Comments on Higher Education funding overseas
21 January 2004Variable Fees and Debt – The Real International Evidence about Access and Higher Education
Introduction and Summary
This brief paper summarises the likely implications of the Higher Education Bill for access to university by children from less well-off families based on research and evidence gathered from both the UK and abroad.
Before Christmas, in its document ‘Higher Education Funding – international comparisons’, the Department for Education and Skills (DFES) concluded that:‘International experience suggests that higher variable fees can be introduced without adversely affecting the participation of students from less well-off families’.
In his speech to the IPPR last week, the Prime Minister went further. ‘Furthermore there is no evidence from these countries that tuition contributions limit access.’
This paper will show that ample evidence from such countries – including the US, Canada and Australia – demonstrates that this is not the case.
Research shows quite the opposite: that higher fees and debt do limit access. And at the very least, they certainly do not improve access.
So far, the DFES has been very selective with the limited amount of international information it has placed in the Library of the House of Commons for Members of Parliament.
When it has been asked, in Parliamentary Questions, to make other surveys available, the DFES has produced no meaningful response.
This paper, therefore, attempts to redress the balance and give MPs more information before the Second Reading of the Higher Education Bill.
Evidence from the United States
The US has often been cited as a model to emulate in terms of the funding of its universities and international excellence. The reality, in terms of access on the basis of merit, is hardly an example for Labour to follow.
The US has an entrenched multi-tier system. The country has three main types of Higher Education institutions: private, public and community colleges, each with the autonomy to set their own level of fees.
Around 18% of students attend the private universities, which include the Ivy League, with annual fees of up to $37,000 for typical four year courses.
Not surprisingly, despite much-vaunted bursary schemes, the Ivy League has the worst record on access. It is appalling – as low as 4.3% at Harvard at the end of the 1990s for the poorest federally-aided students
The remaining 82% of students go either to Public Institutions or Community Colleges, the latter tending to focus on 2 year courses (the length of our proposed ‘foundation degrees’).
The two recent seminal, official reports on access in the US system make for chilling reading.
They are: ‘Empty Promises: The Myth of College Access in America’ in June 2002 by the Advisory Committee on Student Financial Assistance, established by the US Congress, which builds on ‘Access Denied: Restoring the Nation’s Commitment to Equal Educational Opportunity’ a year earlier.
The titles speak for themselves. ‘Financial barriers prevent 48% of college-qualified, low-income high school graduates from attending a four year college and 22% from attending any college at all,’ the 2002 report concludes. Furthermore, the lowest achieving, richest students attend college at the same rate as the very highest achieving, poorest students. (1)
In other words, the US system works for well-off families, but simply prices many low income students out of a market with high and variable fees.
Over time, US federal aid has reduced relatively as fees have risen, so students have turned to bursaries from university endowments for help.
In the UK, much has been made of bursaries recently, yet in the US many are awarded on a ‘needs blind’ basis. Indeed, while the number of US students receiving bursaries has increased, perversely, the biggest increases in aid have been to the wealthiest students. (2)
This is because US universities try to attract ‘top students’ in stiff league table competition in a free market. This trend has serious implications for the UK, as the White Paper said it saw bigger endowments as ‘the route to real funding freedom in the long term’ and the way to fund bursaries.
As the US experience demonstrates, there is no guarantee that bursaries from universities in the UK will deliver greater access as institutions compete to attract students in a market-based system.
Evidence from Canada
Canada has also allowed variable fees, with charges more than doubling at some schools, including medicine, dentistry and law, since the early 1990s.
Before Christmas, citing an October, 2003 report from Statistics Canada, the DFES stated: ‘In Canada, a rise in tuition fees has not adversely affected the participation of students from lower income families’. (3)
Another recent study, however, shows that fears regarding access to higher cost, longer study degrees such as medicine are well-founded.
The research – ‘Effects of rising tuition fees on medical school class composition and financial outlook’, published by the Canadian Medical Association in 2002 – makes for cautionary reading. (4)
The paper focuses on the 5 Ontario medical schools, which have increased their tuition fees since 1997. The University of Toronto, for example, increased its fees from $4,844 in 1997/98 to $14,000 in 2000/01.
After surveying nearly 3,000 medical students, it concluded: ‘At Canadian medical schools, there are fewer students from low income families in general. However, Ontario medical students report a large increase in expected debt on graduation, an increased consideration of finances in deciding what or where to practise, and increasing financial stress, factors that are not observed among students in other provinces.’
‘As tuition fees increased in Ontario,’ they found, ‘the proportion of students from families with incomes less than $40,000 decreased from 22.6% to 15.0%.’ – that is, by a third.
The 2003 Statistics Canada study cited by the DFES, however, did not attempt to measure the effect of fee increases on access to particular courses or universities – a major weakness.
It only measured participation in terms of total numbers in different social groups at universities and vocational colleges - and only up to 1997.
Overall, however, since 1992 – despite an expansion of Canada’s student loan scheme – even this study showed static participation for students from the poorest families. And for lower middle income families it declined.
When examined, the Statistics Canada report, therefore, hardly supports the DFES’ case on access at all - and other studies undermine it.
Evidence from Australia
Since 1989, Australia has also had tuition fees, repaid after graduation through the tax system. After Labor fell in 1996, the Conservatives brought in variables, raised fees by up to 122% and cut repayment thresholds.
Australia’s Higher Education Contribution Scheme (HECS) - with three bands of charges depending on the type of subject studied: arts, maths/ engineering or vocational degrees – has just been controversially changed to allow variability between universities, subject to a national cap. (5)
In its conclusion about the scheme ‘down under’, the DFES states that: ‘In Australia, participation in higher education has increased across all social groups since higher, differential fees were introduced.’ (6)
Again, however, this is at odds with the latest report from the Australian Education Minister Brendan Nelson.
His most recent survey – ‘Higher Education for the 2004 to 2006 Triennium’ – shows that the least well-off students made up 14.5% of the intake in 2003, against 14.7% in 1991 – a fall. (7)
Last August, another report – ‘HECS and Opportunities in Higher Education’ - found adverse effects from the switch to variability from 1996.
It showed applications from school-leavers fell by 9,000 a year, rising to 17,000 from mature students, and that the number of males doing ‘Band 3’ vocational courses – like law and medicine - had fallen by 38%. Poorer children were tending to do cheaper courses. (8)
The Prime Minister was challenged on this evidence on Monday’s Newsnight programme, but floundered in his response.
Australia’s system is cited as the closest to the new one for the UK. So why has the DFES ignored these studies – are they inconvenient, perhaps?
In Australia, these reports were only released after a furious row about an alleged cover-up. This co-incided with huge political arguments over its new more variable system, which has seen fees rise again by up to 25%.
Particularly controversial was the universities demand for an increase in the ‘full fee-paying quota’ which has developed with variable fees. How long, then, will it be before the Russell Group starts pressing for less qualified, better off UK students to pay market rates to bring in more money?
Evidence from the United Kingdom
Charles Clarke has rightly called progress on access in the UK a ‘national disgrace’. Statistics show that so-called ‘elite’ universities already have the lowest percentage of students from the lower social classes attending, as the following table from the National Audit Office shows:
HE Institutions with highest and lowest percentages of students from social classes IIIM, IV & V
Highest
University of Wolverhampton 47%
University of Teeside 45%
Newman College 45%
University of North London 42%
Bolton Institute of Higher Education 41%
Lowest
University of Oxford 9%
University of Cambridge 9%
Royal Veterinary College 10%
University of Bristol 11%
London School of Economics and Political Science 13%
Source : National Audit Office analysis of data published by the Higher Education Funding Council for England (9)
Yet the ‘elite’ in the Russell Group have been in the vanguard in demanding not only ‘top up fees’, but charges way above the £3,000 ‘cap’. From evidence from overseas, the effects on access are all too predictable - especially in the face of pressure to increase fees further.
The National Audit Office has not only demonstrated that ‘the proportion of students accepted from poorer social classes varies substantially among higher education institutions’, but also that already ‘poorer social classes have particularly low representation in medicine, dentistry and veterinary science and higher representation in education, mathematical and computer sciences……in all but two subject groups, their applicants are less likely than average to convert to accepted places.”
These are the very courses likely to command the highest fees. And evidence from the US and Canada, with trends observed in Australia, demonstrates that with higher variable fees, these vocations are likely to become even more than now the domain of the wealthier classes.
Higher variable fees, therefore, do not improve access – even with bursaries or income-contingent repayments. They worsen the situation, or at best reinforce the current pattern, cementing the existing class divide.
Recently, further government-funded research in the UK has shown the very real effects of debt aversity as a deterrent to less well-off children.
In the UK, average student debt has already risen from £1,095 in 1992 to over £8,000 in 2003. Under these plans, Charles Clarke stated at the outset that debt for students may rise to over £20,000. (10)
As Newsnight showed, the presentation of policy so far has reinforced the message that: getting a degree = getting into (now greater) debt. This signal has been received loud and clear by students and their families.
The concessions so far on maintenance and student support are clearly welcome. Evidence in the UK has demonstrated, however, that fear of debt clearly deters less well-off children, as well as hardship.
Recent research in 2003 by Professor Clare Callender on behalf of HEFCE and Universities UK shows that “84% believe student debt deters entry into HE” and ‘respondents from lower social classes were more likely than those from high social classes to hold debt averse views’. (11)
As Callender concludes: ‘These tuition fees, paid after graduation, are likely to increase student debt, especially for low-income students, which as this study showed deterred their participation in HE.’ (12)
A report, too, in May 2003 by The Joseph Rowntree Foundation - ‘Losing Out? Socioeconomic disadvantage and experience in further and higher education’ - also concluded: ‘Young people from disadvantaged backgrounds are often deterred from both entering full-time education in the first place and from continuing within higher education long enough to reach their full academic potential because of the economic hardships they suffer, in particular debt’ (13).
Factors such as lack of attainment, unfamiliarity with HE and cultural background also affected participation. But the Rowntree Foundation also found ‘fear of debt’ a barrier as well as ‘fear of hardship’.
‘A fear of debt…could exert a much greater deterrent effect on disadvantaged students’ continued participation than could actual debt, especially when this fear was coupled with a lack of confidence, about both their chances of academic success and their chances of finding a job at the end of it all to pay off this debt’. (13)
In the current debate, much has been made of the increased income which different courses and attendance at different universities bring later in life. So why shouldn’t students pay more for accessing the best?
The deterrent effects of debt, however, show that in the real world, teenagers – not least poor kids, often under pressure to go out and work – are just not cold calculating, cash machines.
Further recent UK research (by Drs Conlon & Chevalier, much cited by DFES ministers) does indeed show that financial returns vary between institutions and subjects. Yet, they also differ because of other factors such as prior educational attainment, type of school attended and parental occupation.
So does this justify top-up fees? Well, as the research concludes: ‘the introduction of differential fees according to the subject studies and the type of institution attended may have the effect of discouraging people who possess all the entry criteria from applying to or attending particular institutions and studying particular subjects’(14)
In final conclusion, in reality the experiences of the US and Canada, supported by trends evident in Australia, indicate that the introduction of higher variable fees hits access and equality of opportunity.
This reality is at odds with the highly selective, misleading international evidence and conclusions circulated by the DFES so far in this debate.
So the real question is: having seen where the road leads there, do we want to be the first country in Western Europe to go down this route?
Postcript: A few words about OFFA
When challenged with evidence, which it has conveniently ignored, the DFES is likely to fall back on the regulator – as in, ‘but unlike Australia, Canada and the US, we’ll have OFFA to make sure access improves!’
It has, however, already been made clear that OFFA will not interfere with admissions policies. The Education Select Committee, too, has already concluded it won’t make much difference to the activities the Higher Education Funding Council (HEFCE) already undertakes.
And take a look at the fine print accompanying the Bill.
‘OFFA will be a non-departmental public body. It is likely to be a very small organisation consisting of the Director and a small number of support staff,’ according to the notes to the Bill.
What confidence does that inspire, against the assurances being made for OFFA? It is swimming against the tide. Will it be simply over-whelmed?
Sources
1. ‘Empty Promises : The Myth of College Access in America’ – A Report of the
Advisory Committee on Student Financial Assistance, June 2002.
See also: ‘Access Denied: Restoring the Nation’s Commitment to Equal
Educational Opportunity’, by the same body, February, 2001.
2. See: ‘What Colleges Contribute; Institutional aid to full-time undergraduates
attending four year colleges and universities’, The U.S. Dept of Education.
3. ‘Family income and participation in post-secondary education,’ by Miles Corak,
Garth Lipps and John Zhao, Statistics Canada, October, 2003.
4. ‘Effects of rising tuition fees on medical school class composition and financial
outlook’. Jeff C Kwong, Irfan A Dhalla, David L Streiner, Ralph E. Baddour,
Andrea E Waddell, Ian L Johnson. The Canadian Medical Association, 2002.
5. For details, see the Australian government website:
www.hecs.gov.au 6. ‘Higher education funding; international comparisons,’ DFES, December, 2003.
7. ‘Higher Education – report for the 2004 to 2006 Triennium’, Australia’s
Department of Education, Science and Training, December, 2003.
8. ‘HECS and opportunities in higher education,’ as above, August, 2003.
9. ‘National Audit Office, Widening Participation in Higher Education in England’.
Report by the Comptroller and Auditor General : HC 485. 18th January, 2002.
10. Student Living Report 2004, commissioned by UNITE and conducted by MORI.
See also reports in The Independent and Daily Telegraph, 21st January, 2004.
11. ‘Universities UK Student Debt Project’, for Universities UK and HEFCE by
Professor Claire Callender of South Bank University, January 2003.
12. Clare Callender : Postscript to Student Debt Report, 2003.
See also: ‘2002/03 Student income and expenditure survey,’ by
Callender and David Wilkinson of the Policy Studies Institute for the DFES.
13. ‘Losing Out? Socioeconomic disadvantage and experience in further and
higher education’, by Andy Furlong & & Alasdair Forsyth, the Joseph Rowntree
Foundation, May 2003.
14. ‘The Financial Returns to Undergraduates and Tuition Fees’: By Doctor Gavan
Conlon & Dr Arnaud Chevalier, Council for Industry and HE, November, 2002.
15. Report by D Heller of The Center for the Study of Higher Education at Penn
State University using data from the U.S. Dept of Education for 1998/99.
16. Universities’ own information.
17. ‘Does HECS deter? Factors affecting university participation by low SES
groups,’ by Les Andrews, Higher Education Division, Australia’s Dept of
Education, Training and Youth Affairs, August 1999.
18. ‘Income contingent financing of student charges for higher education:
assessing the Australian innovation,’ by Bruce Chapman and Chris Ryan,
Australian National University, May 2002.
19. ‘The access implications of income contingent charges for higher education:
lessons from Australia,’ by Bruce Chapman and Chris Ryan, Australian
National University, April 2003.
20. ‘Socioeconomic Background and Higher Education Participation : an analysis
of school students’ aspirations and expectations’. Richard James, April 2002
21. ‘AV-CC : Paying their way : A Survey of Australian Undergraduate University
Student Finances 2000’ by Michael Long, Martin Hayden, October 2001
Appendix I
The US ‘Ivy League’: the real picture on access
Private institutions, in particular the Ivy League, in the US are those which the White Paper sought to emulate in terms of ensuring we have ‘world class’ universities. So too, do UK institutions like Imperial College, which are already pushing for the initial £3,000 ‘cap’ on fees to be increased.
A good measure of the level of participation amongst students from lower socio-economic backgrounds in the US is tracking those who receive a ‘Pell Grant’ from federal state aid.
Pell Grants are the foundation of federal financial aid, to which aid from other sources might be added. In the year 2002/3, the grant was worth up to $4,000 on graded basis to poorer students.
Ivy League universities on average have the highest fees and the lowest participation by students from the lower social classes, as indicated by Pell Grant recipients.
The following table illustrates the cost of attending Ivy League universities and recent participation rates by Pell Grant recipients.
University Tuition and Fees Room & Board Living Costs Total % of Pell Grant Recipients *
Brown $28,480 $7,876 $2,127 **** $41,266 10.20%
Columbia $28,206 $8,546 $2,750 **** $39,502 16.70%
Cornell $23, 624 ** $27,394 *** $8,980 $1,880 $34,484 18.60%
Dartmouth $27,771 $8,980 $1,880 $38,254 11.60%
Harvard $27,448 $8,217 $2,267 $38,255 4.30%
Princeton $27,230 $8,502 $2,500 $38,450 7.60%
Penn $27,998 $7,842 Not given $35,072 13.20%
Yale $27,130 $8,224 Not given $36,222 14.20%
Sources : (15) and (16)
* % of Pell Grant Recipients 1998/99
** cost of State Assisted costs of Agriculture & Life Sciences, Human Ecology, & Industrial & Labour Relations (NY residents are charged $13, 274)
*** cost of privately funded units of Architecture, Art & Planning ; Arts & Sciences ; Engineering & Hotel Administration
**** in 2001/02
Overall, in the US more than double the number of Pell Grant recipients go to Public Universities and Community Colleges than private universities. Why? Because of the sheer cost of studying in a market system with variable fees.
Appendix II
More Evidence from Australia
To support its sweeping assertions about Australia, the DFES has cited three studies: ‘Does HECs deter?’ by the government in 1999 and two papers from the Australian National University in Canberra from May, 2002 and an updated version from April, 2003. (17, 18 and 19)
That previous Australian government study, however, showed that participation by the least well-off students had also barely moved from 1989 to 1998.
The latter two studies, furthermore, were co-authored by Bruce Chapman, the controversial architect of the HECS scheme in the first place!
Again, however, after dismissing other research and methods, the best conclusion they reached was that HECS did not deter overall – not that the system improved access, as the DFES conclusion implies.
Further survey evidence from Australia, however, has indeed highlighted concerns about the impact of differential fees on access by the less well-off.
A survey of 7,023 school children in the states of New South Wales, Victoria and Western Australia revealed, for example, that: ‘The perceived cost of higher education appears to be a major deterrent for students of lower socio-economic background. They are more likely than other students to believe the cost of university fees may stop them attending university’. (20)
A further recent survey of over 34,000 students has also found that financial circumstances influence student choices regarding course undertaken, university attended and mode of study. The trend was particularly pronounced among part-time students. (21)
Since the introduction of higher, variable fees, the survey found student hardship had increased. In Australia, 7 out of 10 students in 2000 worked in term time – an increase of 50% since 1984. Among full-time students, the average number of hours worked was 14.5 hours per week – a three-fold increase since 1984. Poorer students are disproportionally affected.
Recently, too, Australia has addressed the need to encourage students into socially vital professions, such as teaching and nursing. So from 2005, there will be a separate lower band of fees for ‘National Priorities’ – recognising the deterrent effect of higher fees on student intake.
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