Education Bill

Memorandum submitted by Open University (E 122)

Executive Summary

1. The Education Bill is welcomed by The Open University [1] (OU) as it helps to move towards a system of higher education funding with:

· Parity between full-time higher education and the four in ten students who study part-time.

· A more consistent funding and regulatory system which should deliver more choice and flexibility, for example, the 81% of part-time students who work whilst they study.

· More choice for younger students – 25% of new OU students are under 25 (19,860 students).

2. Nevertheless, in order to meet the above, we argue that following important areas need to be addressed – and considered by the Education Bill in order to avoid unintended consequences:

· To ensure equality of access and support social mobility the Higher Education Funding Council for England’s (HEFCE’s) annual £372m widening participation allocation to institutions, which creates opportunity for students from the most disadvantaged backgrounds, must be retained.

· To enable flexibility of study the ‘in-attendance’ rule (in the 1962 Education Act) which prevents full-time students who study at a distance from receiving support, simply because they are not ‘in-attendance’ at an institution, should be rescinded.

· To ensure a system which does not discriminate on the grounds of modes of study, the additional costs of delivering part-time higher education should be offset through the part-time allocation.

· As the clauses make provision for these changes to be instituted on or after the 1st September 2012, there will be a need for a period of transition for existing students who would have no access to loans.

3. If the remaining policy issues - in particular the three above - are addressed positively in a spirit of delivering a mode-blind funding system, we are confident that English higher education will move significantly towards greater flexibility, more dynamism and higher quality.

Key arguments

The value of part-time higher education

5. Part-time higher education makes a substantial contribution to the UK economy. It provides the following benefits to students, employers, Government and the nation:

· 39% of students in England study part-time (500,000 undergraduates per year)

· 89% of part-time students study to further their career aims

· 64% study vocational or professional courses

· Almost 30% belong to routine or manual socio-economic groups

· 81% of part-time undergraduate students remain in work while studying and are net contributors to the Exchequer through income tax and national insurance

The distinctive contribution of The Open University

6. When the Prime Minister visited The Open University in June 2010 he described the University as having "a huge, huge role to play." He continued: "It is a great British innovation and invention." On a visit to The Open University in April 2010, the former Prime Minister stated that: "What the OU has achieved in 40 years is remarkable. It has become the greatest force for opportunity in Higher Education in this country."

7. These endorsements reflect the exceptional contribution of The OU to British society:

· The Open University is the UK’s largest university, with over 260,000 students, teaching 35% of all part-time undergraduate students in the UK each year

· 25% of our new undergraduates are under 25 years old (fastest growing age group)

· 20% of our new undergraduates come from the 25% most deprived areas of the UK; 49% of our new undergraduates have 1 ‘A’ level or lower at entry

· The typical total cost for an OU degree is between £4,200 and £5,860 compared with £10,125 elsewhere (2011-12)

· Four out of five FTSE 100 companies have sponsored staff on OU courses

· The OU’s presence on iTunes University is huge with 31 million downloads in just two years – the most of any university globally

· The OU is consistently one of the highest ranked UK universities in the National Student Survey – in the top three with a 93% satisfaction rating in 2009/10

· In the latest Research Assessment Exercise (RAE 2008) the Open University climbed 23 places to 43rd – the most improved institution in the country

Higher Education reform - progress to date

8. We are grateful to the wide range of supporters from across the higher education sector, the political spectrum and public life more broadly who have supported the campaign to establish parity between the four in ten students who study part-time and the full-time sector; and to sustain the contribution of the part-time sector to widening participation.

9. Over the past six months, together, we have achieved the following progress:

12th Oct Lord Browne states that: "higher education will be free at the point of entry for all students, regardless of mode of study."

12th Oct All three major parties state their unequivocal support for the principle of parity between full-time and part-time higher education.

9th Dec Government reduces the intensity level at which part time students receive support to 25% (30 credits) which will help a further 19,000 students at the OU alone.

20th Dec BIS letter to HEFCE reads: "for 2011/12 the top policy priorities for targeted funding should be supporting widening participation and fair access".

2nd Feb The £372m allocation for widening participation – of which the OU receives £36m – is one of the only allocations not to be drastically cut in HEFCE’s letter to institutions.

4th Feb David Willetts announces that part-time students earning more than £21,000 per year will be expected to begin repaying their fees 3 years after they start their course.

10th Feb National Scholarship Programme is confirmed as being open to part-time and mature learners, and institutions charging below £6,000 having preferential match-funding arrangements (50% expectation rather than 100%).

10. We have achieved this, not only through the strength of our argument and a widely held conviction that part-time higher education is integral to the future success of our national economy, but also because we are committed to engaging positively with all stakeholders. We intend to continue this throughout the legislative process and the Education Bill Committee.

11. This positive approach also requires honesty regarding the areas where we have concerns that the promise of a mode-blind system may not be implemented in reality. Some of these areas are outlined in the following section.

Education Bill – Clauses 70 and 71.

12. The proposed reforms to the higher education funding and student finance system would enable the Government to charge a real rate of interest on higher education student loans and permit the secretary of State for Education to place a cap on tuition fees for part-time higher education courses.

Clause 70 Student loans: interest rates

(1) In section 22 of The Higher Education Act (THEA) 1998 (financial support for students), in subsection (4) (interest rates on loans), for paragraph (a) (but not the "and" after it) substitute- "(a) the rates prescribed by regulations made in pursuance of subsection.

13.  The clause makes provision to ensure that student support loans are provided at approximately the cost of Government borrowing and not higher than those available for similar loans on the open market.

14. The clause makes provision for these changes to be instituted on or after the 1st September 2012.

15. This brings the interest rates charged in part-time HE into line with full-time HE. This is an important step forwards as it brings us closer to a mode-blind system. However, a truly mode-blind and flexible system, is dependant on ensuring that:

• Distance students studying at a full-time intensity are treated on the same basis as their counterparts who study at a campus institution

Clause 71 Limit on student fees: part-time courses

(1) In section 41(1) of HEA 2004 (interpretation of Part 3: student fees and fair access), in the definition of "course", omit "part-time or".

16. The clause sets out to remove the exclusion of part time courses from loan support. It gives the secretary of State in England or the Welsh Ministers in Wales the ability to prescribe the courses that are eligible for student support. It provide s the capping of the part time fee, regulating the levels for the first time.

17. The clause makes provision for these changes to be instituted on or after the 1st September 2012.

18. This means that the part-time sector will no longer be exempt from the cap on fees for full-time courses. We welcome this as it moves us towards parity between modes of study. However, we recognise that the rise in fees will make widening participation more important:

• The £372m widening participation allocation which Government described as a "top priority" in the Grant Letter to HEFCE should be preserved beyond 2011/12.

• The OU’s £37m allocation has enabled us to provide opportunity to:

• 49% of our students who have one A-level or less

• 12,000 students with disabilities

• 8646 new undergraduates from the 25% most disadvantaged communities in the UK

Avoiding unintended consequences

Widening Participation Allocation

19. In order to counter the deterrent effect of higher cost loans in conjunction with higher fees, it is imperative that To ensure equality of access and support social mobility the Higher Education Funding Council for England’s (HEFCE’s) annual £372m widening participation allocation to institutions, which creates opportunity for students from the most disadvantaged backgrounds, must be retained

20. We welcome the fact that:

(a) Lord Browne proposed that this should continue though an Access and Success Fund.

(b) BIS stated in the grant letter to HEFCE on 20th December that: "for 2011/12 the top policy priorities for targeted funding should be supporting widening participation and fair access."

21. Encouragingly, this led HEFCE to state in its grant letter to institutions on 2nd February that: "We have protected widening participation and improving retention to recognise the priority given to social mobility, fair access and widening participation in the BIS grant letter."

16. The OU’s £37m allocation from this fund has provided opportunity to (in 2009/10): 15,387 new OU undergraduates and 21,512 continuing undergraduates from the 25% most disadvantaged communities in the UK and the 12,000 of our students with disabilities.

17. This record has been achieved through, amongst other initiatives, our: Community Partnerships Programme which operates in deprived areas to increase participation amongst adults from low socio-economic groups; and Access courses (Openings and Taster courses) to equip those with little or no recent educational experience with the knowledge, skills and confidence to begin HE level study. These courses attract 18,000 students a year.

18. However, this allocation and the vital outcomes it produces, remain vulnerable beyond 2011/12 if the Education Bill Committee is not equivocal in its report and Government is not explicit in the White Paper about its importance.

19. We would welcome the Education Bill Committee’s consideration of the impact this allocation makes to social mobility and are urging Government to endorse this as a priority in the White Paper.

The ‘In-Attendance’ Rule

20. Lord Browne recommended that all full-time students should be eligible for loans for fees and living costs; and those on low incomes should be eligible for maintenance grants - this includes students living at home.

21. Perversely, distance learning students studying at a full-time rate are not eligible for help with living costs because they are not deemed to be ‘in-attendance’ at a university.

22. This is due to a clause in the 1962 Education Act. This ruling may have been pertinent in a pre-internet age, but it is not relevant to our lives and society today. It is an Act for a former age.

23. Almost 6,000 OU students study at a full-time rate and we expect this number to increase. To leave the ‘in-attendance’ rule unresolved however would create an unnecessary artificial barrier to those universities offering full-time distance learning courses.

24. We would encourage the Education Bill Committee to make a judgement on the relevance of the archaic ‘in-attendance’ rule and explore with Government whether it could be rescinded in the White Paper.

The Part Time Allocation

22. According to a report commissioned by HEFCE and carried out by J M Consulting, the costs of supporting part-time students are 15-44% higher than full-time students.

23. HEFCE recognises these extra costs through an annual earmarked allocation, of which the OU currently receives £21m per annum.

24. BIS stated in the grant letter to HEFCE on 20th December that there may continue to be a need "to recognise that efficient part-time provision may have some additional costs".

25. If a truly mode-blind system is to be realised, the additional costs that are driven by headcount rather than FTEs should be offset.

26. We would encourage the Education Bill Committee should provide assurances that the part-time allocation will continue in order to ensure that educational providers are not dissuaded from offering flexible learning on the grounds of cost.

Transitional Arrangements

27. As the clauses make provision for these changes to be instituted on or after the 1st September 2012, there will be a need for a period of transition for existing students who would have no access to loans.

28. The Open University has no clearly defined cohort moving through the University in a specified number of years. Whilst it would be simpler and cleaner to finish transition arrangements by the end of the CSR period in 2014-15, the current advice from BIS is that fee grants for existing students would continue for as long as it took for them to complete their qualification – subject to existing rules about the period of study lasting no more than 6 years of active study (i.e. excluding dormant years)

29. We would encourage the Education Bill Committee to consider a transition period of five years after 2012/13 from the year of change for part-time students, reflecting the fastest possible qualification period for students studying at an intensity of 50%FTE. However the total transitional teaching grant could be paid over a shorter period if this was more inline with the full time arrangements.

Conclusion

25. More than ever before, the nation needs a strong and vibrant part-time higher education sector to provide the diversity and flexibility of provision that students necessitate to re-skill; the economy needs for growth and our society demands for social mobility.

26. If we build on the encouraging recent reforms in paragraph nine and positively address the issues in paragraphs nineteen to twenty nine, we are confident that students, the higher education sector and the nation will be stronger, fairer and better educated.

27. The Open University is committed to engaging constructively with the widest range of partners to establish a flexible, innovative and mode-blind higher education sector which enhances quality and widens participation. We look forward to working with the Education Bill Committee in this endeavour.

April 2011