The most pressing need for universities is to maintain their income in order to maintain standards of teaching and research. And in the current climate it would surely be the wrong option for a Government to sacrifice billions of pounds in student loans repayments for the sake of savings in 20 years time.

“However, this is a serious contribution to the debate about solving the problem of the under-funding of higher education which we welcome. It is also good to see the NUS engaging in a measured discussion about graduate payments, although they have effectively renamed ‘student debt’ as ‘graduate contributions’. Indeed, graduates currently make a contribution rather than pay off a debt as there is no real rate of interest on their loan, they are only required to pay back if they earn above 15,000 and even then they pay a fraction of their salary. In fact the current system includes the best features of a graduate tax while avoiding the downsides. The state, employers and graduates benefit hugely from research-intensive universities, but at the moment the taxpayer still foots the lion's share of the bill.

“We will need to hear more details about the NUS’ proposals but, in its current form, we would have a number of concerns.

“For example, it would take a number of years before any significant increase in investment would reach universities. It is clear that in order for Russell Group universities to stay internationally competitive, provide a first-rate teaching experience and offer generous support to disadvantaged students, we will need access to increased funding.

“It would break the vital link between a student’s fees and the institution they attend, which helps ensure that the student learning experience continues to improve.

“Finally, although the NUS’ proposed system of repayments has similarities to the current fee and loan structure, potential students would have no way of knowing how much their studies will cost in total. For many people repayments would be higher and graduates would still have to pay off student loans for living costs on top of payments to the proposed People’s Trust.

“The NUS continues to cite debt aversion as a central argument against fees, but this is simply not borne out by the evidence. Academic attainment before the age of 18 is the key factor in whether a student will go on to higher education, not financial considerations. The last thing we would want is for a lack of transparency in student contributions to deter potential students from applying to university. This is why we need to continue to build on the years of work providing effective information and guidance about the current system to students and parents.”

Notes to editors

1. Recent HEFCE research showed that universities need an additional 15 -20% funding for current teaching levels to be sustained.  It concluded that without further investment the ‘quality of the student experience and the reputation and contribution of English higher education will suffer’. The sustainability of learning and teaching in English higher education’ A report prepared for the Financial Sustainability Strategy Group by JM Consulting, December 2008
2. Under the current system of deferred fees and loans, students pay no up-front fees; grants and bursaries are given to students from poor backgrounds, and there is no real interest rate on loans. Repayments are only taken from earnings over £15,000 per year and all debt is written off after 25 years. Tax-payers pay a relatively high subsidy to provide interest-free loans for all students no matter what they or their parents earn.
3. Government research has found that, once level of attainment is controlled, there is little difference in entry to Higher Education for students from low and high socio-economic backgrounds (Fig 2.15, Office of National Statistics (2004). “Focus on Social Inequalities: Education, Training and Skills”. London: TSO http://www.statistics.gov.uk/downloads/theme_compendia/fosi2004/SocialInequalities_full.pdf

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