UK: An unfair funding system

The higher education funding system is creaking under the pressure of market forces, says a report just published by the National Union of Students. In Broke and Broken: A critique of the higher education funding system, the NUS presents what it sees as the unfairness and lack of sustainability in the current system, and argues that the scenario can only get worse if the cap on top-up fees were raised or lifted. A wide-ranging debate is needed, it says.

Four years ago, the government narrowly succeeded in passing the Higher Education Act which introduced top-up fees with a cap of £3,000 a year from (US$5344) the previous fixed-rate fee of £1,200. A review of this system is due soon and changes are likely to be implemented in September 2010.

Wes Streeting, NUS president said: "Market forces have already crept into our higher education system. More prestigious universities in the Russell Group (20 of the older and research-intensive universities) are able to offer poorer students an average annual bursary of £1,791, but less prestigious universities in the Million+ group (mostly former polytechnics) are only able to offer £680. There is clearly a market of prestige at work, with financial support being based not on how much you need it but on where you study.

"And things will only get worse if the cap on top-up fees is raised. If the cap were raised to, say, £7,000, and a true market of price emerges, some students will end up owing almost £40,000 on graduation. This is a staggering amount, which in some cases will actually exceed the amount of money they can expect to gain from their degree over the course of their entire working lives."

In its report, the union says the review should not simply determine the level of the tuition fee cap as this would be far too narrow a focus and a much deeper change is required. Ministers in 2004 adopted a "false logic of fairness" in bringing about a market of course prices. It fails in practice, because for a market system to work successfully, the 'consumer' must firstly have a free choice to make, and must secondly have a sufficient understanding of the market to exercise that choice. In higher education, neither of these conditions applies.

Choice is highly limited by attainment and by social, economic and cultural factors, argues the report. The information, advice and guidance offered to prospective students can be confusing as applicants are left to wander unaided through a highly complex decision-making process and they are "confronted by a sea of promotional materials, a whirlwind of open days, a bewildering array of bursary offers, and suffocating peer pressure (either to get into the best or not apply at all, depending on their background). In this market, consumers only make choices in so far as they were destined to make them."

The report says the system fails in principle, because in attempting to ensure that the prices of higher education courses reflect their market value, even greater divisions of quality, experience and outcome are forced to emerge.

"The richest institutions will be those that benefit most from higher fee income, and the poorest institutions are (inevitably) the least stable and have the least capacity to invest in the future. There is a demographic gulf between the richest institutions and the poorest. Unless every institution in the sector has an equal number of applicants from across the socio-economic spectrum and takes an equal number of students from private schools and state schools, a market can only be regressive and act counter to the pursuit of social justice. A sector that should be an engine room for social mobility instead acts to reinforce inequality of both opportunity and outcome."

In some areas, it is not the new market approach but long-standing problems that need to be tackled, it adds.

University and College Union General Secretary Sally Hunt welcomed the report, saying: "We are very concerned about the inadequate and confusing system of grants and bursaries for students and are calling for a fairer, national bursary system."

But the Director General of the Russell Group, Dr Wendy Piatt, said: "There is absolutely no evidence that a national bursary system would widen participation - in fact it is more likely to hamper all the efforts Russell Group universities are making to encourage students from non-traditional backgrounds to apply. There is evidence that targeted, generous bursaries have helped to attract very able students from low-income backgrounds to universities they may not otherwise have considered.

Professor Bryan Gould, former Labour leadership contender who left UK politics to become vice-chancellor of the University of Waikato in New Zealand, commented: "Higher fees and larger debts will deter many students from seeking a university education. Many who are so deterred will come from parts of society that are financially constrained or - for cultural reasons - debt-averse. Our society will be less strong and integrated if the talents and potential of significant parts of it are marginalised in this way.