By Elizabeth Truss, Deputy Director, Reform
Despite the political turmoil it created at the time, the introduction of tuition fees in 1998 and top-ups in 2006 has been one of the most successful policies of this Government. Ten per cent more students from low income backgrounds have gone to university since top-ups were introduced. There is a new stream of funding into higher education. Students have the muscle to demand better teaching. Yet Britain still lags behind the international leaders on funding for top institutions and in many cases undergraduate teaching is being subsidised to the tune of £10,000 per year.
The higher education sector is expecting to be hit hard in spending cuts. As one academic put it “we didn’t know it at the time, but these have been golden years for public financing of higher education.” The new financial reality presents a stark choice for universities. One alternative is to see the quality of resources falling as the government tries to get more students for less money. The other is to obtain more financial contribution from individual students.
However this pain can become a gain. Giving more financial responsibility to students is a good thing. Contributing to your own education is empowering and helps students take the decisions they are making seriously. Investing in education should be seen in the same positive way as home ownership. Students will stop being loss making for the top universities and start being something that helps the institution thrive. Additional fee income will fund bursaries and scholarships for poorer students.
Higher fees combined with a well structured loan system do not disadvantage the worst off. In fact a system where students are assessed on merit and required to provide funding is often more open than other systems because the artificial restriction on places is lifted. As institutions are earning a decent amount from each student they have an incentive to get more through the door.
This is shown in the empirical evidence. The countries that charge the highest fees such as Australia, the US and Korea also have some of the highest rates of participation at 84%, 64% and 59% respectively – considerably higher than the UK. They also have impressive participation from the poorest quarter of society with 50% of the poorest in Higher Education in the US and 30% in Australia [the UK figure lags at 17%]. The UK’s position is not all bad; other countries such as Germany and Spain with lower tuition fee rates have even lower participation.
It is important however those proper loan facilities are provided, so those who cannot rely on parental subsidy can have access to a great education that they pay back when they are earning enough money. Where loans are not in place, high fees can lead to low participation. Three quarters of Japanese students do not get a loan and only 31% of the population go to university. The evidence shows it is better to make sure credit is available to poor students rather than cap fees, which can inadvertently result in a top-down cap on places.
England has already dipped its toe in the fee water, with positive results. It is time for us to take the plunge like our international competitors Australia and the US. Participation rates will rise, especially for low income students. And our universities will gain financially and educationally.
