British Higher Education into the New Millennium - Dissertation Example

British Higher Education into the New Millennium Higher education for students in the United Kingdom has undergone significant changes in the past 20 years, leading to a wealth of confusion as to how the system is maintained. Unlike the school systems in many other countries, the higher education system in the UK remains centrally planned even when not much attention has been provided it. Prior to the 1980s, students in the UK could attend higher education institutions free of charge with living expenses paid for through a tax-funded grant issued based on parental income levels (Barr, 2001). However, with the increase in the number of students attending these institutions and the reductions in school funding over a period of inattention, even the full maintenance grants usually awarded to the lowest income student bracket were no longer sufficient to fully support the living costs of the most frugal students. In an attempt to address the growing problem, a new system for higher education was developed that kept tuition free to all students, but changed the way in which the maintenance grants were awarded. Although they were still income-based grants awarded according to a complicated means-testing method, the resulting awarded funds were only intended to provide half of each student’s living expenses while they attended school. The other half could be acquired via a specialized loan program. Any remaining difference was assumed to be supported by expected family contributions. However, because students were borrowing public money and the number of students enrolling in higher education continued to climb with each successive year, the system was rapidly becoming unsupportable. This was occurring even while university funding was becoming more and more scarce thanks to rising inflation and a lack of increases from governmental sources, leading to concerns regarding the quality of education received by these students. Instead of helping the system, this move to half-grant, half-loan borrowing against public funds only worked to place the system in further jeopardy as actual funding to higher education fell first to 30 percent per student between 1990 and 1995 and then to 50 percent per student by the year 2000 (Barr, 2001). It was in the face of these concerns that the government established the National Committee of Inquiry in 1997 that led to a series of refinements designed to both increase the quantity and quality of the higher education system within the United Kingdom, but that also functioned to significantly disrupt the policies concerning student involvement in the financial aspect of their educational goals and strong reform proposals submitted from each of the three major political parties in the past two years. In 1997, Sir Ron Dearing gave an introduction to the Higher Education in the Learning Society main report, now referred to more simply as the Dearing Report, which was the result of the National Committee of Inquiry’s findings. In this introduction, he addressed the concern of a looming reduction in higher education funding as being of prime importance in any kind of system reform. Although funding was already planned to be reduced as part of the “consolidation” efforts of 1994, the inquiry revealed that an additional £350 million in funding was required for the following year and an additional £565 million on top of that for 1999/2000 (Politics 97, 1997) to maintain the higher education system as it stood. The efficiency savings anticipated by the consolidation policy had already proven to be insufficient to cover the needs of the higher educational system and the unplanned growth of the system was failing to meet the needs of an increasing diversity of students (Parry, 1998). The inquiry also revealed that it was a variety of sustainability needs that was causing this requirement for increased funding. These needs included rising numbers of students, the need for adequate infrastructure for those students, a rising need for services available for part-time students, increasing diversity of students, maintenance support for all of the students, adequate research funding and higher pay rates to remain in line with the competitive job markets. Additionally, educational institutions, responding to the consolidation policy adopted by the government since 1994, were planning to introduce tuition fees for full-time undergraduate students as a means of meeting the needs of their campus’. Although one possible solution to meet some of these needs was suggested as increasing public spending on higher education in keeping with the growth of the Gross Domestic Product, even that increase was not deemed enough to provide for the requirements of maintaining the higher educational system without making further cuts in spending. Having determined the system would not have adequate funding to sustain itself into the future, Dearing recommended significant changes to the system in which students would agree to pay for their education after they had an opportunity to achieve work status following graduation. Numerous reports claim the Dearing report called for an abolition of maintenance grants within the higher educational system, but the report actually recommends a combination of “means-tested maintenance grants and student loans as the best way to seek contributions from higher income families and graduates in work” (Politics 97, 1997). Discounts and advantages would be offered for those students and families that could pay the required fees “up front” or as the student was attending school, further reducing the tension brought upon the public resources. By arranging the grants in such a way, the Dearing report suggests the government would be able to fund the students more directly as they move from school to school rather than distributing a large block grant to the institutions for disbursement. In addition, providing funding to opening up institutions in more diverse locations would further assist students by providing educational facilities closer to family homes and reducing the need for additional maintenance funding. Under this directive, the Dearing report indicates the target level of student participation for the grant/loan program would be to have 60 percent of all public funding to institutions to be awarded based on student choice by the year 2003 (Politics 97, 1997). Students would then have the opportunity to launch themselves into the workforce before being required to repay the loans and loans could be offered at lower interest rates to reduce the disincentives involved when a student elects to attend higher educational institutions. While available maintenance fund grants would be reduced in great extent to be replaced by student loans, Dearing suggested the tuition rates be maintained as a flat rate based on the number of years required in study. Further, this document stipulates that the flat rate should be no more than 25 percent of the average cost of higher education tuition and founded on an income-based mechanism. To avoid some of the mishaps that occurred in the original Australian system upon which these recommendations are based, Dearing further recommended that this flat rate proportion could not be increased without an independent review and an affirmative resolution of both Houses of Parliament. Finally, it recommended that any money raised through these recommendations would be required to be used to further fund higher education rather than being spent on other governmental issues. The goals of the Dearing report were not necessarily intended to shift the burden of cost onto the shoulders of the students themselves, but rather to sustain a high quality of education available within the United Kingdom while still reaching out to an ever-changing student base including all income levels, cultures and stages of life. By putting an end to the 1994 consolidation policy, increasing public spending on education by only as much as the Gross Domestic Product increases and easing some of the governmental burden for tuition and maintenance costs, the Dearing report manages to provide the funding necessary to focus on the expansion of the higher education system in order to be more available for a greater number of students and establish a means of increasing the quality and standards of instruction available within the system. It is here that the increase in number of campuses available was thought to help students by reducing some of the high cost of living expenses as students could find accommodations with relatives. The reduction of maintenance grants made available to students allows the system to focus on providing more universities and colleges, rewarding universities and colleges for increasing their services to students and making education a possibility for more students at increasing levels of life stages. In addition, while working to increase the numbers of disadvantaged students and students with disabilities participating in the higher education system, the Dearing report called for allocating “additional resources to institutions which enrolled students from particularly disadvantaged localities, as represented by their home postcodes,” restoring social security entitlements to full-time students, granting additional funds for institutions to provide learning support for students with disabilities and for making changes in the disabled students allowance to help more people meet the personal costs which arose from their disability. Under this plan, the funding available for higher education would fall almost equally between being awarded to the students directly in the form of grants and subsidized loans and being awarded to the schools themselves as incentives to find new ways of helping students achieve their educational goals with the highest quality and availability possible. However, critics of the Dearing report were quick to point out that the changes suggested, while possibly working to create a more diverse student base, also increases the number of students leaving school in greater debt than they had done previously and that the system suggested in the report places lower income students in greater proportional debt than their more income-advantaged counterparts following their graduation. With maintenance costs being the responsibility of students and parents and the requirement that all full-time students pay £1,000 towards the tuition of an undergraduate degree per year, the Cambridge Student Union claims the burden left for lower income families will be much greater proportionally than that placed on the higher income students. Although the total value of the available loans for students will be increased to match the amount of what was previously granted, Ben Jackson argues this new system would only encourage fewer low-income families to assist students and lower-income students to acquire more pre-graduation debt: Students from lower income families will have access to the full loan. This has two implications: families earning less than £16,000 will not be expected to contribute to either maintenance or tuition fees, and students from lower-income families will still leave university with the largest debts. It is laughable that the Government even offers an emergency hardship measure that involves further debt: a supplementary loan of £250 to those students who find themselves in difficulty. (Jackson, 2005). Further, critics argued that the report does not provide any short term solutions to the problem of dwindling public funds in the face of increasing student loans still drawn on the public account. Estimates as to when private funds will start factoring back into the system in the form of loan repayments indicate it could be as many as 20 years before the funding system sees private fund relief. Even then, research into the repayment cycle indicates that the government will only collect approximately 50 percent of the funds it loaned out as a result of default (for various reasons) by students, but more through the loss of interest subsidy on the money loaned. Finally, critics complained that the system, based as it was on a sliding scale of benefits and expected contributions, was too complicated for the average student and family and would therefore discourage many from either beginning or completing their educational goals (Barr, 2001). The complicated methods involved in conducting means-testing further exacerbates the problem as it requires additional departments and associated funding and in that more students are rejected than accepted into the program. Although not all of the recommendations made in the Dearing report were enacted upon by the Labour Party immediately, indicating an incomplete agreement with the recommendations presented, most of the suggestions brought forward have since been enacted or elaborated upon. In practice, most students, particularly those in the lower income brackets who were targeted to receive more assistance, found decreasing rather than increasing chances to obtain a higher education. Because of the decreasing number of low income students attending higher education institutions following the cessation of the maintenance grants, these grants were reinstated in 2004, with further refinements planned in 2005. As had been predicted, far from the intended original goal for these grants, recent reports indicate that only a handful of applicants ever reach the monetary funding stage. The Student Loans Company reported last summer that only 27 percent of college applicants for the government tuition grant program actually received student aid. The reason given for this is that although students can qualify for maintenance grants if their family’s total income is less than £21,125 per year, they only qualify for the maximum amount of £1,000 if their family income is less than £15,200 (Most Students, 2005). Only another 7 percent of the applicants who applied received partial grants toward their tuition rate. In addition, statistics indicate these students who do not qualify for the maximum government assistance also cannot count on their families to provide the expected family contribution to their maintenance as these family income figures used to determine need do not take into account additional factors such as family size in estimating appropriate expected family contribution per student. Knowledge that the family cannot hope to meet the requirements for approval of grant funds or the expected contribution per student is a fact that has led many prospective students to reject pursuing a higher education altogether and others to drop out prior to completing their training (Barr, 2001). These shortcomings in the enacted plan have several communities calling for reform, making it important to understand the difference between the policies proposed among the three major parties and the impacts these policies might have on future student educational funding options. Although the Dearing report was commissioned and has been enacted in parts by the Labour Party, there are significant differences in the recommendations presented in the Dearing report and the way in which those recommendations have been carried out. It was the Labour Party itself which completely eliminated the maintenance grant program immediately following the release of the Dearing report in favor of total loan-based education funding. Despite the availability of these loans, the government discovered less low income students were entering higher education because of maintenance and debt concerns, the party reinstated the grants, but placed strong restrictions on the income levels of families of students. To determine whether students qualified for the grants, complicated means-testing was conducted on the family income of each student and concise monetary levels were maintained as qualification levels with no regard for other, more subjective factors such as family size or special spending needs (i.e. medications for a special needs family member who is not the student). These restrictions have, however, been adjusted for inflation in recent years to meet some of the rising needs of students in terms of increased maintenance costs as well as higher tuition fees. Several other reforms to higher education finance have been suggested by the Labour Party in a report given in 2004. Preserving the concept of tuition fees, Labour’s reforms would eliminate the up front costs currently required of college and university students, offering instead the option of variable fee schedules up to the amount of £3,000 per year, all of which would be payable following the student’s graduation. This deferred fee schedule would be determined independently by the university or college in question with no fee exceptions. These fees loans would be made available to all students regardless of family income, thereby reducing the number of students restricted from attending higher education because of the inability to pay these additional costs. As part of this scheme, graduates would be eligible for a Graduate Contribution Scheme loan equal to the value of their fees and repayable following graduation by contributing 9 percent of their total earnings above £13,925. In addition, some students could qualify for “a means-tested grant of up to £2,700, a means-tested maintenance loan of between £3,305 and £4,405 and a means-tested bursary of at least £300 if their university charged the full top-up fee” (Dearden et al, 2005). Repayment terms for these maintenance loans would remain the same as those established for fee repayment under Labour Party administration. By providing the maintenance grants and requiring universities with top-up fees to pay out bursaries to their lowest income students, the Labour Party feels lower income students would be able to avoid accruing debt for any fees universities might charge. They argue that by taking out subsidized loans for their living expenses while attending school, students qualifying for the bursary funds could end up with more money for living expenses than they would have had otherwise. The party has placed the upper parental income threshold at which students might receive benefits at £22,500 per annum for the first element and at £33,560 per annum for the additional £1,200 grant, awarding more benefits to more students at higher income levels than any of the other policies proposed. As finding the funding to support the system has remained an issue under Labour Party directives, one must look into exactly who is paying the overall costs of university education for students in the UK under their proposed reform policy. The flow of funding among taxpayers, students, graduates and universities under the Labour Party reforms would switch the system from being primarily funded by the students and taxpayers as it is currently to the shoulders of the taxpayers and the graduates through the medium of the deferred payment loan. This plan benefits primarily the universities and the students themselves (Dearden et al, 2005). Students benefit under this system by the use of loans, grants and bursaries. Those students with families earning less than £33,560 per year could find themselves eligible for approximately £6,500 per year in funding assistance among the three elements. Unfortunately, this figure still falls approximately £335 below the yearly estimated cost of living for students as determined by the National Union of Students. However, under this reform policy, the difference in maintenance funds and cost of living figures is made up for in the fact that all students are eligible for yet another loan that would defer the costs of any tuition fees required at universities until after graduation, allowing students to keep their maintenance loan funds as well as bursary funds, effectively taking these fees out of the Labour equation even though they are included as part of the NUS figure. Like the Labour Party, the Conservatives would eliminate the use of up front tuition fees, but would take this another step by eliminating the use of tuition fees altogether. In their report on higher education reform issued in 2004, this party would make a £5,000 annual maintenance loan available for all students regardless of family income and background. To move the funding of these loans partially out of the public sector, they would be offered through private banks at regular market interest rates. By doing this, they would also eliminate some of the concern regarding the loss of income through interest subsidy, which currently accounts for approximately one third loss of all funds distributed. These interest rates were estimated to be somewhere between 6.5 percent and 8 percent (nominal) per year (Dearden et al, 2005). Also similar to the Labour Party reforms, the Conservatives set the repayment schedule for these loans at 9 percent of the graduate’s income after their initial £13,925 earnings per year with any outstanding debt to be written off after a 25 year period. Students whose family incomes equal less than £22,100 per year would also be eligible for a grant of up to £1,500 per annum under this plan. Although the program would end up costing taxpayers an additional £1,100 million and graduates would lose the £1,000 million they received under the baseline system, the Conservatives justify these losses with the advantages gained by the students as they are attending classes and the additional funding that would then be available to the educational institutions themselves. In addition, the Conservative plan indicates that around £400 million of the taxpayer contribution would be made by gifting the Student Loan Bank to the universities (Dearden et al, 2005). To compare this reform proposal to that of the Labour Party, these reforms end up moving the cost of the system squarely on the backs of the taxpayers alone, with universities and students the prime beneficiaries. Students under this system can expect to take up their full allotment of loan funding in the amount of £5,000, but the availability of grants is reduced to much smaller proportion of the student population and the total available funding even for the lowest income students still falls below the National Union of Students estimated living costs of £6,890 per year. Of the three reform policies presented, the Conservative proposal appears to bring students closest to this estimated cost of living figure, but that assumption is based on the idea that a student would borrow the maximum available loan. Because loans under this reform policy are not subsidized as they are in the other two plans, taking out the maximum allowable loan amount is not necessarily advisable for students operating under this policy. However, because the requirements to qualify for the available help are less stringent than those of the other two reform systems and a maximum loan amount does come closer to the cost of living estimate for students, this reform policy suggests more students would have less need to find part-time employment or to take breaks from their education in order to earn money for tuition while attempting to obtain their degrees. The Liberal Democrats seem to agree with the Conservatives at least in terms of eliminating the tuition fees currently in use in the higher educational system, but their ideas of loan programs and grants available for students becomes much more complicated than even the intricate sliding scale system the Labour Party delineates. In their report given in 2005, the Liberal Democrats base their reform on a series of means-tested loans and grants. Students with families whose parental earnings fall below £22,100 per year would be eligible for maintenance loans of anywhere between £3,225 and £4,300 per year as well as a grant of up to £2,000 per year (Deardon et al, 2005). Like the other plans proposed by both the Conservative Party and the Labour Reform Party, the Liberal Democrats propose the repayment of these maintenance loans should be set at the rate of 9 percent of a graduate’s income per year after the initial £13,925 earned, but feel the loans should carry a zero real interest rate. In this respect, the Liberal Democrats fail to address concerns regarding the loss of funds through interest subsidy and the short-term loss of funds prior to collection from graduating students. To fund this plan, they propose the introduction of a 49 percent income tax rate on all taxpayers showing incomes in excess of £100,000 to fund the entire £2,200 million cost of this funding scheme. Like the Conservative plan, this plan also stipulates that any outstanding debt still owed by the graduate 25 years after their graduation would be written off. Also like the Conservative plan, any hope of competitive markets developing among universities as a result of the courses offered is eliminated through the abolition of any kind of tuition fees or additional fees required. Like the Conservative Party reforms, the Liberal Democrats’ plan shifts the financial burden of the higher education system incontrovertibly onto the taxpayer. For the student, though, between the loans and grants made available under this reform policy, students with the lowest income-earning families could qualify for approximately £6,300 per year to meet costs associated with higher education. Even should students qualify for this highest level of funding assistance, the National Union of Students (NUS) estimate for yearly cost of living expenses is still another £590 out of reach, the greatest difference among the three proposals. Because of the complicated process of means-testing involved in determining who is qualified for the available grants, students are not as assured of meeting the requirements for maximum disbursement which can prove to be a significant disincentive to first-generation students as well as those without a large amount of familial assistance or advice. Like the Labour Party reforms, the subsidized nature of the loans available under this proposal makes it much more likely that students will strive to borrow the maximum available amount as they attend school, therefore leaving with higher debts to pay back. It also depends heavily upon public funding and leaves little funding available for other higher education needs. Overall, based on the numbers alone, students stand to gain the most benefits under the reforms proposed by the Labour Party. When comparing students from the poorest backgrounds in either the Labour or the Conservative systems, assuming students in the Conservative system borrowed the maximum amount possible and students in the Labour system qualified for the maximum benefits allowed, students in the Conservative system would still come out £55 per annum behind students in the Labour system despite the fact that they would have ended up borrowing more in terms of maintenance loans (Dearden et al, 2005). In addition, it is only under the Labour provisions that students with middle income families of £22,100 to £33,560 per year would qualify for any kind of grant assistance from the government. Neither of the other reform proposals provide grant funding up to this level of income. Higher income students would see little difference among the systems, especially between Labour and Conservative systems as they would result in the same upfront living funding. Based on the models presented, a student’s expected debt levels upon graduation would be approximately £19,340 under the Labour system, £16,230 under the Conservative system and £12,340 under the Liberal Democrat system for the lowest income student with family incomes of under £15,970 per annum. Those levels remain relatively unchanged for middle income students (families earning around £25,000 per annum) with the exception of the Conservative plan, which estimates a total debt upon graduation of approximately £14,580, approximately £650 less than that incurred by the poorest students. High income students, on the other hand, can expect to graduate with approximately £18,670 in debt under the Labour system, £10,730 under the Conservative approach or £9,250 under the Liberal Democrat system. The higher levels of debt incurred across the board on the Labour party plan despite less money borrowed in terms of maintenance loans takes into account complete acceptance of the approximately £9,000 top-up fee loans that would be made available to all students in addition to the maintenance loans, a consideration not included in either of the other two estimates because fees are eliminated in both the Conservative and the Liberal Democrat reforms. Facing an uncertain future out of a less certain past, the complexities involved in the policies governing student grants in the United Kingdom are nothing if not complex. Although higher education is no longer the blissful financially free pursuit for students that it was in the 1960s and 1970s, neither is it yet the complete responsibility of the student alone. Even for students who have little ability to depend upon family to assist with the costs associated with higher education, the system has been improving toward a more sustainable yet still achievable pursuit. Because higher education must incur a price upon someone, the idea of a free education for anyone who wanted it was an unsustainable concept leading to ever increasing demands and ever decreasing funding to meet them. In an effort to repair this failing system, the Dearing report presented a blended concept of free education and privately funded education, working to present a system that was sustainable in its own right while remaining open to students with a variety of financing challenges. How those suggestions were first interpreted by the Labour Party was not effective in attracting additional low-income students into the halls of the college and universities, so the concept of the maintenance grant was reinstated and the major political parties began discussing various ways of reforming the system even further. Depending upon which of these reform measures is put in place, higher education in the future could be funded by either the taxpayers alone or a combination of taxpayers and graduates. Although students would benefit most under the Labour party reforms, the Conservative plan leaves graduates in the least amount of debt once they’ve completed their education and the Liberal Democrats maintain the zero interest loans without the additional expense of university fees. References Barr, Nicholas. (9 October, 2001). The Welfare State as Piggy Bank. London School of Economics. London University Press. Retrieved 28 December, 2005 from < http://education.guardian.co.uk/specialreports/tuitionfees/story/0,5500,566329,00.html>. Deardon, Lorraine; Fitzsimons, Emla; Goodman, Alissa; and Kaplan, Greg. (March, 2005). Higher Education Funding Policy: Who Wins and Who Loses? London: Institute for Fiscal Studies. Retrieved 28 December, 2005 from < http://www.ifs.org.uk/comms/comm98.pdf> Jackson, Ben. (23 October, 2005). Blunkett’s Funding Muddle. Cambridge University’s Student Union. Retrieved 28 December, 2005 from < http://www.cusu.cam.ac.uk/campaigns/funding/dearing/muddle.html> Most Students Fails to Get Grants. (14 July, 2005). BBC News. Retrieved 28 December, 2005 from < http://news.bbc.co.uk/1/hi/education/4682017.stm> Parry, Gareth. (October, 1998). British higher education into the new millennium: something for everyone? Third Equity and Access Conference. Retrieved 28 December, 2005 from Politics 97: The Dearing Report. (1997). BBC. Retrieved 28 December, 2005 from < http://www.bbc.co.uk/politics97/news/07/0723/dearbrief.shtml>. Read More