23/10/2012 08:33 BST

High Tuition Fees Deter Postgraduates From Study, Threatening Number Of Highly Skilled Workers

Higher tuition fees and lack of money are likely to put more UK graduates off continuing their studies, contributing to a shortage of highly skilled workers, a major report warns.

Universities are increasingly geared towards attracting international postgraduate students, who are likely to return home after completing their studies, it says.

The major study by the Higher Education Commission says that urgent reform of postgraduate education is needed to ensure the UK has the skills it needs for the future.

Postgraduate education is facing a "credit crisis", with rising numbers of people prevented from studying due to lack of access to finance.

The report raises concerns about lack of finance for students, saying "there is a credit crisis in postgraduate education."

"We are concerned that an increasing number of people who wish to enter postgraduate education are prevented from doing so due to lack of access to finance," it adds.

It argues that the government-supported professional and career development loan system is "uncompetitive and unattractive" and the number of loans granted has fallen.

"Fees for postgraduate taught courses are likely to increase - which will exacerbate this situation," the report says.

"Many contributors to this inquiry were concerned about changes in attitudes to debt among those beginning undergraduate study this autumn under the new fees regime.

"Universities, employers and students repeatedly expressed concern that demand for postgraduate study will fall as students become more reluctant to add to their student debt."

The impact of these factors could lead to a decline in UK postgraduates, which would have "long-term implications for British competitiveness and leave UK universities even more reliant on international students to maintain the viability of provision," the report says.

It warns that would-be postgraduate students are facing a "perfect storm" of higher fees and a reluctance by banks to lend money. At the same time, postgraduate degrees are becoming increasingly important.

The report says that recent increases in postgraduate students are almost entirely down to foreign students.

Since 1999, the numbers of international students have risen by 200%, while home and EU student numbers have only gone up by 18% in the same period.

The Commission said it is concerned that this increase "masks stagnation in the qualification and skill level" of the UK's population.

The study also notes that recent data published by the European Commission found that England and Wales, alongside Andorra and Kazakhstan, were the only countries in the European education area to have less than 10% of their own, home undergraduates enter postgraduate study within two years.

"We need an emphasis on up-skilling the UK population, ensuring that British students are able to compete in the global labour market," it says.

"High numbers of international students cannot compensate for poor take-up of postgraduate education among home domiciled students."

The report adds: "We are relying on international students to plug gaps in the skills and expertise of the British population."

But this is not an "efficient or sustainable strategy" as most foreign students return home after their studies. "This carries an economic cost - we have become the education outsourcing capital of the world."

The report says it is in the nation's interest to encourage these student to stay and work after graduation.

And it also says the UK needs to ensure that more home students go on to postgraduate study.

In many industries, availability of well-qualified postgraduates is a reason for firms to operate in the UK, and unless action is taken, British companies will be forced to recruit international workers, or move offices overseas.

A Department for Business, Innovation and Skills spokeswoman said: "We recognise that there are some concerns in the sector about postgraduate provision. We have asked the Higher Education Funding Council for England to monitor and review participation in postgraduate study as part of a longer term assessment of the impact of the funding changes."

Sir Peter Lampl, chairman of the Sutton Trust, said: "We must make the most of all our talents, and that is no less important in postgraduate studies which are now dominated by overseas students.

"The commission's proposal for a targeted, state-backed loan scheme should be pursued alongside other measures to support non-privileged postgraduate students.

"It is vital that our brightest graduates are not priced out of postgraduate study. This is why the Sutton Trust has commissioned a new study on social mobility, which includes looking at access to postgraduate courses."