DIFFERENTIAL FEES
Recommendation 12: We recommend that the Government
should retain a system of contributions to the costs of tuition
and that the Government should keep under continuous review not
only whether the maximum meanstested contribution should
be increased but also whether the thresholds for meanstesting
of contributions should be altered (paragraph 62).
Recommendation 26: Much heat and little light
has so far been shed on the topup fees debate. There is
a serious debate to be had on fees policy and the Government should
not shrink from evaluating the costs and benefits of a differentiated
fees strategy (paragraph 115).
33. We welcome the Committee's support for the principle
that students should bear a financial contribution to the cost
of their higher education course. The Government considered whether
there should be an aboveinflation increase in the standard
fee. However, for the reasons set out in paragraphs 7.24 to 7.28
of the White Paper, we are not proposing to do this. It is absolutely
clear that there the returns students can expect from higher education
differ substantially depending on the course they take and the
institution at which they study. The Government believes that
a revised contribution system should recognise the differing value
to the student of differing courses at differing institutions,
and that it would be wrong to expect all students to bear an equal
share in the costs when the benefits will be distributed unevenly.
That is why we are proposing allowing higher education providers
to vary their fees.
34. The Government promoted a wide debate on these
matters through the issues papers posted on the Department's website
in November 2002. The White Paper proposes variable fees but with
three key additional elements designed to protect access:
- Capping the maximum level of fees. The cap will
be set at £3000 in 2006-07 and will only be uprated for inflation
during the course of the next Parliament;
- Before institutions can vary their fees from
the standard rate they will have to put in place an Access Agreement
which has been negotiated and agreed with the Access Regulator.
The Access Agreement will set out the action the institution will
take to ensure that the most talented students are able to enjoy
the best opportunities based on their ability, not their background
or their income;
- The right of all students to defer their fees
if they wish, by adding them to their student loan.
35. As described above, we will also continue to
provide support with fees for those from lower income backgrounds,
up to £1,100 a year for those whose family income is £20,000
or under, and some support for those with family incomes up to
£30,000.
PUBLIC CONCERN OR PUBLIC MISUNDERSTANDING?/EFFECTIVE
PROMOTION AND COMMUNICATION
Recommendation 5: It is our view that many of
the problems encountered in the present system of student finance
originate from a failure by the Government clearly in public to
debate the essential elements of the Dearing proposals and the
reason for its recommendations and a fear of alienating key elements
of the electorate (paragraph 37).
Recommendation 13: We can expect little progress
in terms of social inclusion unless the Government is able to
communicate more effectively to students and families what the
policy will mean to them in practical terms (paragraph 65).
Recommendation 14: Critically, the information
for current and prospective students must convey the notion that
while a good quality education may require financial sacrifices,
it is an investment that is usually worth making (paragraph 66).
Recommendation 30: We encourage the Government
to explore innovative communication and advertising methods to
ensure that the affordability message is effectively conveyed
to target communities (paragraph 122).
36. We are ensuring that prospective students and
their parents are made fully aware of the changes arising from
the White Paper and how these changes will benefit them, and have
identified funding to help us make sure students are aware of
and able to understand the new system, amounting to some £4
million in each of the three years to 2005-06.
37. We are engaged in a comprehensive process to
provide information, and encourage discussion and dialogue on
the proposals in the White Paper, The future of higher education.
Copies have been sent to every higher education institution and
FE college in England. We are embarking on a series of regional
events for key stakeholders, including Vice Chancellors, employers,
FE college principals, heads of schools with sixth forms, LEAs,
RDAs, Connexions advisers and others. Ministers have also embarked
on a series of visits to student unions around the country.
38. We have produced an information booklet for students
and parents, and will be distributing this widely over the coming
weeks. The booklet sets out what the changes are, when they will
come into effect and who they will affect. It also contains case
studies so that readers can more easily identify what the student
finance changes will mean in practice.
39. At the end of this period, information about
the changes will be integrated into the Department's ongoing programme
of publicity about student finance, which will have a dedicated
allocation within the budget to fund a longterm information
programme about the changes so our audiences will continuously
receive this information throughout the year. The White Paper,
and the booklet outlining the changes that affect students and
parents, are available on our website, and views are invited.
40. We recognise the importance of current and prospective
students receiving clear and comprehensive information about the
financial help available to them and the repayment arrangements
after leaving university or college. That is why we produce a
wide range of information materials, from leaflets and posters
to a free phone helpline and website. Over the past few years
we have also run national press and radio advertising campaigns
aimed at raising awareness of the help available towards fees
and living costs. We regularly review the impact and effectiveness
of our information activity with students with the aim of improving
it for future years.
41. However, we also recognise there is more that
needs to be done to reach those groups that are currently underrepresented
in higher education. That is why we launched the AimHigher campaign
in November 2001, which includes advice on student finances as
well as the longer term rewards of higher education. The AimHigher
road show, which was launched in January 2002, has been promoting
higher education in an innovative way to 55,000 Year 9 pupils
and 10,000 post16 students each year in schools and FE colleges
in some of the country's most deprived areas. Through the use
of trained facilitators it delivers the message about the affordability
of higher education and the fact that it is an investment worth
making. There is sound evidence that the road show is beginning
to change pupils' attitudes: before seeing the road show 52% of
pupils said that they were interested in or definitely going to
Higher Education: after the road show, this figure rose to 75%.
Since the start of the campaign, the AimHigher website has received
over 164,000 visits and the helpline has received 34,000 requests
for AimHigher information booklets.
42. According to the latest Nat West student survey,
90% of the students questioned regarded higher education as a
good investment. People with a higher education qualification
earn, on average, around 50% more than those without. We are ensuring
that this message goes out to prospective students in AimHigher
literature and on the website.
43. We agree that it is also important to reach families.
That is why we are piloting a series of events to reach parents
at Year 9 parents' evenings. We also launched advertising aimed
at parents in October 2002.
44. Connexions Personal Advisors can also provide
information on student support and on the financial benefits of
higher education.
THE COSTS OF STUDENT LIVING
Recommendation 15: We recommend that the maximum
loan available should be set at a level that reflects the realistic
costs of pursuing a fulltime course of study (paragraph
68).
45. The value of student loans and grants has been
maintained in real terms since 1990. The Student Income and Expenditure
Survey (SIES) 1998-99 recorded the real costs of students and
its finding was that student support in that year covered all
essential costs. The Government can only provide limited loan
support for other costs such as those for entertainment and non
course related travel, given the many calls on public funds. It
is a matter of judgment for individual students how the additional
costs of maintaining the lifestyles they choose are to be met.
46. Nonetheless, we have set out in the White Paper
proposals for making student support more generous for those who
need it most, by offering grants of up to £1,000 a year to
those from poorer backgrounds, meaning that students coming from
lower income families who receive a full grant and loan (currently
£3,905 for students studying away from home, and more in
London) will have almost £5,000 a year to live on.
47. We intend to continue to conduct student income
and expenditure surveys on a regular basis, to inform policy development
and assess the impact of the new system. The Department has commissioned
a new "short" Student Income and Expenditure Survey
(SIES) for 2002-03, which will inform the next spending review,
and is commissioning a full Survey for 2003-04. Of course, we
know that choices about lifestyle affect how much people spend,
and we think it is reasonable for students to work to pay for
extras, but we need to ensure that we are providing enough for
them to pay for essentials, and believe this survey is the most
effective way of making sure that we are doing that.
THE DEARING REPORT/THE STUDENT SUPPORT REVIEW/EXPLORATION
OF ALTERNATIVE MODELS
Recommendation 16: We expect that the current
review of student support will thoroughly explore every possible
model for support and offer an indepth analysis of their
advantages and disadvantages (paragraph 73).
Recommendation 29: We expect the findings of the
Government review, and the full and detailed arguments they balanced
on each of the options they considered, to be published (paragraph
121).
48. The number of variations of student finance systems
is huge, and the Government has looked at a large number of possible
models, with the objective of finding a fair and affordable solution,
balancing the needs of the sector against what it is reasonable
for the taxpayer and the beneficiaries of higher education to
pay. As part of this, we have looked at a variety of differing
models operated overseas, including the difficulties faced by
those countries in operating these systems. But there are only
a small number of essentially different approaches which are alternatives
to variable fees:
- Making an across the board increase in the standard
fee;
- Introducing real rates of interest on student
loans;
- Introducing a graduate tax.
49. The arguments about an across the board increase
in the fee are dealt with in paragraph 33 above and those about
a real rate of interest are in paragraphs 25 to 31 above. The
Government's principal considerations in not proceeding with a
graduate tax are as follows:
- The upfront costs are more, the repayment
periods are longer and nor is there any possibility of early repayment
to reduce the public sector costs. Under the existing subsidised
loan system, a significant number of graduates make additional
payments to clear the loan debt early;
- There is no direct link between the student and
what they pay and the institution they attend - so the discipline
and pressure on the institution to respond to customers, driving
up quality, is reduced;
- Under the deferred fees proposal, the graduate
pays back in relation to the amount invested in him or her. With
a graduate tax the amount paid by the graduate may be more or
less, depending on the graduate's salary, and could be substantially
more;
- It would be more difficult to ensure money collected
through a graduate tax would go to higher education, due to difficulties
with hypothecation;
- There would be difficulties associated with collecting
money from EU students under a graduate tax system, as they would
not be subject to the UK tax system;
- Permitting universities to charge a higher fee
under certain conditions gives the independent Access Regulator
an effective sanction to promote improved access policies. A graduate
tax would not have that advantage.
50. The system proposed by the Government has some
of the characteristics of a graduate tax - the student pays themselves,
the payment is deferred until after graduation, the payment is
made through the tax system and is paid on an incomecontingent
basis, and is payable only on the graduate's income above a fixed
threshold.
Recommendation 17: We believe that the current
system of student support has failed in three important respects.
It has not made a significant impact on the social profile of
entrants to higher education; it is not clear and easily understood
by target populations, and it has not delivered a progressive
and socially equitable means of supporting students in higher
education (paragraph 74).
51. While student support can make some impact on
access to higher education, we believe that the most important
factor in improving access for those from lower social classes
is not student support, but work to raise attainment and aspirations
in schools and colleges. Some of our most important work in improving
progression into higher education will be achieved through our
reforms in secondary and 14-19 education, alongside the outreach
work conducted by HEIs themselves, and through schemes such as
the unified national AimHigher programme announced in the higher
education White Paper.
52. Overall, while the number of students from lower
socioeconomic groups has continued to rise in recent years,
the Committee is right in saying that there has not been a significant
impact on the social profile of entrants to higher education.
Data from UCAS shows that those from social classes IIIm-V make
up about 28% of entrants to HE; that figure has not changed significantly
since 1994, well before the current system was introduced. While
this shows that the current system has not had an adverse impact
on the social profile of students, and while there was no evidence
in the Student Income and Expenditure Survey (SIES) in 1998-99
that the prospect of debt was a major deterrent to those from
lower socioeconomic groups, we are far from complacent.
53. We feel that the current system does much to
avoid impacting negatively on access to HE. Tuition fees are meanstested
and students and their families only pay what they can afford.
Parents with income below £20,480 are not expected to contribute
anything towards tuition fees. Parents are only expected to contribute
the maximum amount of fees (£1,100) where their income exceeds
£30,502. Students from low income backgrounds are also eligible
for a higher rate of loan and we have provided 26,000 Opportunity
Bursaries worth £2,000 for students from certain disadvantaged
areas. For student parents we provide a generous system of meanstested
child related grants that are targeted at low income students.
We have extended Disabled Students' Allowances to parttime
and postgraduate students and they are no longer income related.
54. Expenditure on targeted support is now worth
a quarter of a billion pounds compared to half that in 1997-98.
We accept the evidence that this generous system is not simple
and transparent for the target groups to understand. A review
of targeted student support was carried out by the Department
last year. The review group was led by Dr Philip Harris, of Manchester
University, and included administrators and student advisers from
a number of Universities, as well as LEAs, and the NUS. The outcome
of the review provides a coherent, simplified and easier to understand
package of support for fulltime students with children.
In addition to the basic support through the maintenance loan
and tuition fee grant, more support is now available upfront,
giving students on low income more certainty over what they will
get before they start their courses. As a result of this review
14 different grants and bursaries available last year are being
replaced with just five grants over the next two years, but with
no students receiving less help than they do now and some receiving
more.
55. But, as we have said, we recognise that we could
go further, and in the higher education White Paper we set out
proposals that will improve the system of support. The abolition
of any requirement to pay tuition fees upfront from 2006, alongside
the introduction of a new Higher Education Grant, will have an
important effect on students' perception of the affordability
of HE, and we will continue to offer help with fees at the current
rate for those from the poorest backgrounds (up to £1,100
a year for those with family incomes of £20,000 a year or
less). Raising the threshold for repayment from £10,000 to
£15,000 a year will also help students' perception of affordability,
as will the knowledge that no real interest rate will be charged
on loans.
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