You might not have had the time to wade through last week’s 200-page Augar Review on higher education. Fortunately, David Midgley, emeritus professor of German literature and intellectual history at the University of Cambridge, has written an essential  guide to the main points

 

It was clear what made the headlines when the Augar report was published on 30 May. The proposal to cap university tuition fees at £7,500 a year had been widely anticipated. The press release issued by the Prime Minister’s office on the eve of the launch highlighted the reintroduction of means-tested maintenance grants and the need to improve the UK’s record in technical and vocational training. On the other side of the picture, it was the proposed reorganisation of student loan repayments, meaning less well-paid graduates would be paying them off well into their sixties, that made front-page news in The Times, while Bill Rammell’s comment that to present an extension of the loan repayment period as making the system more affordable to disadvantaged students was “a complete con” provided the main focus for Radio 4 coverage.

There was speculation, of course, on whether any of the proposals would be acceptable to the Treasury or find favour with Theresa May’s successor. But regardless of whether its proposals are ever implemented, there are several aspects of the 200-page report of the panel chaired by Philip Augar worth noting. It presents clear views on how both higher and further education should be funded; it is well written; and the systematic referencing it provides will make it a useful resource for anyone who wishes to check, test and analyse the case it makes for specific changes. So here is a brief digest of points that will be worth keeping in mind.

 

Promotion of further education

Three of the eight chapters in the report are dedicated to the subjects of skills, apprenticeships and further education (FE). The report makes clear that, in the realm of post-18 education, FE has been the prime victim of financial cuts, policy churn, and the insistence on market solutions. A particular concern is the “persistent skills gap at technician level” (p. 33), and it is argued that aspects of the current funding arrangements “drive providers away from higher technical provision” (Levels 4 and 5) and excessively favour the 3-year degree model (Level 6). The three recommendations that address this problem area (p. 39) are:

  • A lifetime “loan allowance” to enable learners to build up to a qualification over an extended period
  • The abolition of certain restrictions concerning the equivalence and intensity of courses
  • Giving the student more flexibility by allowing funding to be used for one module at a time, without having to sign up for a full qualification

The report also makes far-reaching recommendations for restructuring and rationalising the FE college network (pp. 131-38), giving priority to what it calls “the most economically valuable” courses, restoring parity of funding between 18-year-olds and 16-17-year-olds, expanding the FE workforce, establishing a more flexible funding regime for FE colleges, and providing them with “a dedicated capital investment” that would possibly include the diversion of capital grant from higher to further education.

 

Maintenance grants

In response to clear evidence that the student loans system is not doing enough to overcome the access gap between the disadvantaged and the more affluent, the report proposes that means-tested maintenance grants should be reinstated and made available for those studying at Levels 4 and 5 as well as 6. It quotes a number of parliamentary committees, as well as the Higher Education Policy Institute (HEPI) and the Intergenerational Foundation, that have argued for this.

The minimum level of grant recommended for “those with the maximum entitlement” (p. 191f) is £3,000, and the rationale for this figure is explained at some length. It is estimated that, if the panel’s recommendations in this area are implemented in full, the effect would be to reduce the maximum debt for a disadvantaged student on graduation from a three-year degree “from approximately £60,000 to approximately £45,000” (p. 192). The report also reassures taxpayers that the impact of this recommendation on their contribution to the cost of post-18 education is likely to be relatively small, since the grants would be offset by the reduction that would be made in the need to cover “foregone loan repayments from students from low-income households” (p. 192).

The panel would also like to see bursary schemes that currently apply at Level 3 and below extended to adult learners.

 

Student loans

The recommendation to cap university tuition fees at £7,500 with effect from 2021-22 is part of a small bundle of measures aimed at re-balancing the contributions to the overall cost of higher education made by graduates on the one hand and the state on the other. That aim is neatly illustrated in a seductively simple graph on p. 179: it shows 50% of the cost coming from graduate repayments and 50% from the state, with the latter portion equally divided between an increased teaching grant for high-cost courses and the writing-off of repayments. What could be fairer than that?

The means of achieving such a tidy balance is more complex and potentially more contentious. The panel clearly saw one of its tasks as reducing the proportion of repayments that have to be written off: under the current system 70% of borrowers are not expected to clear their loans (plus interest) over a 30-year period, and the lowest-earning 30% repay less than 10% of their accumulated debt (p. 169). The proposed changes would not apply retrospectively, but they would reduce the repayment threshold to £23,000 (at current rates), adjust the thresholds for interest charges accordingly, and reduce the portion of borrowers’ lifetime earnings that is currently ineligible for repayments (and therefore has to be covered out of taxation) by extending the repayment period to 40 years. The justification offered for this latter move is that it reflects “the financial benefits that accrue” to graduates “over their lifetime” (p. 171). So there are no discernible concessions here to the notion that higher education might actually be to the general benefit of society, even if lip service is paid to that notion elsewhere (p. 87).

The panel decided not to recommend any change to the rate of real interest (i.e. above the rate of inflation) charged on student loans, and not to comment on the recently introduced loan schemes for postgraduate study, which incur a repayment charge of 6% of earnings on top of the 9% repayment rate on undergraduate loans (p. 165). But in addition to the £7,500 cap on tuition fees and a cosmetic ploy of renaming student loans as a “student contribution” (p. 176), they propose trying to make the loan system more palatable in two ways:

  • By no longer adding interest above the rate of inflation to the loan while students are still studying (p. 172f)
  • By setting a lifetime cap on repayments at 1.2 times the initial loan, which would have the effect of limiting the total repayment of all borrowers to what the highest earners have been paying under the present system (p. 175)

 

Mitigation of market forces

Of the eight principles set out at the beginning of the report (p. 8), principle 7 states that market competition on its own “cannot deliver a full spectrum of social, economic and cultural benefits” and that its outcome is likely to be haphazard without “a steer from government”. In particular, the report rejects both the notion of charging different fees for different subjects and the notion of doing so on the basis of judgements about the relative quality of courses, arguing that the effect would be to create “spirals of improvement or decline” within the system (p. 104).

Noting the concern that the near-universal adoption of £9,000 course fees by universities has led to an exorbitant rise in income for subjects that are not that expensive to teach (p. 70), the report observes that the behaviour of universities in this respect was “rational […] in a market where price is taken as a signal of quality” (p. 78). It acknowledges other kinds of behaviour that might equally be seen as dysfunctional consequences of the move to a market system in 2012, including high levels of spending on marketing, grade inflation, lower entry requirements and the use of “conditional unconditional” offers (p. 78f). Foundation courses are treated with similar suspicion because they are seen as creating four-year courses to attract students who do not meet entry requirements, and therefore do not offer “value for money” (p. 103). The report also notes the strains on the finances of some institutions caused by their commitment to debt-financed expansion (p. 69).

The section on market competition concludes indeed with the statement: “Market competition exists but not on the terms intended” (p. 80). But the report does not go so far as to suggest that, as others have concluded, these “rational” consequences of a market system are evidence that the market provides the wrong kind of competitive model for higher education.

 

Last but not least…

Those who share the aims of CDBU might also like to note the following points, explicitly acknowledged in the Augar report:

  • Between them, universities are spending over £1bn a year on measures to improve the access of disadvantaged students to higher education, but there is a need to clarify the statistical basis on which disadvantaged students are identified (pp. 76f and 85).
  • The metrics by which the success of university courses is assessed in the Teaching Excellence and Student Outcomes Framework (TEF) are considered by the Royal Statistical Society to be profoundly unreliable (p. 75).
  • In particular, the level of earnings achieved by graduates is known to be closely related to their level of attainment before they started at university (pp. 87 and 192).
  • Under the current fee/loan system, the spending of institutions on teaching has turned out to be low by comparison with that on infrastructure and central provision (p. 72f).
  • The National Student Survey (NSS) nevertheless continues to register “high levels of satisfaction” overall with the courses students are getting (p. 86).