Friday, 15 October 2010

Browne Review

Turns out this Master’s degree lark isn’t that heavy a workload, and the Commonwealth games finished today, so I spent this evening looking through the Browne review into the future of Higher Education funding in England (Not Scotland though. Can’t help but feel a little burst of pride whenever ministers insist Scots are simply different to the free-marketeer Sassenachs).
To be honest, I’m not sure what exactly I think the solution is for Higher Education. The Scottish system where the state takes care of everything is simplest, and I’m inclined to say the best option. But, on the other hand, universal free tertiary education may well be subsidising the rich at the expense of those who do not go to university. I think a graduate tax is a plausible idea too, but it carries obvious difficulties in terms of its implementation.

Suffice to say that whatever the best option is, I have serious reservations about the Browne review’s. Here are my concerns/grievances with the report:
Public Funding of Higher Education

The report regularly repeats its concern that the quality and international competitiveness of English university education is under threat due to a lack of investment: “our competitive edge is being challenged by advances made elsewhere. Other countries are increasing investment in their HEIs and educating more people to higher standards”. Yet the authors do not seem to envisage much of a role for public funding in bridging this gap; they seem to expect the bulk of additional investment to come from tuition fees. This is despite the fact that the UK has among the lowest levels of public investment in higher education amongst advanced OECD nations - 0.6% of GDP (By comparison, Canada, Denmark, Sweden and Finland each spend 1.5% of GDP).
Some might believe this is as it should be, that the general taxpayer shouldn’t have to subsidise degrees that primarily benefit the student themselves. Indeed, this seems to be part of Browne’s reasoning, citing an OECD report which suggests that the private return of a university education is over 50% more than the public benefit. The NUS estimates that at a fee of £7000 students will be paying the equivalent of 170% of the state’s contribution.

Yet this figure includes only the monetary benefits of a university education, which the authors themselves accept are only a part of the positive effect: they refer to the reduced threat of crime, better health prospects and “higher levels of social contribution”.

Moreover, the report’s argument that it is the responsibility of students to fill the higher education funding gap only holds up as long as the government continues to pay its fair share. Yet its authors seem to have already conceded that public investment will be cut: £7000 fees are believed to be “roughly equivalent to what institutions will have to charge to maintain investment at current levels based on our assumptions about the reduction in HEFCE funding”. Yet this suggests that increases in tuition fees will do nothing to improve the relative under-funding of English universities – rather, it will simply compensate them for the money taken from them for the government. The result is that the Browne review – apparently by its own admission - seems to have done little to ease the problem it was convened to solve.
The Problem of Risk

Probably the biggest concern expressed by those that oppose the lifting of the cap on tuition fees is the impact on risk-averse students, who may be so concerned at the prospect of taking on large amounts of debt that they are discouraged from going to university at all. Further, the possibility (indeed, the likelihood) that different universities will charge different fees suggests that risk-averse students will be put off from applying to the more expensive (presumably higher quality) universities.

The Browne review’s line on this is borderline obtuse: “For all students, studying for a degree will be a risk free activity. The return to graduates for studying will be on average around 400%”. They are right to point out that, as investments go, going to university is both relatively safe and lucrative. But the point about risk-averse students, the reason that people are so concerned for them, is that they do not know this. How many people consult the economic data before making these sorts of decisions? The benefits of going to university are obvious if your parents or those around you have been or are going. But that is simply not the case for everyone.

If students are wary of taking on debt to go to university in the first place, they are likely to be all the more reluctant to consider taking on extra debt to go to the more expensive universities. It does not take a great leap of the imagination to foresee worsening access problems for the ‘elite’ Russell group universities, which already have a shoddy record on attracting students from less advantaged backgrounds.
Rejection of the Graduate tax
The Browne review claims to have fully considered, and rejected the NUS’ preferred solution, a graduate tax. Quite validly, they point out that their proposal preserves some of the attractive features of a graduate tax. As with a graduate tax, there are no upfront fees. As the report repeatedly observes, up front fees are the biggest disincentive for prospective students, so this is an important concession. Like the graduate tax, Browne’s proposals are progressive: those that benefit more financially from their degree will be required to pay more back. Yet the fact that graduates will be charged no more than the cost of their degree suggests that the proposal is less progressive than a graduate tax.

The authors suggest that a major drawback of the graduate tax is that it will not get enough money to universities soon enough to deal with the funding shortfall. Yet this appears a bit disingenuous: as they so proudly proclaim, both the graduate tax and their preferred scheme require the government to finance students in the short run. Indeed, while they condemn the graduate tax for overcharging rich students, they celebrate the possibility that the majority of students will not pay back the full value of their degree under their proposals.

Perhaps the most troubling feature of the Browne review is its repeated commitment to the principle of a free market in higher education. They look forward eagerly to a future in which “HEI s actively compete for well informed, discerning students, on the basis of price and teaching quality”. The theory is sound enough: good universities will be popular and expand, bad universities will be run out of business or taken over by their more successful rivals.

The first reason why this is troubling has already been discussed. If universities are competing in terms of price, then the more prestigious ones will have no reason not to price the less well off out of the market, with obvious implications for equality of access.

However, a deeper concern is the question of whether it is possible for universities to compete meaningfully for students in the first place. To draw an analogy, consider how competition works with restaurants. Good (or at least commercially viable) restaurants will be successful because they can attract people and convince them to return. Yet going to university is (for most) a one-off decision. Remember all the bad restaurants you have ever been to, and consider the implications of a market where all consumers have yet to sample the service they are buying.

I remember distinctly the grounds on which I decided to apply to the universities I applied to, and it was not the result of many hours of careful research. It was based on a couple of league tables and the general reputations of the institutions. The point about reputation is an important one: Browne et al want Oxford and Oxford Brookes to compete on a level playing field, but is this really possible when the Oxford brand carries such cache?

Strangely, the report pronounces prospective students as the most qualified arbiters of the quality of universities, despite openly admitting the difficulty of making such comparisons: “There is no ‘national curriculum’ for higher education. Looking at student outcomes by institution can be misleading as these reflect which students the institution selected as much as the value added by the institution”.

Admittedly, the report does emphasise the need for greater assistance to students in making their choice, but it is not obvious that the proposed help will make all that difference. Browne calls for more and better qualified careers advisers, but nobody can have the specialist knowledge on all courses and institutions to help everyone. The report suggests that statistics such as student satisfaction should be made readily available. But anyone who has filled in a student survey knows that results are not necessarily to be trusted (for instance, doing surveys online or at the last lecture of a series means only the keenest students will be canvassed).

Ultimately, there is little reason to share Lord Browne’s faith that students will be informed consumers. If these doubts are warranted, it suggests that the whole market that is to be established is open to distortion.
Maintenance funding

A crucial issue that is often overlooked in discussions of higher education finance is that of maintenance grants and loans. A large proportion of the cost of going to university is, after all, living costs such as food, accommodation and transport. The Browne review has insisted on retaining generous grants, and abolishing means testing for maintenance loans, so that all students are guaranteed an annual loan of £3 750.

I have to admit that I can see both sides of the means testing question. On the one hand, subsidising a loan to students from privileged background is effectively handing out money to the rich. Indeed, it is likely many families will simply put the money in the bank and collect the interest. Thus it seems logical to restrict maintenance funding to those who really need it.

The problem is that it is not that easy to distinguish rich students from poor students. Just because a student has rich parents, this does not mean we should assume that they will be supported generously by them. The Scottish government does assume a ‘parental contribution’ to student maintenance, the English funding system will not. Perhaps the easiest way to illustrate the drawbacks of means testing is to use myself as an example. As an undergraduate, I took as much support as I could from the government so as to minimise my dependence on my family. Under the Browne proposals would have had to take little money from them at all. As it was, I needed thousands of pounds of support from my parents. If we are to try to promote equality of opportunity, and to discourage children from hanging on to their parents’ coat tails, then surely they should be given the opportunity to support themselves independently?

Browne et al bemoan the fact that “There is no established culture of giving to higher education in the UK. Only two UK universities have endowments of more than £1bn – Oxford and Cambridge – compared to over 40 in the US. Data from 2009 show that barely over 1% of alumni make gifts to their institutions”. They urge it should be made easier for graduates to give voluntary donations to their universities through tax relief.

Yet surely the institutions that get the highest bequests (i.e. Oxbridge) are those that least need the extra cash. It is invariably the case that the richest universities educate the richest individuals and families. Trying to replace state funding with individual donations (as in the US) will simply create a self-perpetuating cycle where a few universities prosper at the expense of the majority.

The Role of Business

“Businesses will not be compelled to contribute more – they contribute by rewarding graduates with higher wages.” The report acknowledges that businesses benefit greatly from enjoying a pool of tertiary-educated talent from which to select their employees. Yet it suggests that the incentive effect of the higher graduate wages they is a sufficient contribution from businesses. Yet it is surely the case that there is an externality effect here too. Businesses have a lot to gain from operating in a country with lots of graduates, in the same way as the rest of society gains. Therefore, it isn’t that implausible to expect a further contribution, as the NUS has suggested.

Postgraduate Funding

While the main focus of the review was the undergraduate system, it also touched on state of postgraduate education in the UK. On this, the report was remarkably complacent. Despite observing higher levels of uptake of postgraduate education among the well-off, the report simply concludes: “it is reasonable to suppose that access to postgraduate education is a function of the socio-economic make up of the undergraduate population”. In other words, fewer poor people do postgraduate degrees simply because fewer of them do undergraduate degrees. It suggests that improving access at undergraduate level will suffice to remedy the problem for postgraduate degrees.

This does not make sense. At postgraduate level, there are higher fees and less financial support. How can this possibly not affect the likelihood of talented students staying on for further study? I can say with absolute certainty that if I had been from a poorer background I could not have stayed on for a Master’s degree. I know I’m not alone. This suggests that access to postgraduate education is a much greater issue than the Browne review concedes.

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