The funding system for undergraduate education in England (but not Scotland, Wales or Northern Ireland) has undergone a radical overhaul in the last two years. The teaching grant has been greatly reduced (by approximately 80 per cent) and replaced by variable tuition fees capped at £9,000 per year. An improved maintenance grant system has been put in place to support students but the biggest change has been the introduction of income-contingent loans for fees and maintenance.
Some of the debt levels incurred by students under the new system are eye-watering – with loans for fees and maintenance combined, initial debts can be over £45,000 upon graduation. However, these headline debt figures are misleading as a guide to future financial hardship, since many students will never pay back anything like all of their loans.
Following on from Future Universities, which assessed the sustainability of the new funding system in broad brush, Funding the Future takes a detailed look at the numbers, with particular focus on how losses on the student loan book could be reduced. This latter problem – and the concomitant problem of a government cap on student numbers – has been hidden by a narrow policy focus on headline debt figures. Yet, as Future Universities argued, for the sake of financial and bureaucratic sustainability, as well as for the sake of social mobility through widened access, administering a less leaky loans system should be a priority.
Funding the Future will assess the scope for changing the repayment terms on student loans in order to reduce the incidence of unpaid loans and free up money so that the cap on places in higher education can be removed. The project will undertake quantitative analysis of the implications of various changes to the student loans system and will report on which options best preserve the newly reformed system’s progressive nature.
The project will also examine the scope for expanding ‘off-quota’ provision. This is provision not funded by student loans. Examples of off-quota provision include places sponsored by charities and companies, fees paid upfront by individuals, and sponsored fee-waivers.
The final report for this project will be published in autumn 2012 and will make recommendations to government on how the repayment terms of student loans could be changed and how any money saved might be spent on expanding tertiary education. The report will seek to ascertain if, under the current funding framework, the financing of undergraduate education in England can be put on a sustainable footing - one that can respond to changes in demand for different kinds of tertiary education, as well as a potential increase in total demand.
This project is supported by Universities UK.
This report responds to the Government's proposed reforms on higher education, suggesting how they could be improved.