July’s Big Ideas will see Rich Cochrane and myself introduce the question:
“What is the role of the state in education?”
Big Ideas is a pub philosophy group that meets on the last Tuesday of the month.
Venue: Upstairs at The Wheatsheaf, Rathbone Place, London. Nearest tubes: Tottenham Court Road & Goodge Street.
Time: 8pm
All welcome. Details here.
A related reading group, Different Class, is currently looking at the philosophy of education. Information here.
News from New Zealand has provided a concrete illustration of my concerns about student loans and the lack of protection for borrowers.
Over the last year, I have been trying to draw attention to the terms and conditions attached to individual loan agreements. Those signing up are informed:
“You must agree to repay your loan in line with the regulations that apply at the time the repayments are due and as they are amended. The regulations may be replaced by later regulations.”
Loans are therefore future policy contingent.
Without fixed contractual terms and with limited statutory protection, borrowers (who now take on loans with lifetimes of over thirty years) face potential uncertainty. Future governments have the ability to vary the regulations governing repayment so as to extract more money from borrowers. This can be done using statutory instruments, a form of secondary legislation used for administrative matters: these instruments pass into law without the need for a vote or a debate with only limited opportunity for MPs to intervene. I do not believe this is satisfactory, especially given the higher debts that borrowers will now face.
Those concerns were set out in detail in my report False Accounting?
But that was written before I heard about the Budget announced in New Zealand at the end of May.
New Zealand has a very similar loan scheme with monthly repayments determined by income. The repayment threshold there is 19 084 NZ dollars (roughly £9 700) and the ‘tax rate’ over that threshold is 10%. (That is, a graduate pays 10% of all earnings over that threshold back to the government until the loan is repaid).
In England, graduates taking out the new loans will be expected to repay 9% on gross earnings over £21 000 (in 2016). The New Zealand scheme is therefore much less generous, though they pay a zero rate of real interest on outstanding balances (so long as certain conditions are met) and tuition fees are lower.
What is striking is that the New Zealand Budget confirmed an earlier announcement to increase the ‘tax rate’ from 10% to 12% for all existing borrowers, not just new cohorts. Because they were included in a package of budgetary measures, no separate legislation was needed to effect this change.
The New Zealand loan contract allows terms to be varied with no ability of the borrowers to challenge these changes.
This is exactly the situation here in England.
The Coalition government has repeatedly emphasized the generosity of its new funding regime. But once you have saddled yourself with debts in excess of £30 000 you have little defence against a future government deciding it needs to be more miserly. If one were to call for faster and higher repayment, there would be little opportunity to resist.
You would not accept this situation on a commercial loan.
You should not accept it on one provided by the Student Loan Company.
I’ll be in discussion with NUS’s Graeme Wise at the Student Unions event in Exeter.
Tuesday 3 July at 5.20pm
Critical Education: Investigating the ‘Financialisation’ of Higher Education
Recent developments suggest a trend in HEIs towards considering new and complex financial strategies. Independent researcher Dr. Andrew McGettigan will tell us what he’s learned from his journeys through the murky world of student loan accounting, private equity, bond finance and asset manipulation – and will discuss their implications.
This session will deal with some complex structural and financial issues, which we will aim to make more accessible; nevertheless, participants should come prepared for ‘challenging terrain’.
John Gill, in today’s THE, is right to underscore the limited relevance of New College of Humanities. I argued this a year ago in an article for Open Democracy, ‘First as Farce’: the conclusions there are further confirmed with the news that NCH will not have ‘trusted sponsor’ status and so, for the time being, will be unable to bring non-EU students into the country to study.
Gill is also right to finish his editorial with a call to be clearer on the difference between for-profit and charitable private providers. Education debates are overshadowed by health here and the terms of the latter are not always a good fit for the former. I have tried to set out the meanings of ‘privatisation’ in education here.
But there are three important points to remember.
The government’s whole HE reform is designed to ‘create a level playing field’ for private providers. This is why block grant was removed in entirety from Band C and Band D subjects (arts, humanities, social sciences, etc). This is the main market reform and drove higher fees. From the point of view of private providers, that change removed a subsidy to established universities which had rendered private undergraduate fees uncompetitive in the home market. Similarly, students at private providers are increasingly gaining access to public funding to support their study.
Further, it is one thing to recommend the use of private institutions to increase capacity so as to meet unmet demand for undergraduate study. This was Browne’s proposal: he wanted to see overall caps on student recruitment lifted.
This is not what we have from the coalition. We have a different form of market: with more providers but the same number of students we have an intensified zero sum game. In addition, many established universities will be labouring under the new core/margin scheme with its continued use of institution-specific limits on recruitment of certain students (below AAB) – the core. This is the tenor of Pam Tatlow’s letter in today’s THE:
‘The real risk is that students will lose out if there is a cap on the overall number of students who are funded and places are transferred to private providers.’
Gill ignores number controls. But it is the framework which determines the impact of the entry of alternative providers into the state funded (backed) higher education system.
Finally, we shouldn’t ignore the very real capacity of some private providers to expand rapidly given the deep pockets of their backers (were numbers controls to relax). This is especially true of companies limited by shares. The government still plans to give Pearson degree awarding powers. For-profit and with an overall market capitalisation of roughly $10billion, it would have the potential to cause real disruption to established provision.
The latter is Gill’s ‘dangerous hornet’ but NCH’s ‘bee’ is far from benign if its buzzing distracts us.
Monday’s announcement from the Department of Business, Innovation and Skills skirted around last year’s proposals to ‘simplify the process for changing corporate status’. The White Paper paragraphs relating to this idea were vaguely formulated coupled with open-ended questions such as Question 21 from the Technical Consultation: ‘Would you welcome legislative change to make the process of changing legal status easier?’
The government’s formal response reported a lack of enthusiasm for the idea:
“The majority of universities that responded were against the proposal. Many felt that the current legislative processes were adequate, manageable and didn’t present any problems. Some universities gave a qualified response in which their main concerns were that they were unclear about the problem the proposal was intended to address, and concern about the future of charitable assets acquired over time with public funds and private donations.”
As I argued at the time, these sections were deliberately vague as they touched upon a major issue: a ‘legal form of their choosing’ (White Paper §4.35) could involve potentially for-profit forms such as ‘company limited by share’ and therefore suggested making it easier for universities to shed their charitable status so as to ‘better access private finance’.
The government has been shy about making this idea explicit but the recent sale of College of Law to Montagu Private Equity illustrates what is a stake: a charity with a royal charter was effectively purchased and transformed into a profit distributing entity. College of Law shares its legal status, charitable chartered corporation, with all ‘pre-92’ universities, with the exception of the Universities of Oxford and Cambridge.
College of Law is a private enterprise – it does not receive public funding. Its sale is still surrounded in vagaries and indicates why proposals to simplify such proceedings would be needed were public universities to begin to go down this route.
It is heartening therefore that to read that amongst those attending the consultation ‘roadshow’ events:
“There was little interest in the legal status issue with those that did comment saying that this didn’t create barriers to what they wanted to do.”
If the majority of universities were against the proposals, it should be revealing to see which of the minority of respondents were in favour (who indicated that ‘the process of changing legal status easier could facilitate public-private partnerships and enhance institutions’ ability to compete internationally.’)
‘Public-private partnerships’ here may indicate spin-offs where joint ventures with private investment are used to run profitable operations such as business schools. The university and the backers would then split any returns between them.
Following on from yesterday’s summary, this post looks at the brief references to financial matters in the government’s formal response to the higher education consultations.
As to loans and their potential sale, another subject I have spent too much time on recently, it would seem we are still no further enlightened than a year ago.
2.1.23. The Government is continuing to examine options for monetising the income contingent repayment (ICR) loan book. We are focusing on the feasibility of selling the existing (pre-Browne) loans, subject to any sale reducing significantly the Government’s risk exposure to the loan book and representing value for money for the tax payer; and to borrowers being no better or worse off as a result of the sale of their loan compared to those whose loans have not been sold. Following the completion of the feasibility work, the Government will decide whether and how to monetise the loan book based on the conditions listed above.
Months late but here it is, the government has finally published a formal response to the consultations it ran off the back of last June’s Higher Education White Paper.
I had planned a quick blog post but what I was drafting soon ballooned as I started to try to cover what was missing from today’s response. There really were very few new concrete announcements, whilst the proposed single regulatory framework for HE in England seems to have taken a battering from respondents. We knew there was to be no HE Bill in 2012 but the plans are in a weaker state than thought.
This might seem an exaggeration, but when you read Part 3 relating to the Technical Consultation it is striking that the summaries provided spell out the half-baked nature of that document, whilst concrete response to the many objections is absent. ‘Too rushed and too little detail’ is the consistent theme.
A parliamentary statement from Willetts repeats a paragraph from the Introduction:
Many responses to the White Paper stressed that we do not yet know the full effect of the new funding arrangements, which will come into effect for academic year 2012-13. Hence, it cannot be clear what form of regulatory framework will be appropriate.
So, the ‘single regulatory framework’ has been put to one side and while there is a promise to ‘move our reform agenda forward primarily through non-legislative means’, today was the opportunity to do precisely that with, for example, the proposed reforms to degree awarding powers. Instead the strong commitment to expand such powers to non-teaching institutions, such as Pearson, has been sidelined.
Over the next week, I will look at the implications for those plans, along with the sale of loan book and proposals to make it easier for universities to change legal form ‘the better to attract private finance’. All receive a mention but none has progressed.
Willetts and co managed to find one positive announcement in a bid for tomorrow’s headlines.
The press release leads with the trailed changes to regulation governing the legally protected ‘university’ title. The normal ‘red tape’ cant confirms a dramatic reduction around the minimum size for a university – from 4000 to 1000 fulltime equivalent HE students.
1.5 We will further stimulate competition in the sector by reducing the ‘numbers’ criterion for university title from 4,000 higher education students to 1,000. This will widen access to university title for smaller, high quality providers.
The change will come into effect immediately and will make a significant difference to a number of smaller institutions operating with the publicly funded framework.
Without the raft of other changes promised, it amounts to very little new competition. GuildHE estimates that ten of its members would now qualify for the title, while ‘new providers’ remain excluded.
The other announcement in the press release deals with a problem generated by yet more delay.
With no ‘single regulatory framework’, the government has to work out what to do with courses run by private providers but ‘designated’ for student support. Students on these courses can access the student loan company to cover fees and maintenance (and are also eligible for maintenance grants).
BIS has seen this shadow scheme expand beyond its capability to manage: its ‘review’ will introduce number controls and try to bring some quality assurance to bear. As private providers, these institutions are currently outside the aegis of Hefce and QAA – doing this without legislation may present a conundrum.
So, more consultation and review, I counted at least another eight, but in sum an admission by government that its original plans are floundering. I expect it to redouble its efforts via alternative means, but more on that over the course of the week.
The next meeting of the ‘Different Class’ philosophy of education reading group will take place on Tuesday 19 June.
The venue is upstairs at The Wheatsheaf on Rathbone Place and we will start at 8pm.
The reading for this month is Rousseau’s Emile – we will concentrate on Book III but I also recommend that people look at the discussion of the fable of the Fox and the Crow in Book II (paragraphs 345-369).
Meet Up page here includes link to free online copy of the text.
This is the third meeting in the series but no previous attendance is necessary. All are welcome.
Previous groups discussed: Augustine’s Confessions and Plato’s Meno.
I’ll be in discussion with NUS’s Graeme Wise at the Student Unions event in Exeter.
Tuesday 3 July at 5.20pm
Critical Education: Investigating the ‘Financialisation’ of Higher Education
Recent developments suggest a trend in HEIs towards considering new and complex financial strategies. Independent researcher Dr. Andrew McGettigan will tell us what he’s learned from his journeys through the murky world of student loan accounting, private equity, bond finance and asset manipulation – and will discuss their implications.
This session will deal with some complex structural and financial issues, which we will aim to make more accessible; nevertheless, participants should come prepared for ‘challenging terrain’.
I will be speaking at the University of Nottingham on Friday 15 June at ‘For a Public University’.
The transformation of Higher Education in the UK is at full speed. The cuts in government funding and the simultaneous increase in tuition fees of up to £9000 per year have dramatic implications. While universities emphasise the need to attract private finance, students are pushed towards courses with direct employment possibilities. At the same time, employers ask for closer co-operation with universities not only in relation to research but also in terms of the development of teaching curricula. The main focus is clear; education should be directed towards business interests in order to strengthen the UK economy. One outcome is that Higher Education is increasingly commodified as universities exist in the shadow of the market. The space for critical thinking about society has been eroded, substituting students’ ability-to-learn for consumers’ ability-topay.
Academics have themselves become subject to the charge of irrelevance unless direct policy-relevance is embraced. The critical theoretician is cast adrift as indolent and idle in the race to inform statesmen, to become prophets for science, to make profits for business.This workshop has the purpose to analyse the underlying dynamics of the transformation of Higher Education in and beyond the UK, to reflect on the social function of Higher Education, as well as develop alternative ways of thinking about how best to deliver Higher Education in the future. The goal is to re-assert ways in which Higher Education can be retained as a public good, available to all.
Critical Education 