Full State Financing of Student Maintenance in the UK - Essay Example

Topic: Should The UK Government Return To A Policy of Full Financing Maintenance And Tuition Fees Give the benefits and drawbacks.Introduction The UK government's focus on educational policies highlights the government's achievements in education. The policy handbook notes the government's focus on educational policies which states that 'Standards are up across the board including the best ever primary school results. More teachers are in our schools than at any point in last 20 years - 28,500 more than in 1997' (labour.org, 2006). Despite the advantages of certain government policies and the benefits of improving quality and standards within an educational system, the problem on whether the government should consider returning to the policy of full state financing and student maintenance could be examined using economic analysis with models, theories and mathematical data. Income and Expenditure - The Educational System Statistical data obtained from the functioning of the educational system show that total income of the government in 2003-2004 from education was at 16867041 whereas expenditure was at 16625712. Tuition fees and education grants was at 24.2% of the total government income and funding council grants was at 38% of the total income (HESA, 2005/2006). Total income and expenditure by source of income and category of expenditure 2002/03 - 2003/04 ( thousands) Percentage of Total 2002/03 2003/04 2002/03 2003/04 United Kingdom Total income 15691291 16867041 Funding council grants 6049216 6516597 38.6% 38.6% Tuition fees & education grants & contracts 3747081 4078976 23.9% 24.2% Research grants & contracts 2597074 2714591 16.6% 16.1% Other income 3061975 3320439 19.5% 19.7% Endowment & investment income 235945 236438 1.5% 1.4% Total expenditure 15473150 16625712 Staff costs 9032522 9728675 58.4% 58.5% Other operating expenses 5513683 5904120 35.6% 35.5% Depreciation 727060 791329 4.7% 4.8% Interest payable 199885 201588 1.3% 1.2% Where comparisons are made between the latest financial year 2003/04 and the previous year 2002/03, the previous year's figures are those reported in the re-stated financial statements. Copyright Higher Education Statistics Agency Ltd. 2005 From HESA, accessed 2006-04-26 Data for figure 6.5 Students' expenditure by type, 2002/03 England & Wales Percentages Living costs 68 Housing costs 19 Participation costs 14 Source: Student Income and Expenditure Survey, South Bank University 1997 1998 1999 2000 Current expenditure /98 /99 /00 /01 Universities .. .. .. .. Other Higher, Further and adult education .. .. .. .. Higher Education Funding Council 5,693 4,726 5,166 5,813 Further Education Funding Council 3,718 5,064 5,216 5,167 2001 Continuing Education 1,960 .. .. .. /02 Other education expenditure 1,355 4,611 4,278 3,861 .. .. .. 5,813 5,628 5,167 6,810 .. .. 3,861 3,989 From HESA, accessed 2006-04-26 The government expenditure on education in terms of higher education funding has remained stable since 1997 receiving up to 5628millions in 2001-2002. Comparatively further education funding council received funding of 6810 million and other education expenditure of the government was at 3,989 million (HESA, 2006). Percentage of students opting for loans seems to have risen considerably and the data show that students seeking funding have risen from 41% in 1992-93 to 64% in 1997-1998. The table below shows the percentage of students who depend on funding for external or state sources, loans or grants 1992-93 41 1993-94 47 1994-95 55 1995-96 59 1996-97 62 1997-98 64 From HESA, accessed 2006-04-26 The tables that we have considered could be analyzed comparatively for government expenditure against student requirements. As we see from the statistical data on student expenditure, student borrowing, financial requirements and expenditure have gone up considerably since 1992-93 when borrowing for instance was only at 41% compared with 1997-98 with at least 64% of students depending on external funding. The chart on student expenditure shows living costs and education costs at 68% of total expenditure for students. Compared with the rising expenditure of students, government expenditure on higher education has not risen considerably with government expenditure at 5,693 million in 1997 increased to only 5,813 in 2001-2002 (HESA, 2003/2006). This is a rise of a mere 1.2% when compared with the 23% rise in student borrowing requirements. Thus providing economic data we suggest that government expenditure has not risen in accordance with student needs and expenditure in the last few years. Government funding seems to have decreased despite its benefits of student support and the advantages of making students responsible for their finances could be emphasized on. Greenaway and Haynes (2003) suggest that higher education is becoming increasingly important in OECD countries with a considerable expansion of higher education facilities in the UK where student numbers have doubled in the last 20 years. Yet according to Greenaway and Haynes funding to students seem to have halved and haven't kept pace with student requirements or needs. The study suggests a need to diversify the funding base including a limited role for fee contributions. A necessity for greater availability of income contingent loans to students is also suggested. As Barr (2004) suggests, the expansion of higher education is necessary in terms of increased student numbers. Although increased student numbers also lead to increased costs and Barr suggests that higher education faces imperatives for public spending. Higher education finance though not completely appreciated in some countries can be according to Barr a politically sensitive issue as well. Barr suggests that higher education funding could be explained in terms of economic theory and the general educational experience. Stiles (2000) has suggested that certain restructuring of UK universities had significant effects on the pattern of funding and data obtained from higher education show that since 1990, higher education funding has hit a low and this could be explained as an intensification of a trend rather than a policy direction. Institutional consolidation and funding support seem to have decreased and policies serve to reorganize the existing number of institutions. There also seem to be a continuing gap in research income per student capita between pre- and post-1992. The funding patterns may highlight the financial problems that universities may face if more government aid does not come through. Ahier (2000) presents the implications of higher education loans including difficulties within student families suggesting that changes in funding higher education in the UK is consistent with family obligations. The role of state financing is emphasized as crucial for helping students to overcome financial problems within the family. Recommendations have been in place suggesting that graduates would be subject to some form of tuition waiver and would have to repay once they begin earning. This would make the financial process easier for certain publicly funded institutions which still contribute to a certain part of the tuition. Economic theories point out to the fact that central planning of educational system is no longer feasible as students are themselves better planners and can make their own financial and educational choices. The benefits of higher education would imply that students should contribute to the cost of their degree. As a result there are income contingent loans, variable tuition fee and active measures to promote access to financial resources. Conclusion: The economic data and studies on the educational funding situation in the UK show that government expenditure in education have lessened or remained the same over the years whereas student borrowing amounts, loans and expenditure have drastically increased. Yet, considering the new trends in the pattern of tuition paid at schools, recommendations for tuition after the students begin earning rather than providing full state financing may be made to ease government expenditure and student financial burdens. The new financial strategies for payment of tuition could promote greater access to educational resources and income contingent loans would benefit both the students and the government. At this stage with the new measures full state financing could be ruled out to encourage increased financial independence of students. Bibliography Ahier J. (2000) Financing higher education by loans and fees: theorizing and researching the private effects of a public policy Journal of Education Policy, Volume 15,Number 6, pp. 683-700(18) Barr, N., (1993) Alternative Funding Resources for Higher Education. The Economic Journal. Vol. 103, no. 418, pp. 718-728 Barr Nicholas (2004) Higher Education Funding Oxford Review of Economic Policy, Volume 20,Number 2, pp. 264-283(20) Curtis Susan;Klapper Rita (2005) Financial support systems: the student experience in England and France International Journal of Social Economics, Volume 32, Numbers 1-2, January pp. 121-132(12) Deardon L., E.Fitzsimons and A. Goodman (2004), An Analysis of Higher Education Reforms, IFS Briefing Note 45 Dutta J.;Sefton J.;Weale M. (1999) Education and Public Policy Fiscal Studies, Volume 20,Number 4, pp. 351-386(36) Greenaway D. and M. Haynes (2003), Funding Higher Education in the UK: the role of fees and loans, Economic Journal, 113, F150-F166. Stiles D.R. (2000) Higher Education Funding Patterns Since 1990: A New Perspective Public Money & Management, Volume 20,Number 4, pp. 51-57(7) Policies - Labour party website, accessed 2006-04-26 http://www.labour.org.uk/ourpolicies for statistical data, Higher Education Statistics agency, accessed 2006-04-26 http://www.hesa.ac.uk/ Read More