As most readers will be aware, this year England moved to a new system for funding undergraduate teaching. The new system allows an increase in tuition fees to a maximum of £9,000 per year and provides funding to students via loans which will be repaid above a certain salary threshold.
The system has its flaws and has led to various negative impacts that could have been predicted. However, for the foreseeable future it is here to stay, and everyone working in education needs to make sure it works - or else see a generation miss out on a university education.
As has been well-documented, the large increase in fees and the associated debt has had a significant impact on admissions. In 2012, we saw 50,000 fewer students entering university and most institutions have reported shortfalls in numbers.
This has led to wide ranging criticism of the fees strategy and to calls for a range of short-term fixes to mitigate their impact - not least most recently from the Universities Minister, David Willetts. But instead of knee-jerk responses, what we need now is a well thought-out and considered approach to how we tackle these problems - or risk undermining the international reputation of one of our leading exports.
First we need to admit that we do not know if the increase in fees will reduce costs to the Treasury. This was always dependent on how many students actually pay back the loan - which in turn depends on their future income.
The government estimates the true costs of the loans using the niftily titled Resource Accounting and Budgeting (RAB) cost. The more optimistic estimates indicate a RAB charge of 30% whereas the Institute of Fiscal Studies puts it closer to 33-37%. The difference between a RAB cost of 30 and 37% is around £0.68 billion per year. This, combined with the fact that the average fee across the sector came in higher than Government was expecting, could largely wipe out the £1.3bn predicted savings, making it even more difficult to find the necessary funds to reverse the current position.
But to remain internationally competitive universities will need the income generated by fees of £8,000-9,000. Short of a pot of gold at the end of the rainbow, we need to work with the environment we now have. Fees and loans are unlikely to be revoked.
Second, the debate needs to move away from what percentage of people should enter higher education and instead focus on making sure that it's accessible to groups from across society. Nobody disputes that higher education can be life changing and is a major factor in social mobility.
We need to recognize that fees have an impact on individuals and disproportionately on certain groups: for example early data indicates a clear drop in white working class males applying for university. University is not for everyone, but those who are appropriately qualified and wish to go should not be prohibited by cost.
The current loan system is progressive in the sense that there is no upfront cost to students. But the government has provided a weak communication strategy around this. There is a stronger role for government to play in communicating the importance of higher education, how this fits with a knowledge-based economy and how higher education can meet the needs of UK plc - both now and in the future. Furthermore they have to work with universities to explain the loan system and overcome barriers to any groups of potential students that have been impacted.
Finally, universities need to ensure they clearly champion the progressive nature of the current loan arrangement. There is clearly uncertainty about the cost of the system and it is natural for the Government to keep its options open on how to balance the books in the future.
If costs rise the government could further reduce the number of places available or it could act to reduce the loan subsidy by altering the terms of the loans - for example the repayment threshold could be reduced or the interest rate increased. Indeed it is of note that all students accepting a loan agree to 'repay the loan in line with regulations that apply at the time the repayments are due'.
It is therefore important that universities act collectively to ensure they clearly articulate to Government the importance of the loan system in supporting access to higher education. Any poorly considered changes to the repayment system could have a hugely damaging impact on participation rates.
It may not be the perfect system, but it's one that we have to work with and one that all of us working in education, from government to universities, schools and colleges, have to make work if we do not wish to destroy the aspirations of a generation.
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