Annex 2: Student Finance
1. Issues related to the financial support of students
raised in evidence included:
- how financial arrangements may support or impede
- students' financial hardship,
- the relationship of financial support and non-completion
- the extent of students' paid employment during
their higher education,
- the complexity of arrangements for financial
- and the relationship between the overall level
of funding for higher education and students' finances.
The overall funding of higher education
2. The huge expansion of higher education since the
late 1980s has put considerable pressure on its public funding.
Numbers have more than doubled. Funding per student has fallen
by 37 per cent since 1989. At 1999 prices, by 1993-94 it stood
at £5,545. On current plans, by 2001 it would have been £4,628.
To exclude the fees contributions paid by undergraduate students
would have brought this figure down to £4,332. This has led
universities to call for an end to the 'efficiency gains' that
have hitherto been expected from them. Baroness Blackstone, the
Minister of State for Higher Education, told the Education Sub-committee
that these have been withdrawn for the first year (2001-02) of
the current spending review. Instead of falling by 1 per cent,
unit funding has increased by 0.5 per cent.
3. On 16 November 2000 the Secretary of State announced
increases in higher education funding for the second and third
years of the review period to 'fully fund' further expansion.
Despite this increased investment, there remains a funding gap
in the resources the CVCP has judged necessary to address problems
of human resources and the teaching infrastructure. Lack of confidence
on the part of some university leaders that public funding would
ever be adequate to sustain mass higher education provision had
already generated demands for new approaches to how universities
obtain support. These include charging so-called 'top-up fees',
even on a full cost basis, but with generous support available
from scholarships and bursaries for those unable to pay.
4. Professor Roderick Floud, representing the CVCP
(now Universities UK), told the Education Sub-committee that underpayment
of staff due to funding constraints was creating recruitment problems,
particularly in subjects where there were insufficient graduates
to meet overall needs and better pay was offered in the private
sector. The National Union of Students shared this concern, and
believed it was affecting the quality of students' experience.
Contributions from businesses, alumni and philanthropic
5. The NUS argued that business and industry should
make a greater contribution to the cost of higher education and
that the Individual Learning Accounts initiative could provide
a mechanism to allow business and industry to contribute.
The CVCP did not share their optimism. Professor Floud told the
Sub-committee that business and industry already contribute to
a considerable extent in terms of funding research activities
and supporting individual students, particularly those on parttime
courses. The CVCP would not expect industry to fund the core activities
of higher education institutions, and did not believe substantial
extra funds were available to be levered-in for the general purposes
of the higher education sector.
6. A number of institutions in the United States,
although a relatively small proportion of American universities,
receive substantial funding from alumni and contributions from
business. The CVCP suggested that one of the reasons why in the
UK this had not been the case was different tax regimes in the
One of the comparisons often made between UK and American universities
was to look at Yale or Harvard's work in promoting access to students
from disadvantaged backgrounds. The CVCP was not persuaded that
these comparisons were always valid. Professor Floud told the
Sub-committee there was some evidence that, for example, Harvard
has a significantly lower proportion of students from working
class backgrounds compared to Oxford University.
7. Members of the Education Sub-committee were impressed
by the commitment of a number of American universities to develop
a long-term relationship with their alumni, including the fund-raising
aspects of that relationship. The universities visited by Members
of the Sub-committee invested heavily in staff and other resources
to develop and maintain alumni relations. It was clear that their
success in fund-raising was the outcome of a long-term commitment
to working with alumni. There appeared to be a marked cultural
difference between the USA and the UK in the likelihood of former
students making financial donations to the universities. Universities
in the UK also have much more limited experience of developing
corporate and individual giving. Members of the Sub-committee
were not convinced that apart from a small number of institutions,
UK universities currently have the skills or resources to promote
the culture change which would enable them to raise funds for
university development sufficient to make a significant and sustainable
change to their overall funding position.
The current system of student support
8. Arrangements for students' financial support while
studying at English universities are available from two main sources:
local education authorities and the university or college. Box
2 shows the principal sources of support administered by local
education authorities, and Box 3 shows funding sources administered
by individual universities and colleges.
9. Additional sources of financial support are available
for parttime students (including fee support, loans for
course related costs, Disabled Students Allowances and help from
Access Funds); NHS Bursaries available for students on some healthcare
courses; some students certain may be eligible for social security
benefits; and extra allowances may be available if students have
dependants. Career Development Loans are available to students
who are not eligible to apply for other financial support schemes.
|Box 2: Sources of financial support administered by local education authorities|
TUITION FEE SUPPORT
For 2000-01 annual tuition fees are £1,050. Support is available, on a means-tested basis, for the cost of these fees. Grants are payable to students on the basis on parental/student income. The Government estimates that around half of students will receive grants to cover the entire cost of their tuition fees.
Loans to students are available to cover the cost of living while completing an approved course of higher education. The level of loan that students are entitled to vary with location of study, type of course, stage of course and the length of the academic year. The student and his or her family may be required to contribute up to 25 per cent of the level of the loan depending in income levels. Repayment of the loan will be triggered once income exceeds £10,000, with repayment amounting to 9 per cent of annual income above this amount collected by the Inland Revenue on behalf of the Student Loans Company. Total repayment costs are the value of the original loan, index-linked to inflation.
Supplementary grants are available for some students who require additional support depending on their circumstances. Students eligible for these grants include those with disabilities, those with dependents including lone parents, students with additional travel costs in certain circumstances and those leaving care to enter higher education.
Students' Financial Hardship
10. The NUS told the Sub-committee that there was
a mismatch between the cost of being a student and the level of
funds available to students via loans, grants and bursaries. The
Union found in their Student Hardship Survey the shortfall outside
London to be approximately £2,000 per year, with a greater
funding mismatch for students studying in London and other cities
such as Cambridge and Edinburgh. Mature students needed an additional
£1,000 pa, with those in the 31-40 age category requiring
additional support of £3,000.
Students outside London are spending 84 per cent of their loan
on rent, leaving less than £20 a week left in order to live,
eat and travel.
In the view of the NUS, the abolition of the grant and the introduction
of tuition fees, and "the confusion of the new financial
system" contributed to the reasons for students not completing
|Box 3: Sources of financial support administered by individual universities and colleges|
Access funds are normally in the form of a grant to the student from the university or college, and are available to help students who are in financial difficulty. These funds can help with living expenses and course costs including childcare, travel, accommodation, books and course equipment. Students must normally have begun their course before they can apply for these funds. The university or colleges decides which students will receive payments and how much each payment will be, depending on the student's circumstances, how many other applications have been received and the level of access funds available to be disbursed that year.
Hardship loans are available in addition to normal student loans. To be eligible, students must have already applied for their full student loan entitlement. Hardship loans are added to the total sum borrowed via the student loan, and are repaid in the same way.
11. The CVCP said it was undeniable that there was
substantial student hardship.
This had been recognised by the hardship and access funds which
universities receive from Government and disburse to students.
The CVCP did not consider that current funding of this kind were
fully adequate but contended that the scale of student hardship
should not be described as a 'crisis'. The NUS took the view that
although students no longer expected the Government to pay every
single penny of their living costs, they did expect it to make
a decent contribution.
Undergraduate completion rates
12. The CVCP noted that the non-completion rate for
UK higher education had stayed essentially stable in the last
15-18 years, and was the amongst the lowest in the world. Approximately
18 per cent of students did not complete their studies. Overall,
the CVCP concluded that the picture of students completing their
higher education was positive.
Professor Gareth Williams argued that increasing non-completion
rates pointed to a problem to which UK universities needed to
pay careful attention.
13. The CVCP told the Sub-committee that the reasons
for non-completion were complex, and included financial pressures,
academic failure and personal factors. The NUS suggested that
one of the major reasons was financial hardship.
Students undertaking paid employment
14. The NUS surveys and the experience of individual
universities show that substantial numbers of full-time students
now undertake paid work during term-time. Inevitably, it is difficult
to judge the extent to which this work is undertaken to pay for
basic necessities, or whether it is mainly for the purposes of
sustaining a particular life-style. The NUS argued that the level
of paid work undertaken puts many students under considerable
pressure, affecting, in many cases, the quality of their academic
The CVCP also said that some students were so short of money that
the amount of paid work undertaken during term time had a serious
impact on their studies.
For them, paid employment was not a matter of choice. Many students
from better-off backgrounds were also choosing to take employment.
15. In Scotland, the Cubie Committee had concluded
that many students were damaging their studies by undertaking
excessive levels of paid work.
Mr Cubie noted that although there was much concern politically
about the issue of tuition fees, there was probably as much anxiety
within the university sector and those involved in it in regard
to the living costs of students in Scotland.
The Committee had concluded that there was a need for a higher
level of funding to be available to students.
Mr Nicol Stephen MSP told the Sub-committee that the debate in
Scotland on student finance was much wider than a concern with
tuition fees. The message from students and student organisations
was that tuition fees were important, but there were many other
issues in relation to student hardship that needed to be addressed.
16. Professor Floud argued that universities were
responding to the needs of students who undertake employment.
He noted that at London Guildhall University, course provision
was being adapted to the commuting patterns of students to take
advantage of off-peak travel costs and modular course and flexible
structures were developed to allow parttime and fulltime
students to combine study with work. The teaching day at ran from
9.00am to 9.00pm, and the university was increasingly putting
on courses at different times of the week and at weekends both
for the full-time and the part-time students in order to accommodate
changing patterns of student attendance.
Concerns with the administration of student loans
17. The NUS told the Sub-committee that in the 1999-2000
academic year there were problems with the administrative system
for student loans which had an impact on student hardship. A significant
number of students did not receive their student loan payments
on time, including some who had not received their payment by
These problems were adding to the financial burden on students.
Mr Scott Rice, President of the King's College London Students'
Union, noted that in some cases students were unable to receive
access funds disbursed by universities until they paid their tuition
fees. Students who were waiting to receive a student loan payment
were often not able to pay their tuition fees and therefore were
unable to receive access funds.
18. Baroness Blackstone accepted that there had been
"one or two blips" in the administration of the student
loans system, but argued it was a huge system with very large
numbers of individuals applying for loans, which had worked "pretty
In 1999 the Education Sub-committee took oral evidence in public
about the administration of student loans.
Tuition fees and support for mature students
19. The NUS argued that, with applications to full-time
undergraduate education falling, tuition fees present the single
largest obstacle faced by students, particularly mature students.
The Union agreed with the Cubie Committee's conclusion that tuition
fees were a barrier to students from disadvantaged backgrounds
thinking of going into higher education, even though these students
were not being required to pay fees. The NUS said that this was
a problem of perception of the true costs of higher education.
20. The CVCP confirmed that their policy with regard
to tuition fees was 'unchanged'.
The CVCP had supported the Government's introduction of tuition
fees, and were engaging, at the suggestion by the Secretary of
in a reconsideration of the whole issue of funding. The CVCP believed
that a proposal for topup fees should be seen within the
overall context of the proper funding for higher education and
proper funding for students within higher education.
21. Professor Maggie Woodrow had argued in her report
for the Cubie Committee that the common assumption that mature
students are financially a disadvantaged group was unfounded.
Those most persistently under-represented come from lower socio-economic
She believed the main weaknesses in student finance were lack
of co-ordination between the different aspects of student funding,
failure to look at the system as a whole and the tendency to regard
fees, loans, access funds and grants as separate elements, instead
of from the perspective of parents and of the student from a low-income
UCAS data showed that applications from UK based students under
the age of 24 had declined marginally in 1999-2000 compared to
the previous year, but that applications from UK mature students
(over the age of 25) had declined by five per cent.
22. Baroness Blackstone acknowledged that there had
been a small fall-off in numbers of full-time mature students
entering higher education. She noted that the DfEE had some time
ago started working on a package of measures to provide additional
support for that group.
Although 85 per cent of mature students did not pay any tuition
fees, many did not appreciate this when the system was first introduced.
The Minister told the Sub-committee that the DfEE had worked hard
to get the message across that the majority of mature students
were not liable for tuition fees.
23. The Minister noted the decline in fulltime
mature students was approximately eight per cent since the funding
system was introduced. This should be seen against an increase
in parttime mature students of about five per cent. The
overall decline was only about one per cent, which the Minister
described as "a very small reduction".
The principal reasons for the reduction in mature student numbers
- a buoyant economy, particularly in the kind of
jobs that many mature students in the 21 to 30 age group want;
- a decline in the number of people in that age
- a large increase in the numbers of full-time
students in the system at a conventional age, so that the pool
of people wanting to come forward to study full time at a later
age has reduced.
139 Q. 80. Back
148 Q.124-127. Back
at Work Survey 1999. Back
and Employment Committee, 1 September 1999. The work of UCAS/Payment
of student loans. HC824. Back
p. 21, para 7.9. Back
by Secretary of State for Education and Employment at Greenwich
University on 15 February 2000. Back
CVCP has established an independent review group to consider HE
funding. See the Discussion paper from the Funding Options Review
Group, chaired by Sir William Taylor. CVCP, September 2000. Back
Student finance: accessing opportunity, section 2. Back
press release, Notes for Editors Table 3, 14 April 2000. Back