House of Commons - Education and Skills

Select Committee on Education and Skills Minutes of Evidence

6. Memorandum submitted by the National Union of Students (NUS)

INTRODUCTION

The National Union of Students (NUS) represents the interests of all students in post-16 education. This includes addressing the needs of students in full and part-time further and higher education (HE) and ensuring that the needs of a diverse range of students are met—showing sensitivity to their age, socio-economic background, ethnicity, disabilities, stages of educational and skills development and desired outcomes.

In the White Paper, the Department for Education and Skills (DfES) states that success in achieving access to HE depends on:

— building aspirations and attainment throughout education

— HE outreach, pastoral and teaching support

We also welcome some of the principles outlined by the Government such as

— an end to up-front tuition fees

— the introduction of a means-tested maintenance grant

— maintaining the current interest rate on the student loan.

However, NUS has a number of concerns within the detail of the White Paper and we have identified a number of potential barriers to accessing HE study that have been created by the proposals.

In addition, after consultation with membership, NUS has set its own policy goals for assessing a fair and effective system of student funding where

— access to education should be based on ability to learn not ability to pay

— policies should support the Government's widening participation targets

— there should be contributions to funding the HE sector from the state, business and individuals who have benefited

— there should be no up-front contribution to funding HE from students or their families

— all funding generated must be ploughed back into funding student finance in HE.

This response is based on the content of the White Paper we conclude with our own policy and recommendations to amend current proposals, to enable a fairer system of student support that will facilitate the Government's own access agenda.

We would also like the Committee to know that we have commissioned research conducted by the University of Brighton, which includes looking at responses to the Government's proposals from 14 and 15 year olds and their parents. This research will be made available to the Committee once completed.

1. INDEPENDENCE AT 18

NUS supports full recognition of independence at 18 for students, including:

— Finite graduate contributions to tuition fees, to be paid when a graduate has financially benefited from the HE course—ie at above £25,000.

— Meeting living costs through a student loan completely means-tested on the student's own income, in recognition that this is a personal debt and to recognise full independence at 18.

— Reviewing the period of estrangement, so that students who have been estranged from their parents / carers for less than two years may be assessed as independent.

Therefore, NUS welcomes the Government's proposals to abolish up-front payments of tuition fees, in partial recognition of independence from 18 years old onwards. We also welcome the introduction of a means-tested grant which recognises that low income families are less able to support students financially.

However, NUS believes that the White Paper has only partially addressed the issue of independence at 18 with its proposals; messages about independence are actually confusing in the paper eg

Although fees are now firmly the responsibility of the graduate, the student loan will still be means tested on the family income.

This does not acknowledge that the loan is actually a personal debt for the student, not a family commitment. In fact, keeping the family means test on the loan maintains the problem of parental or spousal non co-operation. This risk is further increased by means testing step-parents who may have multiple financial commitments.

NUS recommends that the loan is only means tested on the student's own income to clearly establish independence at 18.

However, NUS does support the Government to keep the means test on family income for the maintenance grant. Research shows that students from less well-off backgrounds are more likely to take paid work, and to work longer hours than students from better off families[3] because students' families are unable to help them financially. In addition, 41% of students from higher social classes were much more likely to obtain money from their parents as an alternative to term-time work compared to just 15% from routine and manual classes. [4]

Thus the maintenance grant must be given as a supplement to the loan, as a replacement for family support.

Addressing Estrangement

Under current guidelines, a prospective student would need to have been estranged from their parents for two or more years to be assessed as independent. Prospective students who have been estranged from their parents/ guardians for under two years do not receive any assistance. They are either forced to rely on their estranged parents for financial support, or must try to meet the costs of living and studying from their own resources. This is a serious flaw in policy. Lack of contact with family members is a serious and traumatic event, regardless of whether estrangement is for a short or long period. They should not be further penalised or prevented from accessing HE through student funding policy.

Further to this, those who have been estranged from their parent(s) for two years or more can have problems trying to prove it under current guidelines. Unhelpful guidance to Local Education Authorities (LEAs), such as asking for confirmation from the parent(s), leads many LEAs to find this to be one of the more difficult parts of the means-testing process. This also leads to inconsistent treatment across the country.

NUS believes legislation and accompanying guidance related to estrangement need to be seriously reviewed.

If the Government is to maintain some form of means test based on family income, the issues of estrangement and parental/spousal non co-operation with the means test must be addressed.

NUS would like to see a review of the required period of "estrangement", to enable students estranged for less than two years to be assessed for any support on their own income; and a review of legislation and accompanying guidance related to estrangement.

2. TUITION FEES

NUS supports the implementation of the Cubie system of graduate contributions, namely

— a finite amount, regardless of course or institution at a level no more than students currently pay, to be paid back once a graduate has financially benefited from their degree ie earning £25,000 and over;

— funding raised must be ring-fenced and reinvested in student support

— graduates of HE qualifications below degree level, for example foundation degrees, HNC/Ds should be exempt from payment, unless they top up to a bachelor's degree.

NUS strongly opposes any of the following options for student contributions:

— the current government scheme ie means-tested, flat-rate, government-capped up-front tuition fees, based on family income—as currently implemented in England and Wales;

— government-capped "top-up fees" ie increases to the current capped flat rate, government-capped tuition fee, either up-front or after graduation;

— government-capped differentiated fees ie differentiating government-capped tuition fees either by institution or course, paid up-front or after graduation. For example, as operates as part of the current Australian Higher Education Contribution Scheme (HECS) for full-time home undergraduate students;

— deregulation of tuition fees ie allowing institutions to charge what they want, in accordance with either what they judge to be "publicly acceptable" or "market driven", paid either up-front or after graduation, as operates under the American system of private institutions;

— graduate tax ie an on-going additional payment on income tax or National Insurance paid by all graduates, either once graduated or on an income-contingent basis. For example, an additional 1-2p on income tax for all graduates or once their earnings reach a certain level;

— increased interest rate on student loans—for example increases to the government rate of borrowing, or higher. This may be considered by the Government as a way of increasing revenue from graduates. NUS believes that this would simply increase student debt, present a further barrier to participation from debt-averse groups and detrimentally effect the economic behaviour of future graduate generations.

Full-time undergraduate students

NUS welcomes the Government's proposals to abolish tuition fees paid up-front for full-time undergraduate students, as we believe they are a deterrent to access. NUS also supports the move to contributions made payable after graduation, as it helps to overcome parental non co-operation with the means-test system and non-payment of fees—a severe and unsolved problem created by the current flawed means-testing system.

However, NUS has a number of concerns about the proposed system of replacing these, namely:

— Differentiating fees

— Increasing fees to a £3,000 cap

— The lack of government means-tested support to cover the whole top-up fee of £1,900

— The impact that the proposed system may have on student choice, diversity, indebtedness and hardship.

— Fees should be payable once a graduate has financially benefited.

Freedom of choice—access by ability

NUS believes that allowing institutions to charge different fees for different courses and enabling them to charge up to £3,000 per year will create barriers to access.

Differentiated fees will restrict an individual's freedom to choose the institution and degree they want to do. This will mean that prospective students will be forced to make choices, not just based on course quality and suitability to their aptitudes, but on whether they can afford it. Secondly, with fees tripling, prospective students will have to pay even closer attention to living costs and how much debt they are prepared to take on. Consequently, it is likely to affect where they can live and the likelihood is that more students will have to stay at home to study.

Evidence from America and Australia backs this:

NUS is further concerned with differentiated tuition fees, as it is more likely that market forces, rather than quality of provision, will drive fee prices. Therefore, it is likely that price will become a proxy for quality. For prospective students and for employers, it will be quicker and more convenient to "read" the quality of the course by its cost. This will create a challenge for the role of student information and distort the drive for transparency. If differentiated fees are given the red light, there will be much work to do in preventing these distortions in reading price for quality. There must be clear responsibilities in terms of information and transparency given to institutions, eg on what will be delivered, what is included in the costs and what is extra, what the student can expect in terms of academic and pastoral support, and clear systems of redress.

NUS is also concerned that enabling institutions to charge different fees will divide the HE sector into elite, research intensive institutions that charge the full £3,000 while other institutions are forced to charge less in order to fit in as many students as possible to boost their public funding. Again, this will force prospective students to choose their degree on what they can afford, rather than where they want to study it. It may also create huge dilemmas for families saving for their children to go to university. In America, where price is a crucial factor in choosing HE courses, the assumption is that cheaper equals lower standard. American families are having to save for higher cost institutions as a proxy for quality and rate of return. This goes against UK principles of equal access and leads to a divisive system.

NUS would urge the Government to reconsider its proposals. If students are to pay tuition fees, NUS recommends that fees are kept at a flat rate across institutions and across courses so that access is genuinely based on the ability to learn, not the ability to pay, so meeting the Government's own policy tests.

The top-up fee deterrent will be exacerbated by the Government's own policy gap. As the Government do not propose to change the level of the current means-tested grant for tuition fees (currently at £1,100), there will be no government support offered to cover the entire potential top-up fee of £1,900.

Students will, it is presumed, have three options to pay the additional fees:

— they may use an additional student loan, thus potentially increasing their student loan debt by up to £5,700 over a three year degree; or

— they may use part or all of any maintenance grant to pay the fee, thus defeating the purpose of providing extra grant-based support for maintenance; or

— they may depend on their chosen institution to provide scholarship-based support. However, there is little evidence to suggest that institutions will have the funds to provide these.

NUS believes that all these methods of paying the extra top-up fee are deterrents to access, especially for debt averse and low income households - the very groups the Government is trying to attract into HE.

NUS recommends that if tuition fees of up to £3,000 are to be introduced, the Government must also provide means-tested, grant-based student support to meet these fees. Without this, the Government will not meet its own access policy goal of a fair system of student support.

Increase in graduate debt

The Education Secretary Charles Clarke estimated that students who attend universities that charge the full top-up fees will graduate with debts of £21,000[7]. NUS estimates the burden of debt to be potentially higher than this, taking into account commercial sector debt that is also accumulated by students and rising costs of living. Therefore despite student debt being the biggest issue on the doorstep at the last election, and the Prime Minister's assertion that he did not want to put graduates even further into debt, [8]the White Paper proposals will make the situation considerably worse.

Power to regulate tuition fees

NUS is concerned that there are no details in the White Paper on how the Government proposes to regulate how institutions may vary fees. For example, will institutions have the ability to vary fees within and across academic years, or vary fees in the lead up to an academic year as part of a marketing exercise or charge students different amounts based on their financial background?

These issues will impact on how and when prospective students are able to choose the right course and institution for them. If institutions have no regulation of when and how they can vary their fees, students accepting places on courses earlier in a preceding year, may be charged more than those entering through clearing. If such a trend emerges, the university application process may become very complex for both the prospective student and institutions.

With no regulation of charging within and across academic years, students will not be able to financially plan for their education with confidence and this will be an additional barrier to access for lower income students.

NUS believes that differential fees could also lead to the decline of courses that do not necessarily attract a "high graduate premium", such as the humanities, and to the decline of institutions that were not considered as providing an advantageous "springboard" for earnings. [9]

Furthermore, rather than encouraging diversity amongst the student population, as explained above, NUS believes that differential fees will inhibit access.

NUS is strongly opposed to top-up fees. However if top-up fees are to be implemented regardless, the Government must legislate to ensure institutions cannot vary fees within a year or in the lead up to an academic year. Clear sanctions for charging above the government capped rate must also be covered within legislation, as well as measures to prevent the charging of additional course costs, which can have a significant impact on the overall cost of study, for example library charges and computer facilities.

Part-time undergraduate, postgraduate and international students

There is no mention of fee structures for part-time, postgraduate or international student fees in the White Paper. These are currently all deregulated, but must form part of the Government's strategy to increase and broaden participation in HE and to establish UK institutions as world class.

Whilst NUS supports the Government's proposals to waive part-time fees up to a capped amount for low income students, there is no evidence to suggest that the Government's proposals will encourage access. We believe there is a lack of research on the diversity of the part-time population, course provision and charging and the financial needs of potential students within this area and this needs to be remedied as soon as possible.

NUS recommends the monitoring of institutional fee charging, particularly in the light of the Government's proposals to make fee waivers available to low income students up to an annual cap and that research is undertaken on the diversity and needs of the part-time population.

Facilitating lifelong learning—statutory fee support for postgraduate students

NUS welcomes the Government's extra funding for postgraduate Research Council scholarships and the Government's continued recognition of the importance of statutory provision for postgraduate Initial Teacher Training (ITT) students. This is crucial in helping to create future generations of key workers and innovative business and research communities. However, outside of these welcomed government initiatives, there are currently few means of government support for postgraduate courses.

The DfES should work with institutions, NUS and the National Postgraduate Committee (NPC) to provide guidance on regulating tuition fees for postgraduate students.

International Student Fees

An important part of HE institutional income is generated from tuition fees charged to international students on a market-led basis. NUS is concerned that there is no national agreement to monitor market-led tuition fees, to ensure that rates are not increasing to levels that make some courses or institutions inaccessible. NUS would urge the Government to obtain data on international student fee rates over the past three years within UK institutions, and that the government closely monitors fee rates in future years.

Fee payments for key workers

NUS welcomes Government initiatives to repay fees for key workers in the public and voluntary sector such as the pilot scheme for teachers in shortage subjects. NUS would urge the Government to review the need for fee repayment schemes in other public sector and voluntary organisations.

3. MAINTENANCE SUPPORT

Grants

NUS welcomes the Government's proposal to introduce a means-tested maintenance grant for students from low-income families. This recognises that loan-based support presents a barrier to access to groups who are debt averse. It also acknowledges that current government support does not meet the real costs of study. However, NUS has a number of concerns about the proposed level of grant and the means-testing thresholds.

Level of grant

NUS is concerned that the proposed level of the grant (maximum of £1,000 per year or £19.23 per week) is too low to overcome debt aversion amongst those groups for whom this is a barrier[10]. Research shows that reluctance to take on huge debts is a prominent factor determining access to higher education, particularly amongst those from poorer backgrounds. For example, the Universities UK (UUK) Student Debt Project shows that the groups the Government is trying to attract into HE are likely to be the most debt averse and the most concerned about the costs of HE (ie low-income groups and lone parents)[11]. In this research, 84% of sixth formers and college students believed student debt deterred entry into HE and 88% of those questioned from the lower income groups believed that more people would go to university if grants were available. [12]

Thus, research would support the government's principle of grant-based funding. However, £1,000 per year will not impact on debt levels exceeding £21,000 after three years.

Equally, the proposed level of grant is too low to address hardship, as it does not top up government student support to a level high enough to live on for a year. Research shows that low-income students are less likely to have "safety net" funding from their family which prevents debt levels becoming a concern. There is also evidence that shows debt levels are highest for under-represented groups such as in the UNITE Student Living Report 2003. This research found that 45% of students from working class backgrounds (C2,D and E) were "seriously worried about their debts".[13] The UNITE Student Living Survey showed that students from socio-economic backgrounds C2, D and E predicted that they will owe £9,376 by the end of their studies—15% higher than the average estimate and 22.5% higher than peers from the same socio-economic groups in the previous year's study. [14]

NUS would like the Government to make a grant available to students to meet half the average living and study costs per year[15] that is means-tested on the student's family income.

NUS is disappointed that the Government has missed the opportunity to simplify student support systems by integrating the maintenance grant thresholds and levels of support with either those used within the EMAs[16] in further education (FE) or those used within the existing HE means-test system for grant for fees[17].

Student loan

NUS welcomes the government proposals to maintain the current interest rate on student loans. Although the Education and Skills Select Committee has explored in depth what is seen as a £800 million per year subsidy on student loans, NUS does not support raising interest rates on loans, because

— those who are the poorest graduates or those who take career breaks for raising children, for example, pay the most in interest and would be subsidising the system;

— higher interest rates would add to graduate debt, thus creating a bigger barrier to accessing HE for debt averse groups;

— higher interest rates would prohibit take up by certain groups, such as Muslim students.

NUS would like to see students loans set at half the cost of living and studying, completely means-tested on the student's own income; current interest rate on student loans being maintained; loans being extended to postgraduate students undertaking taught and research programmes; consideration to be given to treatment of step-parents' income; a review of the parental and spousal means-testing system, to take more sensitive account of household outgoings and a review of the assessment of income for the purpose of repayment of student loans, to take account of essential outgoings.

(a) Raising the repayment threshold for repaying loans

NUS welcomes the Government's proposal to increase the current income threshold for repaying student loans. The current level is too low—a student has not financially benefited from their HE at £10,000 and NUS casework has shown that this low income level for repayments even forces some benefit claimants to contribute part of their social security funding to the Student Loans Company. However, the proposed £15,000 repayment threshold is still too low—far below even average graduate earnings (currently £17,722)[18].

NUS would like to see the Cubie principle being implemented, ie repaying loans when a graduate has clearly financially benefited from their degree with thresholds at £25,000 income per year to address the risk of investing in HE.

(b) Reviewing the level of support offered through student loans

NUS welcomes the Government's proposals to review the level of student loan offered in the light of the findings of the next DfES Student Income and Expenditure Survey (SIES). NUS firmly believes that the current level of government support is insufficient to meet the costs of study and we estimate that funding for student support on average falls short of meeting living and study costs by the following amounts for 2002-03:

Costs (without
fees, 39 weeks) Govt Funding
(39 weeks) Shortfall

In London £7,300 £3,611 £3,689

Outside London £6,217 £2,929 £3,288

Source: NUS Press Pack, 2002, NUS Estimated Costs of Study 2002-03

The inadequate level of Government support for students was highlighted by the National Audit Office, which stated that average student expenditure for the 1998-99 academic year was £5,464—exceeding the maximum student support by £1,845. [19]This shortfall will not be addressed by the Government's current proposals. Both the loans and grant levels need to be amended in line with NUS' proposals.

Additionally, the cost of living for students is rising faster than the provision of student support. NUS figures between 1997-2001 show that:

— The cost of living has been rising nearly three times faster than the provision of student support for students inside London, and nearly four times faster outside London. This may help to explain the increased need for students to supplement their income with paid work.

— Institutional accommodation alone has risen on average twice as fast as student support in London and one and a half times faster outside. Again, it seems that students are increasingly contributing to the sector through costs other than tuition at rates higher than inflation.

The increases in costs mean that after paying for accommodation students outside London are left on average with £34.85 per week to live on from government funding. [20]This is less than an individual would receive through Jobseeker's Allowance or Income Support per week[21]. Thus the Government is offering students less than its own recognised level for subsistence and support. This urgently needs to be revised in line with NUS' proposals.

NUS is concerned that the HE discussion paper implied that most student debt is a result of expenditure on non-essentials or entertainment. This implies that students spend a disproportionate amount on non-essential items compared to other groups in society. Research tells us otherwise

NUS is concerned that when reviewing the level of student support offered to students, the Government will make moral judgements about what is an "essential item" for students eg the much touted "mobile phone ownership" without considering the context eg a mobile phone may be essential for a student parent who needs to be contactable by a child carer.

NUS would urge the Government to look sensitively at individual student need, rather than making judgements about student spending patterns when reviewing the levels of student support.

NUS is concerned that there is an assumption that students should make up the shortfall in government funding through undertaking paid work. Although undertaking paid work in itself should not be dismissed, NUS does not support the policy that students must work, as significant paid work can have serious consequences on academic achievement, mental and physical health. For example

There is also a substantial body of evidence that shows that paid work is having a detrimental impact on academic achievement and retention:

— The NUS Students at Work survey (1999) found that 59% of those who worked thought that work affected their studies; 38% missed lectures as a result of work and 21% failed to submit coursework as a result of part-time work.

— A study of the impact of students working carried out by the University of Northumbria found that 43% of those surveyed reported that their term time job had an adverse effect on their academic performance.

In addition, there are a number of students for whom undertaking paid work is difficult or not an option at all for example, student parents, students with significant workloads or work placements, students with certain disabilities and students who have health problems.

NUS believes that in assessing the level of government support for students, consideration needs to be given to reducing the need for part-time work, to ensure that students are able to fulfil their full academic potential and skill development.

(d) Minimising commercial debt

In assessing the level of student support offered by the Government, consideration should also be given to the need to borrow money from commercial sources to make up for current shortfalls in government income. For example, Barclays found 31% owed money to a credit card and 55% had an overdraft. [31]This adds significantly to student debt levels and is usually borrowed at interest rates higher than the student loan.

NUS would urge the Government to consult relevant parties on the appropriate level of support to offer students, giving consideration to minimising current levels of graduate debt from government and commercial sources; reducing the need for students to undertake excessive hours of paid work and maximising government sources of income to meet the actual costs of living and study.

NUS has produced annual estimates of study costs since 1991, and would welcome further discussion with the Government on this issue.

(e) No recognition of independence at 18

NUS is concerned that the proposed means testing on student loans does not fully recognise student independence at 18, as it is assessed on family income.

NUS believes the loan should be means-tested on the student's own income to fully recognise independence at 18 and in recognition that this is a personal debt; the whole loan amount should be means-tested, as the current 25% cap is to protect students from parental or spousal non co-operation in the means test (this would not be needed if the means-test was on the student's own income).

(f) Part-time undergraduate students

NUS welcomes the Government's proposals to offer a means-tested grant of £250 and discretionary support for childcare for low-income part-time undergraduates.

However, there is currently no analysis of the maintenance needs of part-time undergraduate students. As this is one of the target growth areas of achieving the Government's widening participation targets, NUS would urge the Government to research the support needed by part-time students in terms of living and study costs, taking into account the diversity of this group and the need to facilitate flexible learning.

(g) Postgraduate students

NUS welcomes extra funding within postgraduate study through Research Councils. However, this only provides for a minority of students. NUS is disappointed to see no more reference to encouraging participation in postgraduate study.

NUS would like to see student loans extended to postgraduate students in order to achieve lifelong learning.

(h) International students

At present, institutional funding for international students is patchy and insufficient.

NUS urges the government to create a discretionary support fund for international students, along the lines of proposals in the Rees Report.

Means-Testing

NUS welcomes the Government's proposals to review the current parental means test in order to bring education means-testing in line with other areas of government policy, such as that for social security benefits and tax credits.

However, involving step-parents in the means test for grants, fees and loans increases the possibility of non co-operation, as step-parents may also be committed to maintenance payments within other households. We believe this will be detrimental to the student and create a further barrier to access, so these factors need to be taken into account.

NUS' recommendations on independence at 18 would overcome these problems.

NUS has stated its concerns with the current means-test on a number of occasions and would welcome further discussions with the DfES on reviewing how parents and spouses are assessed. NUS believes that only the targeted grant should be means-tested on family income, with other elements being assessed on the student's own income.

In addition, the current means-test is not sensitive enough to family outgoings and the financial commitments for other family members, such as student's siblings. For example, the current income disregard for having another child is £89 per year. This does not reflect true expenditure on this child. NUS would like to see the same principles applied to assessing income for loan repayments.

NUS recommends that the means-test is changed to consider more outgoings, to fairly assess a family's ability to contribute financial support to a student's education.

NUS would welcome further discussions on assessing residual income.

Students and Social Security Benefits

NUS is disappointed that the Government has not used this review as an opportunity to look at how social security provision could more effectively interact with student support to provide safety net funding for low income students and intercalating students. The neglect of this area by the Government is a classic case of government departments not talking to each other about how their policies could co-support government targets.

NUS has previously discussed these issues at some length[32], so will highlight some key policy points that the Committee might like to consider below:

Intercalating Students

NUS is disappointed that the Government has not addressed the funding gaps for students who suspend their studies. To facilitate ongoing and flexible learning, it is important that the system of financial support can cope with students who have unexpected breaks in study due to illness, caring duties, pregnancy or other reasons. We have welcomed previous moves towards providing funding for students who are ill or have caring duties through Jobseeker's Allowance (JSA) and the Housing Benefit system[33]. Unfortunately, this provision does not cover the whole period of suspended studies, nor does it provide funding for students who intercalate for other reasons.

NUS reiterates its support for the Social Security Advisory Committee (SSAC) recommendations, where students who intercalate for any reason should have entitlement to Income Support or JSA (according to whether they are available for work), Housing Benefit and Council Tax Benefit to act as a safety net against hardship and dropping out.

In addition, data should be collected centrally on the number of intercalating students, reasons for intercalating, applications for discretionary funding (to LEAs and to HEIs) and success rates for such applications. This would enable an informed and costed policy to be developed within this area.

Students as low income citizens

NUS is also disappointed that there is no mention of recognising students as low income citizens by bringing them into entitlement for Housing Benefit all year round and Jobseeker's Allowance during their long vacation.

4. GRADUATE ISSUES

Alumni contributions

NUS supports government plans to facilitate graduates to make contributions to their institutions through Gift Aid and voluntary tax contributions. However, the White Paper seems to assume that significant alumni contributions are possible across all institutions and assumes that this funding will be used to develop scholarships for access to high fee-charging institutions.

NUS has a number of concerns about reliance on such methods to bolster scholarships for access policies.

— Evidence-based policy?

There is no evidence to support the Government's assumptions that significant revenue can be built up in the UK by institutions through alumni contributions. In fact, at institutions where alumni currently do contribute, such as the University of Warwick, there is no consistent availability of student scholarships. There is also no evidence to suggest that alumni contributions are a beneficial way of generating revenue for all institutions. In fact, it is likely that only a handful of institutions will be able to benefit from this route to fundraising, as administration may prove to be more costly than the revenue gained.

— Tuition fees still spiral with alumni contributions

American institutions lead the way in attracting contributions from alumni. However, despite some institutions benefiting from this system, tuition fees have still had to rise substantially to meet the need for scholarships to attract under-represented groups. For example, during the 2001-02 academic year, tuition fees at public US institutions rose an average of 6% (to an equivalent of approximately £2,380) compared to 2000-01, and in private US institutions, where alumni contributions are the highest, the fees were still as high as £19,300. [34]

Student indebtedness in the US has doubled since the mid-1990s. For example, the total amount of Stafford loans borrowed by students increased from about $15 billion in 1992-93 to about $35 billion in 1999-2000. [35]

— Balancing graduate contributions with alumni contributions

If a back-end graduate contribution is enforced either through government or institutions, alumni will already be contributing to the costs of funding the HE system. Additional contributions from alumni to their institutions directly is a tall order and unlikely where significant graduate debt needs to be paid off.

NUS views alumni contributions as an additional source of funding that institutions could use to support additional teaching and research scholarships for under-represented students, not as a replacement for government investment in the sector.

Graduate employability

The Association of Graduate Recruiters' (AGR) annual survey has shown that employers are willing to pay a premium for graduates; even higher for certain qualities, including work experience. [36]

If students have no time to reflect on the skills they are developing through work, then it is both a wasted opportunity and it lessens their chances of a high return on their investment in a HE course.

Course providers should be encouraged to include varied opportunities for work experience, reflection and mentoring to ensure that graduates are meeting the skills demanded by recruiters and they are maximising their graduate opportunities. Institutions need to be encouraged to accredit employability skills and encourage students to record and develop their skills. This is easiest to integrate within vocationally orientated qualifications, such as foundation degrees, HNDs and degrees in engineering and is already in place for many of these programmes. Whilst NUS encourages the continued development of such vocational qualifications at degree and sub-degree level, the challenge is to ensure that more academically-focused subject areas include opportunities to focus on employability. Such schemes need funding and broader development of partnerships with employers.

Repayment of student loans

As previously stated, NUS is disappointed that the White Paper has not mentioned reviewing how income is assessed for repaying student loans. At present, virtually all income counts and no account is taken of outgoings and family context. Thus, although we know that £15,000 for a single 21 year old graduate is not the same as £15,000 for a graduate lone parent with two children in terms of disposable income, the current repayment system would treat both debtors in the same way.

NUS would recommend that a more sensitive assessment of income is developed for loan repayments, using residual income.

Graduate premium

The Government argues that students should contribute more towards the costs of higher education because of the extra £400,000 on average they will earn by virtue of having a degree. However, NUS believes that this figure is misleading for a number of reasons:

Cost of lost opportunity: graduates spend from two years upwards not earning when non-graduates are in work, and thereby losing out on earnings during this time.

Differential rates of return: research demonstrates that not all graduates benefit from HE equally and this is a view supported by the Dearing Inquiry[37]. A number of factors determine a graduate's earning potential: entry qualifications, social class, level of HE qualification, degree subject and degree outcome may affect the probability of unemployment after graduation, further study and employment in a graduate level occupation. [38]For example, the National Audit Office (NAO) found that in England, three years after graduating, people from social class V earn on average 7% less than those from social class 1[39]. Although the average graduate salary is currently £17,722[40], the range can vary enormously; Careers Service Unit (CSU) figures show a range from £4,000 to £40,000, depending on sector and region. The premium also neglects the reduced earning potential of more mature graduates or those who are likely to take career breaks.

Graduates pay back their "graduate premium": if we accept that the "average graduate" does manage to earn £400,000 more, this is diminished to £240,000 after income tax[41], and further reduced by payments to government and commercial debts accumulated as a student.

The impact of increasing participation on the graduate premium: finally, there is no strong evidence to suggest that the prospect of earning £400,000 or more over one's lifetime will not diminish significantly as graduate numbers rise.

5. ACCESS

NUS welcomes the Government's recognition that successful access initiatives have to address three issues

— raising the educational achievement of under-represented groups in compulsory education and for second chance students

— raising the aspirations of under-represented groups, so that HE is within their reach

— offering student funding and pastoral support that is concerned with overcoming debt aversion, addresses the real costs for study, and offers on-going support with money management, debt management and financial advice.

Access Regulator

There are few details available from the white paper on the implementation of the access regulator. However, on the basis of the information the government has made available, NUS has concerns about the scheme as it is currently outlined:

— what could be a good access monitoring system is linked to the ability institutions will have to vary fees; this contradicts the principle of access;

— assessments of access initiatives must be about actual practice and evaluation of practice, not about plans;

— assessments of successful access initiatives must not be based on attracting quotas of certain students in institutions. This equates to social engineering. The regulator's role should be more about what steps the institution is taking to ensure that its population is becoming more representative of the general population in terms of socio-economic background, ethnicity, gender and disability;

— the regulator must ensure that institutions are making links with schools, colleges and the wider community, for example through outreach and mentoring projects, pre-course financial and pastoral advice, taster courses and open days;

— decisions resulting from the access regulator should be about pump priming access and pastoral initiatives, not about increasing fee levels.

NUS would like to see the development of an independent access regulator, based in HEFCE, whose role is to perform the above and to disseminate good practice across a range of institutions. We urge the government to ensure there is no link between the work of the access regulator and the ability of institutions to charge top-up fees.

Widening participation funding

NUS welcomes the continued commitment to increase participation in higher education towards the 50% target of those aged 18-30 by the end of the decade. We also welcome the reform of the widening participation allocation to reflect the new access indicators of family income, parental levels of education and the average results of the school attended so that it better reflects need and the increase for the premium from around 5% additional funding for each student from a disadvantaged background to around 20% .

However NUS would like to see the policy distinction between increasing and widening participation to be firmly embedded at all levels; ring-fencing of widening participation funding, so that these funds are used for the purposes outlined above; parity of esteem of widening participation within teaching and learning and research within funding allocations; recruitment, retention and employability to be key criteria in the success of widening participation schemes; measurable widening participation outcomes and outputs.

Funding outreach initiatives and welfare services

NUS welcomes the consolidation of outreach initiatives into the Aim Higher umbrella, as these are crucial for raising the aspirations of prospective students and ensuring that they are well informed about what to expect from HE, in terms of course content, career choices and finances. However, we feel the Aim Higher initiative needs to go further, extending its work into measurable initiatives to raise aspirations amongst students, as early as 11 year olds.

We support the continued development of well funded outreach initiatives between HE institutions, schools, colleges and community organisations to raise aspirations and achievement and we support pump priming welfare services to ensure that financial and welfare advice is available to students before their course, during their induction and during their course.

NUS would wish to see the Access Regulator play a key role in disseminating good practice relating to such initiatives and diverting access funding to support the development and maintenance of such projects.

Financial Support for Further Education Students

NUS welcomes the Government's commitment to extending EMAs nationally for 16-19 year olds. This is crucial for facilitating access into HE for under-represented young adults. NUS also welcomes the Government's current review of funding for adult education also being conducted by the DfES. NUS believes there is a need for diverse funding approaches to target the diverse needs and study patterns of adult learners. There is also a need for the development of a national statutory entitlement to funding for all FE students together with well-funded information and welfare services.

NUS would like to see

— Statutory grant-based funding, based on the Education Maintenance Allowance (EMA) model to support post-16 full-time students to study up to a level 3 qualification with additional payments for childcare, travel, disabilities and course costs when needed.

— No withdrawal of Child Benefit when EMAs are rolled out nationally.

— If loans are made available, these are only appropriate for part-time learners on short-term vocational courses at level three upwards. They must not be assessed by the commercial sector and should not be offered at commercial interest rates.

— Clear and comprehensive information and advice needs to be available before, during and after study, to ensure that potential learners get appropriate guidance on student funding and benefit entitlements.

6. EMPLOYERS

Employers' contribution to HE funding

Employers benefit from HE teaching in a number of ways:

— Employers benefit through HE providing a mutual testing ground through work experience—ie students can ensure they are choosing an appropriate career path, but employers can test recruitment and training techniques and gauge whether courses are delivering the calibre of graduates needed for their business.

So, it is clear that employers should indeed contribute more to HE teaching. NUS believes this could be through:

— Developing students—providing an input into building students' skills capacities within HE courses from foundation degrees to honours degrees.

— Reinvesting employer taxation—ensuring that a percentage of taxation generated through employers goes back into HE teaching and research.

— Paying full cost for HE services—NUS supports the CIHE's recommendation that employers should pay the full cost of teaching, research and development services supplied though HE institutions.

However, NUS is keen to stress that business involvement in HE teaching and research should not compromise academic freedom. For example, where businesses are involved in developing curriculum content, although institutions should be sensitive to employers' local needs (as is being encouraged through foundation degrees), nationally consistent minimum standards for course content must be maintained. This will help employers to understand the qualification obtained by the graduate and reassure the student that quality is being upheld.

NUS would also like to stress that due to the volatile nature of market economies and businesses' interests, funding through business cannot be relied upon as a consistent source of funding and can be fickle as to where it falls. There is a danger that if businesses strike up relationships with specific institutions (often for specific periods of time), other institutions and their students suffer through lack of investment or sudden withdrawal of investment.

NUS would recommend having safeguards to ensure more equitable distribution of business funding across institutions though encouraging national and regional inputs. This could be achieved, for example, through employer-based sponsorships where the student is responsible for choosing the institution, rather than funding being institutionally specific (as currently operated through the Helena Kennedy Bursary Scheme).

Developing foundation degrees

NUS welcomes the expansion of the two year work-focused foundation degrees. Whilst NUS believes that foundation degrees and other sub-degree level higher education courses can provide valuable opportunities tailored to employers' needs, we strongly believe that the content of a foundation degree should not be business-driven only and that it should be a credible higher education qualification in its own right.

NUS would welcome clarity on how the funding incentives for students to undertake foundation degrees mentioned in the White Paper will operate. [49]

7. COSTS OF PROPOSALS

In general, NUS believes that there is a cost associated with increasing participation and that funding must be prioritised for both student financial support and pastoral support in FE and HE if government targets are to be achieved. NUS accepts that individuals should contribute to the cost of their education through finite graduate payments at no more than the current level of fees. However, this means that new funding needs to be offered across the FE and HE sectors to halt the decline in funding per student and the decline in widening participation funding that has occurred over the past decade.

NUS would like to point out that:

— the total budget for HE student support has been shifted since 1998;

— the £400 million fee income was offset by savings in government spending not invested into the sector; and

— funding has been generated by students and graduates through tuition fee contributions and student loan repayments, including accumulated interest; this is estimated to be approximately £961 million in 2001-02.

NUS believes that government savings and extra income generated through fees should be put back into FE and HE student finance to help address the current HE funding problems.

Graduates as tax payers

— It should be noted here that "taxpayers" includes graduates.

— Additionally, as business leaders, graduates are contributing substantially to the GDP of the UK, and through corporate taxation.

— Therefore, when asking whether taxpayers should contribute to funding HE teaching, the government needs to bear in mind that many of those taxpayers are in fact graduates.

NUS believes that it is the responsibility of the Government to divert more funding into HE in order to achieve the widening participation targets and create a fairer system of student funding.

8. RESEARCH

Research Funding

NUS welcomes the commitment in the White Paper "to make sure that the allocation of funding overall encourages and rewards promising departments with comparatively low research ratings, particularly for work in new research areas, so that they have the resources to develop and improve". NUS firmly believes that funding systems need to look at future potential, as well as current research performance.

However, we are deeply concerned at the notion that funding should be concentrated on just the best "world class" research performers and that additional resources will be given to the very best five* departments over the next three years.

If resources are localised to specific sites, then academic staff will be forced to choose between teaching and research. Given that the rewards and esteem for research are far higher, NUS would expect valued and talented teaching staff to opt for the research avenue, with the gradual erosion of dynamism and creativity within the teaching environment.

However, we believe that world class research occurs in a variety of settings not just those deemed to be the "best" research institutions.

NUS is aware that the current research funding methodology—through HEFCE's Research Assessment Exercise—has an in-built bias to reward traditionally research-intensive institutions. We believe this stifles innovation and creates a barrier to funding for many post-92 institutions.

The link between research and teaching is a crucial one, to ensure that creative and innovative ways of thinking and doing are transmitted to those—including students—who quite rightly understand that as part of HE. Students need up-to-date, first-hand experience from staff, who have been interacting within the research arena at the local, regional, national and international levels. Of course, HEIs have differing missions and may well have certain areas of competence; but not normally in a way that excluded one of the principal functions that has through a shared history and understanding come to mean higher education.

NUS believes that management and leadership of institutional research funds needs to be enhanced to make it more effective and efficient so that projected outcomes and outputs are met successfully.

Ring-fencing of research funding would also limit financial drift of research funding to alternative activities and resources.

Finally, NUS believes that a combination of public and private funding streams should be available but separate. Private funding should be seen first and foremost as an additional source of funding, not a primary one. A system of protection should also be set in place to safeguard academic freedom, so that enforced bias in academic endeavour is not an option and that costs are not passed onto the student.

NUS recommends that universal research funding should be available where actual or potential research performance is shown so that all universities are eligible to apply for and expect some degree of research funding.

Collaboration

NUS welcomes the fact that collaboration will be encouraged and that one of the ways it will be rewarded will be based on improved graduate training. However, NUS would like to see this change managed so that encouragement is directed at areas of particular social and economic disadvantage. In this way, communities and the local economy as well as society can fully benefit from the developments.

9. KNOWLEDGE TRANSFER AND EXCHANGES

NUS welcomes the extra support to non research-intensive university departments in developing knowledge transfer through "communities of practice". We also welcome the establishment of 20 Knowledge Exchanges, which will be examples of good practice in interactions between less research-intensive institutions and business.

NUS recognises that both business and higher education benefit from enhanced links. However, higher education should be protected from commercialisation as its primary role is to provide a public service. Given the benefit HE can bring to the local and national economy, the agenda for the relationship between business and higher education should be set and driven by the HE sector.

NUS also believes that two basic principles need to be met to protect the independence and integrity of universities:

— the institutional mission statement should be safeguarded as is; and

— academic freedom should be enshrined as a fundamental right (for the university as well as its staff and students).

NUS recommends that protection should be built into the guidance and regulations provided by the funding council. Where these two principles are not met, then sponsorship should be refused.

NUS also believes that the role of universities within both local communities and regions is fundamental to their function. Greater communication at all levels should be encouraged. RDA's and local community representatives can provide valuable input into the governance and strategic management of institutions.

Access

Widening participation

NUS welcomes the continued commitment to the target to increase participation in higher education towards 50% of those aged 18-30 by the end of the decade. NUS would argue strongly for parity of esteem in funding allocations between widening participation; teaching and learning and research; with ring-fencing ensuring appropriate use of funds. NUS would like the policy distinction between increasing and widening participation to be firmly embedded at all levels so that the university student body more closely represents society in general. NUS believes that the success of widening participation schemes should be clearly identifiable by measurable outputs and outcomes in both efficiency an effectiveness and that recruitment, retention and employability be key criteria in the success of widening participation schemes.

NUS also welcomes the reform of the widening participation allocation to reflect the new access indicators of family income, parental levels of education and the average results of the school attended so that it better reflects need. We also welcome the increase for the premium from around 5% additional funding for each student from a disadvantaged background to around 20%. However, NUS believes there should be ring-fencing of the widening participation funding, so that widening participation funds are used for its assigned purpose.

Foundation degrees

NUS welcomes the expansion of two year work-focused foundation degrees as a means valuable vocational opportunities tailored to employers' needs. This is particularly important in areas of social and financial deprivation. The expansion and targeting of these courses on a local level can do a great deal to stimulate the local economy and provide career opportunities for a range of people.

However, to be truly successful for students, NUS would like to see the following conditions met:

— Clear progression routes: from foundation to degree so that students have the opportunity to benefit from a higher education within a higher education institution.

— Minimum standards: foundation course minimum standards are needed to help employers understand the foundation qualification and promote confidence within the student population that quality is being upheld.

— Transparent outcomes and outputs: skill development objectives need to be clearly communicated to all stakeholders including schools, pupils, institutions and employers.

10. REDRESS FOR STUDENT COMPLAINTS

NUS welcomes the idea of an independent adjudicator with the fundamental proviso that the independence criterion is fully met and that the system is mandatory. For the last 15 years, NUS has been lobbying for an national ombudsman[53] who would be independent, publicly-funded and non-voluntary to bring the sector into line with other publicly-funded services, such as local government, parliament, prisons and the health service. NUS sees this role as being publicly accountable, free with no liability for costs to the other party, consistent and with further redress still available through the courts.

The Teaching Quality Academy

NUS welcomes the idea of an Academy that brings together the functions of the ILTHE, LTSN and HESDA into one over-arching body.

NUS would recommend:

— A transparent three-tier competency standard be set up so that the Academy of Learning & Teaching include three tiers of HE teaching professional competency standards: member (current academics who are aiming for accreditation), associate (those that have completed the accreditation process and demonstrated competence) and advanced associate.

— A democratic governance system be integral to the organisation's structure and processes, which would include the views of all stake-holders in the policy-development and evaluation process.

— An annual budget that ensures continuity be ensured so that the distinct activities of each of the three agencies is not lost in the development of the new agency.

Student information

NUS welcomes the commitment to providing accessible student information. We would suggest the following model:

— A dedicated new (information) portal for students—to bring together information students need to make the right course choice. This portal would be a first-stop calling point, so that students would be passed onto other relevant sites. The information available via various websites through the portal would be: annual student questionnaire feedback, up-to-date external examiners' reports and QAA reports.

— A brief published guide would provide information on how to interpret the information and how to navigate around the portal.

11. CONCLUSIONS

NUS believes that the proposals in the HE White Paper will increase student hardship and debt and furthermore that these proposals are contrary to the government's own targets of widening access and increasing participation. NUS believes that new funding must be offered across the FE and HE sectors to halt the decline in funding per student and widening participation funding that has occurred over the past decade.

In summary

— NUS welcomes the abolition of up-front tuition fees, with the partial recognition of independence from 18 with its proposals.

— NUS strongly opposes allowing universities to charge differential fees of up to £3,000 depending on course and institution. Differential fees will create a two tier higher education system and will further deter those from poorer backgrounds from accessing higher education.

— We are pleased that the Government recognises that finance does impact on access, and has reintroduced targeted grants for the poorest students. However, NUS believes that the overall level and extent of support proposed is too low to overcome debt aversion amongst those groups the Government is trying to target. NUS urges the government to increase the level of the grant and raise the threshold so that more students are eligible to receive support.

— NUS welcomes the maintenance of the interest subsidy on student loans and the review of the level of the loan. NUS urges the Government to increase the level of the loan to realistically reflect the costs of living and studying.

— NUS is concerned that the proposed repayment threshold of £15, 000 is still too low, and urges the Government to support Cubie's principle of repaying loans when a graduate has clearly financially benefited from their HE ie a threshold of £25,000.

— NUS supports the development of an independent Access Regulator, based in HEFCE, whose role is to disseminate good practice but is strongly opposed to any link between the Access Regulator and the ability of institutions to charge top-up fees.

— NUS supports the Government's target to increase participation in higher education towards 50% of those aged 18-30 by the end of the decade.

— NUS welcomes the principle of allocating research funding on the basis of future potential, as well as current performance and believes that all universities should be eligible to apply and expect some degree of research funding. NUS opposes any moves to further concentrate funding in research intensive universities.

— NUS believes the link between teaching and research is key to the higher education experience.

— NUS welcomes the expansion of two year work-focused foundation degrees. However, the government must ensure clear progression routes from foundation to degree, minimum standards so that foundation degrees are seen as credible qualifications and transparent outcomes to be communicated to pupils and employers.

— NUS supports the creation of an independent adjudicator, which is publicly funded and accountable to bring the sector into line with other publicly funded services.

We believe the Government still has the opportunity to draft a Bill that would have:

— a grant available to students to meet half the average living and study costs per year, means-tested on the students' family income in recognition that low income families are less likely to be able to provide additional financial support to the student and in recognition of the additional financial barriers to accessing HE these students face. The other half of living costs would be met through a student loan completely means-tested on the student's own income, in recognition that this is a personal debt and to recognise full independence at 18;

— current interest rate on student loans being maintained;

— a contribution from graduates once they have benefited from their HE;

— repayments on student loans to be made when a graduate has clearly financially benefited from their HE—ie above £25,000, to help address issues of the relative risk of investing in HE;

— more research into the support needed by part-time students in terms of living and study costs, taking into account the diversity of this group and the need to facilitate flexible learning;

— student loans being extended to postgraduate students undertaking taught and research programmes;

— consideration given to the treatment of step-parents' income;

— a review of the required period of "estrangement", to enable students estranged for less than two years to be assessed for any support on their own income and a review of legislation and accompanying guidance related to estrangement;

— a review of the parental and spousal means-testing system, to take more sensitive account of household outgoings; and

— a review of the assessment of income for the purpose of repayment student loans, to take account of essential outgoings.

March 2003

1 DfES, 2003, The Future of Higher Education, p.68, para 6.2. Back

2 Based on NUS annual costs of study figures, NUS estimates this would equate to £4,650 in London and £3,110 outside London. Back

3 Callender, C & Kemp, M-"Changing Student Finances: Income Expenditure and Take-up of student loans among full and part-time higher education students in 1998/99 "Research Report RR213, DfEE, London; Connor et al.-" Social Class and Higher Education: Issues affecting decisions on participation by lower social class groups" Research Report RR267 DfEE, London. Back

4 Universities UK Student Debt Project 2002. Back

5 Independent Committee of Inquiry into Student Finance: Fairness for the Future, 2000. International Student Support Systems. Back

6 DEYTA, March 1999, Equity on Higher Education, Occasional Paper Series, Higher Education Division, in NUS Australia, July 2002, NUS Submission to the Crossroads Ministerial Discussion Paper, NUS. Back

7 Breakfast with Frost, 20 Jan 2003. Back

8 PMQs 4 Dec 2002. Back

9 Fees "unaffordable" for arts students The Guardian, 27 January 2003. Back