Memorandum submitted by CMU Universities
(TFSB 1)
— CMU is the largest of the UK University
groups and unites universities which have long-standing traditions
of promoting excellence and applied research.
— CMU universities offer an extensive
range of undergraduate and postgraduate degrees, many of which
lead to professional qualifications, and educate half a million
home, EU and international students.
— CMU universities have a first-class
record in recruiting and supporting students to achieve their
potential. By working beyond the campus in schools, with employers
and in communities, with regeneration agencies and international
partners, CMU universities continue to create opportunities for
new generations of students, thereby promoting new qualifications
and skills as well as personal and professional development.
— Graduates from CMU universities are
equal in terms of employability as those from Oxford and Cambridge
and work in business, small and medium sized enterprises, the
creative industries, the medical, teaching, legal and other professions,
for government agencies and in the public sector.
PROFESSOR MICHAEL
DRISCOLL HAS
BEEN CHAIR
OF THE
CMU UNIVERSITIES GROUP
SINCE 2003
Professor Driscoll has been Vice-Chancellor
of Middlesex University since 1996, having previously been Professor
of Economics and Head of School of Economics at Middlesex Polytechnic,
Dean of the University's Business School, Pro Vice-Chancellor
and Deputy Vice-Chancellor. Professor Driscoll is also on the
Board of UUK, Chair of the UUK/SCOP Strategic Group on Sustainable
Development, a member of London Higher's Steering Committee and
of North London Learning and Skills Council and a Governor of
the College of North East London.
"TUITION FEES AND STUDENT BURSARIES"
SUMMARY
Tuition Fees
1. As predicted by CMU universities, the
so-called "market" in respect of tuition fees has largely
failed to emerge. To date and almost without exception, universities
have confirmed that they will charge tuition fees of £3,000
per annum to full-time students.
Variable Bursaries
2. Institutional income from full-time fees
has to be set against expenditure on bursaries. In spite of representations
from CMU universities that variable bursaries would produce a
market which would be both complex and confusing for students
as well as complex and administratively onerous to manage, the
Government declined to adopt a standard national bursary scheme.
Instead, the Government permitted variable bursary schemes with
the exception of a minimum standard bursary (MSB) of £300
pa for the poorest students for every £3,000 pa tuition fee
charged.
3. To date, the Government has failed to
address perverse outcomes of the fees-bursary regime applicable
from 2006, notwithstanding the fact that such outcomes could be
mitigated without interference with primary legislation.
Impact upon institutional funding of tuition-bursary
system from 2006
4. By failing to take into account socio-economic
profile of students recruited by universities, patterns of institutional
recruitment in respect of full-time and part-time modes of study
and the effect of variable and minimum standard bursaries upon
institutional fee income, the Government has perpetuated inequity
in terms of the funding and the student resource available to
higher education institutions after 2006.
5. These inequities are perverse and affect
disproportionately those universities which have been the most
successful in widening participation, recruiting students from
low income backgrounds and low participation neighbourhoods as
well as black and ethnic minority students, disabled students
and mature students.
6. These are also the same universities
which have been most successful in providing opportunities for
students to access higher education in their twenties and thirties,
thereby frequently adding to the skills base and enhancing professional
skills. As such, these universities have contributed significantly
to meeting DfES and the Government aspirations of providing access
to higher education for those in the 18 to 30 age range.
7. Unless Ministers amend present arrangements,
CMU universities and others with similar student profiles will
receive proportionately less additional fee income. This means
(in a nutshell), that the universities which have been most successful
at ensuring that social class is not a barrier to higher education,
will have the least money to spend on their student populations
which on every measure—socio-economic class, age, black
and ethnic minority profile and disability—are the most
representative in the sector and of the population at large.
8. CMU universities believe that their students,
their families and their staff are entitled to ask what is fair
about the perpetuation of inequities in institutional income which
could be avoided or at least mitigated and to further, request
the Committee to enquire of Ministers why the following perversities
have not been addressed:
(i) Impact upon institutional income of minimum
standard and variable student bursaries.
(ii) Administrative costs of the bursary-fee
system and the remit of the Student Loans Company.
(iii) Cash flow problems and potential delays
in the payment of student bursaries arising from proposals to
pay fee income to institutions by instalments.
(iv) Inequities in institutional income arising
from exclusion of part-time undergraduates from scope of fees-bursary
provisions of the HE act.
PROPOSALS
9. In order to mitigate disproportionate
effects upon institutional fee income CMU believes that:
(i) A central fund should be established
to cover the payment of minimum standard bursaries. Such a fund
would not require the allocation of additional money but could
be established by top-slicing from the funds allocated to cover
tuition fees.
(ii) The administrative costs of Student
Loans Company assessments should be funded from the allocation
to the sector as a whole and not by individual institutions. Ministers
should also confirm that the remit of the SLC will be extended
to cover the assessment and administration of bursaries and that,
if required, the SLC will be permitted to transfer funds from
tuition fees/a central fund which would reimburse the costs of
minimum standard bursaries.
(iii) From 2006, institutions should receive
tuition fee payment in the November of the autumn term based on
notification to the Student Loans Company that a student has registered.
Ministers should also confirm that proposals to pay additional
fee income to universities by instalment, will not be pursued.
(iv) DfES should advise HEFCE to safeguard
the unit of funding for part-time provision for all institutions
for the 2006 academic year so that universities with a significant
profile in terms of part-time provision are not disproportionately
affected by loss of potential fee income.
(v) In the long term, the Government should
commit to deferral of fees for part-time students. This would
also ensure that students who have to switch between full-time
and part-time modes after 2006 are not faced with two different
funding regimes (ie fee deferral when full-time, payment up front
when part-time).
Detailed evidence in support of these proposals
follows. Appendix A provides specific case-studies, evidence and
statistics relating to effects upon fee income that have been
provided by individual universities.
1. INTRODUCTION
1.1 Variable tuition fees were introduced
by the Government under the 2004 Higher Education Act as a mechanism
to address the under-funding of higher education and a decline
in the student resource which had taken place over the previous
20 years. Under the legislation agreed by Parliament, the income
available from increased (but deferred) tuition fees from 2006
is therefore a vital additional revenue funding stream for universities.
It is of particular importance and significance for CMU universities
because:
(i) they have been disadvantaged by historic
mechanisms adopted to distribute research funding which has been
further exacerbated by current Government policy of increased
selectivity and allocation of public funds for research by departmental
star rating; and
(ii) the under-funding of teaching has not
been addressed.[1]
2. VARIABLE STUDENT
BURSARIES
2.1 Institutional income from full-time
fees has to be set against expenditure on bursaries. In spite
of representations from CMU universities that variable bursaries
would produce a market which would be both complex and confusing
for students as well as complex and administratively onerous to
manage, the Government declined to adopt a standard national bursary
scheme. Instead, the Government permitted variable bursary schemes
with the exception of a minimum standard bursary (MSB) of £300
pa for the poorest students for every £3,000 pa tuition fee
charged. As the statistics in Appendix A confirm, CMU universities
will be committed to returning significant sums from fee income
in the form of student bursaries from 2006 as a result of their
student profiles.
3. MINIMUM STANDARD
BURSARIES
Impact upon institutional income
3.1 From 2006, the poorest full-time undergraduate
students (eligibility to be determined by means-testing of family
income) will be entitled to receive a minimum standard bursary
of £300 pa for any course charged at £3,000 pa. This
£300 has become known as the minimum standard bursary (MSB).
Its payment has been confirmed as a requirement by OFFA. At present,
it is proposed that the MSB will be deducted from individual institutional
tuition fee.
3.2 It is self-evident that universities
which have been in the forefront of widening participation and
encouraging and supporting students from low income households
will have a high number and percentage of their student population
eligible for a minimum standard bursary.
3.3 CMU universities have largely met and
exceeded targets in terms of these students. They will therefore
disproportionately lose out in terms of additional fee income
since, under current proposals, universities will receive fee
income of £2,700 pa for every student who qualifies for an
MSB by virtue of low family income rather than the £3,000
pa for students from better-off families. The more low income
students a university has, the less it will receive in fee income.
In fact, the fees for these students will come from DfES via the
Treasury and is not subject to fee deferral or future payback
by the students concerned.
Solution
3.4 The loss of additional fee income which
will affect universities disproportionately can be avoided by
the establishment of a central fund to cover the payment of minimum
standard bursaries. Such a fund would not require the allocation
of additional money but could be established by top-slicing from
the funds allocated to cover tuition fees.
4. ADMINISTRATIVE
COSTS OF
THE BURSARY-FEE
SYSTEM AND
THE REMIT
OF THE
STUDENT LOANS
COMPANY
4.1 The Student Loans Company (SLC) has
been identified as the potential agency to undertake means-testing
of student income to establish entitlement to fee remission and
minimum standard bursaries in the regime which will come into
effect from 2006. This is to be welcomed and is likely to avoid
the prospect of students in the same financial circumstances being
assessed by institutions as having different entitlements. It
may however, also require Ministers to amend the remit of the
SLC.
4.2 It is currently proposed that administrative
costs of assessments, including assessment for entitlement to
minimum standard bursaries are borne by the sector. There is a
pending consultation with institutions whereby the latter will
be asked whether they want to buy into SLC services and how administrative
costs should be covered. For some institutions, administrative
costs may not be a significant concern. However, for CMU universities
with significant numbers of students with an entitlement to MSBs
and student populations with lower family incomes/from lower socio-economic
groups, administrative costs are a key issue.
4.3 Under current proposals, administrative
costs will be further expenditure that will have to be set against
fee income. Such costs are likely to again affect CMU universities
disproportionately. The prospect that the level of administrative
costs will be further determined by the number of institutions
opting to buy into the services of the SLC only adds to these
concerns.
Solution
4.4 The administrative costs of Student
Loans Company assessments should be funded from the allocation
to the sector as a whole and not by individual institutions.
Ministers should also confirm that the remit
of the SLC will be extended to cover the assessment and administration
of bursaries and that, if required, the SLC will be permitted
to transfer funds from tuition fees/a central fund which would
reimburse the costs of minimum standard bursaries.
5. CASH FLOW
PROBLEMS AND
POTENTIAL DELAYS
IN THE
PAYMENT OF
STUDENT BURSARIES
ARISING FROM
PROPOSALS TO
PAY FEE
INCOME TO
INSTITUTIONS BY
INSTALMENTS
5.1 The Department has proposed that from
2006 institutions will receive tuition fee income by instalments
in February and in the summer semester/at the end of the academic
year. Ministers appear to believe that the majority of universities
currently operate instalment plans for the payment of up-front
tuition fees by students. In fact, this is decidedly not the practice
in CMU universities.
5.2 Given that income from tuition fees
from 2006 will be provided by the Treasury/DfES in the first instance,
pending recovery from graduates from 2010, CMU universities can
see no reason why institutions should not receive the additional
income from fees in the autumn term. This would be particularly
important to the CMU part of the sector. Indeed, to pay institutions
by instalment will cause institutional cash flow problems.
5.3 There is no doubt, in addition, that
students will expect to be in receipt of bursary payments as soon
as they have registered. However, under current proposals, universities
will not be in receipt of additional fee income until the following
February at the earliest. This raises the prospect of a delay
in bursary payments, pending receipt by institutions of additional
fee income.
Solution
5.4 There are some suggestions that HEFCE
grant payment might be brought forward. However, Ministers need
to address the question of cash flow in the autumn semester. There
is no practical impediment to institutions receiving tuition fee
payment in the November of the autumn term. Currently, the Student
Loans Company is notified on the day on which a student registers
(via the SAC file). This notification releases the student loan
payment. There is no reason, in principle, why the same notification
could not release the tuition fee payment to institutions.
Ministers should be asked to confirm that from
2006 institutions will receive tuition fee income in the autumn
term and that proposals for payment by instalment will not be
pursued.
6. OFFA
6.1 The Office for Fair Access was established
under HE legislation. Universities are required to submit Access
Agreements to indicate their commitment to attracting applications
from students who are members of groups currently under-represented
in the sector as a whole.
6.2 Notwithstanding the well-established
track record of CMU universities in widening participation, some
CMU institutions have been advised by OFFA that they should reconsider
their proposals in respect of bursary support "in relation
to (their) position in the market" (Appendix A paras 4.4
and 6.3).
6.3 CMU universities accordingly have concerns
that with little or no empirical evidence that OFFA is:
(i) prejudging "the market";
(ii) has failed to appreciate that there
are different starting points in the sector; and
(iii) is seeking to "bid-up" access
agreements in universities which will receive the least additional
fee income under current proposals.
7. INEQUITIES
IN INSTITUTIONAL
INCOME ARISING
FROM EXCLUSION
OF PART-TIME
UNDERGRADUATES FROM
SCOPE OF
FEES-BURSARY
PROVISIONS OF
THE HE ACT
7.1 The 2004 HE Act does not provide for
the deferral of fees by students studying part-time. As a result,
CMU institutions have very real concerns that the levy of an annual
tuition fee for part-time students on a pro-rata basis against
a £3,000 full-time undergraduate fee for the same course,
will simply act as a deterrent to participation by students who
under current policy, will have no access to fee deferral in 2006.
7.2 If universities do not charge a pro-rata
fee for part-time courses, they will inevitably receive less fee
income compared to institutions which have done little to promote
flexible learning opportunities and/or have a full-time undergraduate
student population. (These are often the very same institutions
which have been least successful to date in widening participation.)
7.3 There is an element of employer subsidy
for part-time provision but this is variable from course to course.
Ministers have suggested that employer subsidy runs at 60% of
part-time undergraduate students. No CMU institution can confirm
this level of employer subsidy and all report significantly lower
levels of support. However, even where these higher degrees of
subsidy allegedly exist, 40% of part-time undergraduates are self-funded.
Further, a number of sponsors may be small employers and a doubling
of the part-time fee may result in them only being able to sponsor
half the number of students than at present.
7.4 CMU institutions support more part-time
undergraduates than the OU and Birkbeck combined and have estimated
that they stand to lose between £1.25 million and £5
million per year in additional fee revenue because they will be
unable to lift part-time fees in line with full-time fees.
7.5 The failure to bring part-time undergraduate
students within the scope of the fees-bursary regime from 2006
and the perversities this potentially creates in terms of fee
income into those institutions with a significant proportion of
part-time undergraduate students, many of whom are themselves
from lower socio-economic groups, are often older students accessing
higher education in their twenties and thirties, and frequently
with caring responsibilities in their own right, is a critical
issue for CMU universities.
7.6 While HEFCE has been asked to undertake
a review of part-time provision but this will not start until
2005, will not report until 2006 and will not address inequities
in terms of institutional income from 2006.
Solution
7.7 DfES should advise HEFCE to safeguard
the unit of funding for part-time provision for all institutions
for the 2006 academic year so that universities with a significant
profile in terms of part-time provision are not disproportionately
affected by loss of potential fee income. One way of achieving
this would be to bring the fee element of the part-time student
grant in line with the increase in implied fees eg £1,500
for a 50% programme.
In the long term, the Government should commit
to deferral of fees for part-time students. This would also ensure
that students who have to switch between full-time and part-time
modes after 2006 are not faced with two different funding regimes
(ie fee deferral when full-time, payment up front when part-time).
1 Sir Howard Newby, Chief Executive HEFCE, evidence
session of the Science & Technology Committee on 7 February
2005: ". . . I do not think the kind of investment has been
put in on the teaching side from government that has been put
in on the research side . . . Most of them [universities] are
going to charge the £3,000 maximum fee, but . . . the actual
net gain they receive will be very variable, even though the fee
they charge will be broadly similar." Back
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