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More costly for students, more regulation for universities, and not fit for purpose

More costly for students, more regulation for universities, and not fit for purpose

Could the Coalition Government be in a bigger mess?

The Office for Fair Access (OFFA) has published guidance on what universities need to do in order to charge fees over £6000. It does nothing to help the Government get out of the hole it has dug itself over tuition fees and the potentially high cost of the arrangements for student support if universities cluster toward the upper fee level of £9000.

According to OFFA guidance, any fee above £6000 will have to include a proportion spent on widening participation. This amount will be scaled according to how well the University performs in relation to other universities with regard to the recruitment of students from different social backgrounds. Those performing below average will pay more into their widening access ‘pot’ (30% of the additional fee), while those performing above average will pay less (15%), with those performing at the average will split the difference (22.5%).

This levy will not ameliorate the cost to Government of the support arrangements for students (as the Browne Review had envisaged). It need not be spent on fee waivers or bursaries. In addition, OFFA recognises that it has no sanctions if universities don’t improve their performance. As William Cullerne Brown comments, any sanctions initially invoked by Ministers now appear to be ‘homeopathic’ in their level of dilution. Universities may ignore the guidance, but, given that the performance of institutions will be judged on their performance relative to that of others, a university will find it possible both to improve its performance and to remain below average.

Worse, no account is taken of the impact of the new fee regime acting as a disincentive for recruitment overall, such that universities can perform relatively well, while the consequence of higher fees is to reduce applications from those from low income backgrounds. This is accentuated by the fact that the new access arrangements also encourage universities to charge the highest fee possible.

As William Cullerne Brown observes, the Institute of Fiscal Studies calculates that students from the lowest 30% of households will be worse off under the new arrangements.  Most commentators agree that the bigger disincentive for applicants from low income backgrounds is meeting the living costs associated with study, but raising fees will tend to reinforce this as students contemplate immediate financial difficulties as well as future debt.

The Government expected those universities that already do most of the ‘heavy lifting’ for widening participation to charge closer to £6000, but they are now incentivised to charge higher fees because they will recover more of the difference. At the same time, those with poor records of widening participation are also incentivised to go for the highest fee possible because then they will recover most income (even if the levy for their access pot is highest).

The overall consequence is to reduce the differential in the ‘real’ level of fees across institutions, when widening the differential was precisely the aim of the market-oriented recommendations of the Browne Review. At the same time, universities are incentivised to maximise their fees to recover the income lost from the withdrawal of the HEFCE teaching grant.

No wonder the Government has decided to delay the publication of the White Paper until after Universities set their fees. It still doesn’t know what to do. OFFA did not come riding to the rescue.

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