Reform Scotland

“Deferred fees the answer for higher education” – Scotsman

This article by Alison Payne appeared in the Scotsman

In a keynote speech last Thursday, the new Universities Minister David Willetts indicated that he was open to the idea of an increase in variable tuition fees for under-graduates in England and Wales as part of a radical overhaul of higher education funding. This is in addition to Lord Browne’s review on university funding south the Border which is expected to report in the autumn. While I disagree with the principle of up-front tuition fees, we have to face the fact that the current funding system of universities in Scotland is equally in need of fundamental and urgent reform.

The series of reports that Reform Scotland has published over the past two-and-a-half years has focused on improving standards in public services, not merely because it could cost less or deliver efficiency savings, but also because the taxpayer deserves better value for money. When we began examining the funding of higher education in Scotland, the current economic crisis simply strengthened the case for change.

That is why Reform Scotland’s report, Power to Learn, published today [mon], calls for graduates to contribute towards the cost of higher education in Scotland through the introduction of a deferred fee. The fee would cover a proportion of the cost of the degree and would only need to be paid back once the graduate earned more than the Scottish average salary.

In an ideal world, higher education should be an option open to everyone who is academically able. However, even under the current system of taxpayer-funded university places, there are school leavers who cannot afford to attend university and instead seek employment. It cannot be right that such individuals, or indeed other non-graduates, have to fully subsidise those who can afford to go to university.

Although it is true that society as a whole benefits from having a well-educated and diverse workforce, graduates also gain individually. But, under the current arrangements, it is only wider society that pays for university education though the tax system, while the graduate does not contribute any more than the non-graduate. Although graduates may earn more and subsequently pay more tax, many successful top rate tax payers have not gone to university, so higher tax contributions should not be seen as payment towards higher education.

That is why Reform Scotland believes there needs to be a better balance with both taxpayers and graduates contributing towards university education.

Introducing some element of fee can also help improve standards. David Lammy, the former Higher Education Minister in England, has said that that “students are more purposeful about what they should expect at university and what the general minimum standards should be across universities in this county” when fees are introduced.

However, we are not advocating that Scotland should follow England with the re-introduction up-front tuition fees. Such an arrangement would simply deter those who come from less well-off backgrounds and potentially make higher education the privilege of the elite. Similarly, we reject the notion of a graduate tax where the individual pays indefinitely, since that could see the graduate contributing more than the full cost of their study.

A deferred fee ensures that graduates pay a fair share towards the cost of their education, but equally guarantees that their ability to enter higher education is not based on their parents’ ability to pay.

The deferred fee should cover a proportion of the cost of tuition. The Scottish Government would fund a set percentage of the average cost of a degree, broken down by broad subject area.

There is currently a lack of published evidence on the true cost of higher education in Scotland which is why Reform Scotland has recommended that the Scottish Government commissions independent research to work out the true average costs of degrees. Then, in discussion with representatives of Scottish higher education institutions, it can be decided what proportion the government will pay.

The deferred fee is modelled on the system introduced in 1989 in Australia, which has a higher education participation rate of 86%, according to the OCED. Research has indicated that the introduction of the scheme did not have a negative impact on participation rates in higher education from lower socioeconomic groups.

The existing system for collecting student loans could easily be used for the collection of the deferred fee, once the graduate earns more than the Scottish average salary, which in 2007 was £23,000.

In the longer term, Reform Scotland believes some of the extra resources raised from the deferred fee could be used to expand the availability of loans to all students and to raise the point at which they start being repaid to the Scottish average salary, in line with our proposals for the deferred fee.

While widening the availability of loans could help increase access to university education, we also believe that greater recognition of Higher National Qualifications as a legitimate way to progress towards a degree could also widen access. Research by the Scottish Funding Council suggests that while post-92 universities are willing to transfer students who have successfully completed a relevant higher national qualification into later years of study on a degree course, ancient and traditional universities are less accommodating. This can lead to students unnecessarily having to undertake up to three years more study, along with the increased costs associated with that.

Since it is often students from more disadvantaged backgrounds who use this route towards a degree, this can disproportionately affect this group. Reform Scotland believes that if Higher Education Institutes are willing to take public money to pay, even in part, for a student’s higher education, there should be a condition of grant that they are willing to take transfer students who have successfully completed HND and/or HNCs into later years of study on a degree course where the subject content is comparable.

Higher education is not “free”. Rather it is paid for by taxpayers. Before universal services such as healthcare or policing are targeted for spending cuts, it is only fair that the current system of university funding, which often sees the less well-off contribute through their taxes for the better off to go to university, is reviewed.

Reform Scotland believes that the recommendations we have set out in our report published today will go some way toward helping to create a system of higher education that continues to produce well-educated individuals, but is funded in a way that is fairer to society as a whole.

Alison Payne is Research Director of Reform Scotland