UK: Fears over private sector gain from loans hike

The government has announced plans to extend support and loans to students attending private sector institutions in England, to the same level as for state sector students. But the announcement has stoked fears that private institutions will be able to cherry-pick lucrative courses.

David Willetts (pictured), the Universities and Science Minister, said: "The new system will be more responsive to student choice."

Students at alternative providers will benefit in the same way as those at state universities from the doubling of tuition loan limits to £6,000 (US$9,800) under a new system in place from 2012-13, so long as their course is designated by the Department for Business, Innovation and Skills.

"Today's announcement is an important step towards the goal of public spending following the decisions of learners," he said.

But Nicola Dandridge, Chief Executive of Universities UK, which represents 133 vice-chancellors, voiced concerns about what quality controls there would be.

She said: "We are mindful of the recent experience in the United States of opening up the market to for-profit providers. Many believe that the quality of provision among the for-profit providers in the United States has been poor, and the costs have been high, particularly in terms of the costs to students and to the state. This has particularly impacted on poorer students."

The vice-chancellors' concerns were echoed by the University and College Union, whose General Secretary Sally Hunt said: "We have real concerns about expanding the for-profit degree business in this country and the fact that for-profit providers will now have access to taxpayers' money.

"We only need to look at America to see that for-profit higher education is fraught with danger for students and taxpayers alike and, at the very least, needs to be properly regulated."

Private providers - there are currently only two degree-awarding private universities in England, but a range of providers deliver professional courses such as business studies - are not subject to the same requirement to widen access to students from disadvantaged backgrounds and do not face the state cap on student places.

Dandridge said if private sector students could access loans their institutions should operate on the same playing field in terms of quality assurance and regulation.

"We would also be concerned if private providers cherry-picked the more lucrative courses, making it unsustainable for universities to run the less lucrative but often more socially valuable courses."

The priority must be to protect the quality of degrees and make sure that the UK's national and international reputation for higher education is not damaged, she said.

"Most important of all, we must ensure that students in the UK receive the student experience they expect and deserve," she said.

Willetts said further consultation would be carried out on the liberalisation of the sector as part of the process of reform.

The extension of grants to students using private providers was announced along with other measures to increase support for new and continuing students.

These include the first increase in maintenance grants for students for three years and giving distance learning students tuition loans on the same basis as full-time students for the first time. It complements another recent decision to give part-time students access to loans.

Willetts said: "All our higher education reforms are designed to place students at the heart of a more dynamic sector. We are focusing support on those students who need it most because no one should be deterred from higher education on financial grounds.

"Continuing students and new students will both benefit from more generous maintenance rules, while part-time students and distance learners will be entitled to new support to cover the costs of tuition."

Dandridge welcomed the increase in maintenance grants, saying it would help target support at students from the lowest-income backgrounds.

But the University and College Union said the increase would not match the increase in student fees. Students from the poorest backgrounds would now face a tuition fee debt when they graduate. In addition, most students would still need to take out a maintenance loan to cover living expenses.

Under the current system poorer students' fees are covered by a government grant plus a minimum bursary from a university if it is charging the current maximum top-up fee of £3,290. Under the new system poorer students will face tuition fee bills of up to £9,000 a year, offset by a maintenance grant of £3,250. It is expected that universities will provide bursaries for poorer students as part of their access agreements.

The announced changes are subject to parliamentary approval.

Related link

UK: Higher education market - conflicting messages