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Talk – Where did it go wrong for the English fee-loan regime? (KCL, Wed 28 March)

Where did it go wrong for the English fee-loan regime?

King’s College London
Wednesday 28th  March 2018  17.00 – 18.30

Venue: Bush House
Room: NE -1.01

Introduced as part of the Coalition government’s austerity programme, “post-2012” undergraduate fees were given a more substantive rationale when student numbers controls were lifted from universities in 2015. The shift to loans was presented as central to ending the rationing of full-time places for Home and EU students and the new regime was trumpeted as a triumph of secure, sustainable funding.

Just three years later and terms on loans have been changed twice, before even two full years of graduate repayments have come in. Now the government has announced a major review, backed by an independent expert panel.

This talk will outline what’s going on in terms of the politics, the finances and the accounting and set out the likely implications for undergraduate teaching for 2019 onwards.


Whatever Happened to the Polytechnics? Part IV – Concluding Comments

Here’s Lord Stevenson speaking in the House of Lords in April 2017:

“Where are the policies to reinvigorate part-time provision? The collapse in enrolments at Birkbeck, University of London and the Open University coincided with the hike in course fees and the introduction of maintenance loans. No real change in approach is signalled in the higher education Bill or in the Technical and Further Education Bill, which passed through this House yesterday. … So we have a policy approach which will not work: a system of fee increases, and thereby personal borrowing increases, which will not enhance social mobility or improve part-time provision.”[1]

By cutting all teaching grant to institutions, part-time study is hit because the fee is pro-rata and loan eligibility is restricted and other funding has dried up. In 2012/13, two-thirds of part-time students were ineligible for loans and the proportion getting employer support with fees declined by 35 percentage points (Callender, HEPI October 2015).

Those students were ineligible for loans also because of the Equivalent and Lower Qualifications regulations brought in 2007. ELQ at the time removed direct teaching grant funding for students who had already studied at an equivalent and higher level and prevented them from accessing loan support. Combine with the new fee regime which allowed part-time fees up to £6750 and part-time study becomes exorbitant.

There has been a partial reversal for ELQ – but only for part-time degrees in STEM subjects[2] – not for non-STEM and not for institutional credit, certificates or diplomas etc.

If we are thinking about retrainees – are they more likely to need another full degree or something else?

Wolf further notes that the flaws in the generalised loan logic can been seen with Advanced Learner Loans: their introduction ‘is associated with a near-halving of enrolments at level 4.

“In 2013-14, £115.8 million was paid out for advanced learning loans. This was the first year – but in 2014-15 only a little more, £149 million, was taken up, out of the £397m allocated. Moreover, 94 per cent of the loans were for adults taking qualifications at level 3 and only 6 per cent for level 4.” (ibid. p. 54)

Here, rather than more loans, I see the need for a new set of institutions given a different set of funding incentives to focus on undergraduate-level provision but with a focus on part-time, lifelong and retraining and a commitment to making students a priority, pace Eric Robinson, before subject discipline, research, employer demands or state. Civic, participatory institutions.

Perhaps what I have in mind are something like US community colleges, which provide general tertiary education and the kind of systematic careers guidance which was promised in the 2011 HE White Paper, but never delivered. I see such institutions as receiving direct grant and being thereby an alternative to various voucher schemes.[3] In this way, headline part-time fees would be cheaper than pro rata’d full-time ones.

If Labour is serious about reforming higher education, creating a National Education Service and abolishing fees, it will need to do so by focusing on supporting a different kind of provision rather than the blanket support of existing institutions and provision. Labour’s mistake before the 2015 election was to highlight the cut in full-time fees to £6000 without explaining how that could have beneficial implications for part-time and lifelong study. It is only by reorienting to lifelong, universal provision that a reduction in fees is more than a saving for the future high-earners.

Politically, any government seeking to undo the changes of the last 5-10 years will have the unenviable task of facing down Oxbridge and the Russell group universities. The attraction of the fee-loan regime is clear – the autonomy, the lifting of recruitment caps and prestige. What I am thereby proposing would perhaps mean a new binary in terms of funding. Full-time away from home academic degrees funded on the fee-loan model, but a separate class of institutions concentrating on flexible provision and joining up with FE.

Some former polytechnics and newer universities may want to revert to a teaching focus with a better set of incentives for part-time and flexible. Some FE and adult education colleges – such as Newcastle College, my hosts this evening –  may also be able to come into such a setup. As with the formation of the original polytechnics, families of institutions could be brought together as is happening at London Southbank University.

There will be objections to a move away from a unitary system – but we don’t have the level playing field our ideologues suggest – it is an abstract equality that ignores disparities of wealth and opportunity. We need to “level up” education at the neglected end.

There are though a couple of key messages that should also be addressed – pay and governance. There are lessons to be learned from the failures of local authority involvement in the polytechnics, but we also cannot be sanguine about university-style governance, particularly as universities extend their reach into public services (for example, sponsoring and running schools). University governance is not democratic and the only social control is the attenuated semblance of such: consumer pressure. With any new institutions, students and staff would need to be involved in governance – along the lines perhaps of the reforms suggested in Scotland by the von Prondzynski review – with its emphasis on ‘independent public bodies’.

And, and, and – nothing of Crosland’s vision of sites of collaboration between industry and education can happen if there is not movement of personnel between industry and education and parity of pay between industry and education. The current pay of educators in further education (and casualisation everywhere) sets a huge impediment before any radical scheme: it cannot work with overuse of hourly paid lecturers and it cannot work if one would have a better standard of living administering the department than teaching in it.

I will end with a more philosophical point.  Classically the urban forum is the site of philosophy – where ideas are tested in debate. This was overwritten with the scholarly refunctioning of the monastery and its emphasis on lack of distractions. We do need both models – a research oriented and an engagement model. And by the latter I mean – not the show and tell of much academic conferencing but the cut and thrust of political and street debate. Robinson, whose 1968 manifesto The New Polytechnics is worth revisiting, called for institutions that looked to an urban, community model as appropriate for mass higher education.

Robinson: “One of the social needs which the universities have failed to meet is that of co-ordinating and stimulating intellectual activity in the community generally. This is most notable in respect of the further education of professionally qualified people working in industry, commerce and the public service …” [p. 131]

We are living through the crisis of public expertise as presented by the media- that is partly because the model is so unappealing. “Let us tell you what you should think, like, want etc.” A different kind of institution would be open to a public testing of knowledge distinct from the idea that academic researchers have a message to deliver to the people.

A new polytechnic movement could create and test out knowledge in new form with spaces that would not be dominated by accreditation or by the bestowal of qualifications from figures of authority.

Sites of popular learning predate the polytechnics – working class education projects – but they had much of their energy and raison d’être removed by the recent expansion of formal higher education. Part of the necessary democratic revolution facing the UK is the need to recapture some of what was lost in that transition. We forget that learning and expertise take many forms and that the university is not always the best site for it to happen. Nor should the degree be sacrosanct.

Robbins was accused by Robinson of failing to ask: ‘what is a degree and what is it for?’  Our current government would rather leave such a question unanswered and let a market sort it out. My sense is that the market cannot provide the solution – it will give us more of the same, because of how fees and loans work.

We should instead experiment with funding part-time and lifelong tertiary education differently and in institutions given the special task of linking that to technical, professional and vocational aspirations. New Polytechnics as the ‘anchor’ institutions? A National Education Service that aims at educating our diverse citizenry differently?


This is the final part of four.



[2] PT maintenance loans will also be available for these students from 2018/19.

[3] Wolf’s own recommendation of a lifelong learning entitlement does not appear to have any clear incentive benefits if the repayment terms are initiated once any resource is drawn down.

Whatever Happened to the Polytechnics? Part III

I will now turn to what I consider to be the moral imperative for part-time provision, which leads me to conclude that we have grave problems with our current funding settlement.

Regardless of debates about what the proper cost of HE should be, what we have is a system that gives people in the main one shot at funded study and a culture that pushes them to make that decision at 17 or 18. As someone who changed undergraduate courses in the mid-90s, I am acutely conscious of the pressure put on young people to go to university too soon and the difficulty of redressing mistaken choices. The fee-loan regime introduced without adequate credit transfer arrangements is hopeless from this perspective.

It is very inflexible and at odds with lifelong learning and retraining. Crosland laid great stress on these points – the Polytechnics would have close ties to industry, business and the professions and in doing so would not only offer part-time provision (that was not beholden to e.g. the University of London external degree programmes)[ but offer training and retraining opportunities to citizens and workers throughout their lives.[1]

Read more…


Whatever Happened to the Polytechnics Part 2

Let’s move on to today’s concerns about technical education.

As we move towards a new settlement for higher education, there is a overt sense that the previous settlement, finalised in 1992/93, misfired in abolishing the binary divide between Polytechnics and Universities as separate higher education institutions with distinct missions and modes of administration and funding.

In what way did it misfire? Well, there is a longing for institutions specialising in undergraduate professional, technical and industrial training – institutions that are more connected and responsive to industry and commerce – at a time when industrial strategy is no longer a dirty word and when Brexit threatens to make apparent to everybody that England /Britain is a de-developing nation. And it does not appear that the £170m set aside for new Institutes of Technology (or existing colleges rebadged as such) is going to be adequate to the challenge of

‘linking up other providers, including FE and sixth-form colleges, the national colleges and UTCs as part of a system of professional and technical routes from education into employment. higher level technical education – along with Level 4+ structure for technical education’[1]
January 2017 Green Paper, Building Our Industrial Strategy.

The average annual operating budget of a single university is £200m.

Read more…


Whatever Happened to the Polytechnics? Part 1

The next few posts are based on the text of a lecture I gave last year at Newcastle College.



I should begin with the obvious  – or maybe not so obvious – apology. I first went away from home as an undergraduate in 1992/3, when the last big settlement in English higher education was achieved. I have no direct lived experience of the Polytechnics as were – not when they were under local authority control and not when they were funded separately to the university sector.

I did though study as a post-graduate in Tottenham at Middlesex’s White Hart Lane campus and during and after my doctorate I taught there as well as at Westminster.

So the question in my title is not really that of a 40-something wondering about a policy change that happened during my teenage years. Twitter users seem somewhat thrown by rhetorical questions these days.

My title is meant to point to something different. To flag up the clear problems with the current English HE system and its recent and ongoing reforms.

Which is why do Polytechnics still haunt English HE policy?[1]

In this talk, I mean to flesh this question out in two ways: concerns about the loss of diversity from English higher education – concerns about the dominance of the full-time academic undergraduate degree; and concerns about the costs of full-time study for students, graduates and the state.

Read more…


Grad Tax vs Loans: the national accounting differences

Accounting is governed by conventions. These conventions have rationales behind them, but they can also be abused or bent out of shape so that the rationale gets obscured or lost. Focusing on rule-following without getting the larger picture clear will lead to fundamental misunderstandings about decisions and options.

In the case of English higher education, these mistakes form part of a narrative insisting that “there is no alternative” (TINA). Politicians appealing to accounting rules might be dogmatists, they might be credulous or they might be opportunists looking for a good way to close down debate. It’s hard to tell at times what’s animating their claims, so it’s easiest just to show how to think about accounting and budgeting for loans otherwise and more constructively.

Let’s take a simplified example.

A government wishes to pay for undergraduate tuition and decides it must have some repayments from graduates to mitigate the cost of the policy. Further, they think non-universal provision like higher education shouldn’t be covered from general taxation, since not everyone gets to benefit.

Let’s say they devise two competing schemes: a fee-loan model and a graduate tax model. Both models require £10bn outlay each year and generate £7bn of repayments over the 20 years after the student leaves university. Both schemes are time-limited so that repayments stop at that point and both use the same repayment threshold to generate returns.

I’m asking you to imagine, for the sake of argument, that we have no differences in outlay and cash coming back in the two schemes (whether in timings or amounts received).

Read more…


Contingent Liabilities & the Sale (5 of 5)

On 31 October 2017, when the student loan sale process was restarted following the General Election, Jo Johnson placed a Departmental Minute in the House of Commons Library outlining the contingent liabilities that the government would have to assume to proceed with a sale.

There are four areas where liability might arise and these would be recorded in subsequent DfE accounts:

  • Under certain conditions, the government would have to commit to repurchasing the securities issued:
    • RPI being abolished and not being replaced with a suitable substitute;
    • gross repayment collection failure (defined as missing three years of payments);
    • changed collection terms removing HMRC from the equation.
  • The government would offer an indemnity to purchasers against losses arising from any failure in the servicing of the securitisation;
  • The government would enter into the standard market indemnity against any misrepresentation of the loans in its sale prospectus;
    • this “Joint Lead Managers” indemnity is uncapped and in place as long as the securities are outstanding.
  • and finally, to guard against “democratic risk”, there will be compensation to purchasers were a future government to make changes to the loans:

A third area of contingent liability arises due to the offer of a compensation mechanism which provides assurance to investors that they will be made whole for changes made by the Government: (i) to the terms of the sold loans which affect repayments and therefore cashflows; and/or (ii) specified changes to their regulatory status which would have a material adverse effect on the securities. This would only apply to pre-2012 loan terms. The risk of these specific events occurring depends on the direction of future government policy.

With respect to the last, the government cannot prevent future governments from abolishing these sold loans or changing their terms, but it can set up a compensation mechanism which would prove off-putting to any such radical plans.

In sum, these contingent liabilities would have to be considered when deciding whether Income Contingent Student Loans 1 (2002-2006) Plc really is sufficiently independent of government to be considered a private sector entity.