Augar review: call for £7.5K fee cap but loan access bar deferred

The maximum tuition fee that English universities can charge students should be cut to £7,500 from 2021, with replacement public funding targeted at subjects that cost more to teach and have greater “social and economic value”, the panel for the government’s major review of post-18 education recommends.

Meanwhile, plans considered by the panel to reduce the number of students entering universities by halting access to loans for those with lower grades – fiercely opposed by the sector and the universities minister, Chris Skidmore – do not feature as a direct recommendation. Instead, the panel, led by former banker Philip Augar, says such a plan should be among the options considered by the government if universities have not addressed problems such as “poor long-term earnings benefits” on some courses by 2022.

Other key recommendations include those calling for the return of student maintenance grants, abolished by the Conservative government from 2016; the widening of access to tuition fee and maintenance support to students on vocational education courses; a lifelong learning loan allowance to help adults upskill in which “equivalent or lower qualifications” (ELQ) restrictions would be ended; a cut in loan interest rates during periods of study; and the extension of loan repayment terms from 30 to 40 years.

The panel also recommends scrapping student finance support for foundation year courses – which will anger many universities.

The report costs the total package of recommendations at between £300 million and £600 million a year in England, with Barnett formula funding for devolved nations taking this to £1.2 billion to £1.5 billion UK-wide. But it says ongoing work to calculate the cost of changes to the treatment of student loans in government accounts contributes to “significant uncertainty” around the package’s price tag.

Treasury concern about funding additional direct spending on universities could put a block on implementation of the fee recommendations, Westminster sources have previously told Times Higher Education.

While the higher education sector’s focus will be on the recommendations on tuition fees, much of the panel’s focus is on trying to boost funding for students in further education and to level the playing field between them and their counterparts at universities.

The panel – which also included Baroness Wolf, an academic expert on vocational and higher education, and Edward Peck, the vice-chancellor of Nottingham Trent University – writes: “Our core message is that the disparity between the 50 per cent of young people attending higher education and the other 50 per cent who do not has to be addressed.”

But the review faces an uncertain political future. It was personally announced and pushed through by Theresa May, who will soon step down as prime minister; and the Conservatives are unable to command a majority in the House of Commons, where legislation would be required to lower the fee cap and to make changes to university funding.

There has been no announcement on when the government will respond to the review.

However, the broader philosophical shifts called for by the review panel – for universities to “bear down on low-value degrees” and to prioritise “courses better aligned with the economy’s needs”, with a warning that post-18 education “cannot be left entirely to market forces” – could prove influential.

On the review’s key recommendations, the call for a £7,500 fee cap to be introduced by 2021-22 is followed by a recommendation that “government should replace in full the lost fee income by increasing the teaching grant, leaving the average unit of funding unchanged at sector level in cash terms”.

The panel adds that the fee cap “should be frozen until 2022-23, then increased in line with inflation from 2023-24”.

The panel also says in its recommendations: “Government should adjust the teaching grant attached to each subject to reflect more accurately the subject’s reasonable costs and its social and economic value to students and taxpayers.”

In the chapter on higher education, the panel says it judges that the “distribution of funding between subjects is out of line with teaching costs causing over and under funding of many subjects”.

The government “should have more say in how the state subsidy for higher education is spent”, the panel also says.

The panel recommends that the Office for Students “carry out a review of the funding rates for different subjects, to include an examination of the reasonable costs”.

It adds: “We expect that this study should rebalance funding towards high-cost and strategically important subjects and to subjects that add social as well as economic value. We would expect some subjects to receive little or no subject specific teaching grant over the £7,500 base rate but that the OfS would consider separate arrangements to support those specialist institutions offering the highest quality provision that might otherwise be adversely affected by these recommendations.”

The report judges that a fee cap of £7,500 “is fair”, adding that although “commentators stress that the level of debt is irrelevant given the income-contingent character of the loan system, perception is reality for many prospective students”.

On the minimum grade threshold for loan access, the panel says it considered the introduction of a lower limit for under-25s to access student finance. Sources previously suggested that the panel wanted to set the bar at DDD at A level or equivalent, in effect barring most students who fell short of that from entering higher education.

The panel argues that, based on modelling conducted by Ucas of potential “contextualisation” of scores for students from disadvantaged backgrounds, such a threshold could stop students from enrolling when they have a limited chance of significant social mobility on graduation. The panel also says it considered an “alternative or complementary option” that would allow the government and the OfS to impose a cap on the number of students admitted to courses “that persistently manifest poor value for students and the public”, in terms of graduate earnings and loan repayments.

The panel concludes that the sector should be given more time to address the problem of “students being inappropriately recruited onto low value courses”, but does not rule out the introduction of such limits later down the line.

“Unless the sector has moved to address the problem of recruitment to courses which have poor retention, poor graduate employability and poor long term earnings benefits by 2022-23, the government should intervene. This intervention should take the form of a contextualised minimum entry threshold, a selective numbers cap or a combination of both,” the report says.

Universities will be pleased that the minimum entry tariff plan has been downgraded to a vaguer, more distant threat.

It remains to be seen whether Ms May’s successor will seek to steer through any legislation on university funding.

john.morgan@timeshighereducation.com