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The Progressive Policy Think Tank

Post-18 education finance review: a failing system, even in its own terms

The current student finance system in England is failing. The post-18 education review announced today therefore needs to be genuine and fundamental, driving a post-18 education system that is better able to promote access and social mobility across backgrounds and age groups, parity of quality across college, apprenticeships and university, and funded in a progressive and affordable way.

The tuition fee debate often feels like it has dominated to the exclusion of almost everything else when it comes to adult education in England. Every government knows the power of tuition fees as a political issue, following their painful birth in the early years of New Labour through to their tripling under the Conservative/Lib Dem coalition and the huge political repercussions of doing so (for the Lib Dems at least). The higher education system in England has been reviewed or reformed every few years, and despite this it is failing even in its own terms, never mind against the aims we believe we should have for Post-18 education.

While overall participation in higher education has continued to rise, the tripling of tuition fees has clearly had a very significant impact on some groups. There has been a massive decline in the number of mature students, and the number of part-time students has fallen by over half. And while participation in higher education has increased despite the tripling of fees, the picture in further education is far more concerning. In addition to increasing fees for higher education, the Conservative/Lib Dem coalition restricted eligibility for fully-funded further education courses for adults and instead introduced Advanced Learner Loans, which operate in the same way as student loans. In the year after their introduction, participation by adults in these courses fell by a third.

This is a system that is simply not working. With debt levels approaching £60,000 for university graduates, and the highest debt borne by the poorest students, with participation plummeting among key groups, and with the promised benefits of a marketised approach failing to appear, the only real benefit of the current system has been its ability to take government spending on higher education off the books, protecting university budgets from the worst of austerity seen among other public services (and not least among the wider skills and education system). Even here, it remains to be seen whether the clever accounting tricks that have underpinned the relative affordability of the current system are sustainable in the long-term, or more like the Ponzi scheme characterised by Nick Timothy, the PM’s former advisor.

With the UK Government’s latest attempt to fix student finance in England we have been promised a wholesale review with everything on the table. However, this review seems confused between attempting to find a quick fix to make the current system more palatable or a fundamental review willing to rip the current system up and start again from scratch.

We believe fundamental reform is required. However, without a clear purpose for the review, and for the system as a whole, we risk repeating mistakes of the past, and risk implementing regressive policies without even meaning to.

Everywhere you look, when it comes to student finance, there seems to be a regressive answer to an ill-defined question.

For example, the current 6.1% rate of interest on higher earning graduate’s debt has been highlighted as being particularly unjust. However, reducing interest rates on loans would actually be regressive, benefiting the higher earnings graduates who pay real interest rates and not benefit the poorest graduates who currently pay zero interest (in real terms).

Reducing or abolishing fees has also gained prominence, not least since the perceived success of Labour’s free education policy in last year’s UK election. However, without both moves to make progress on widening access to university for the poorest, and progressive taxation to pay for public investment in universities (as in Scotland, where free education is already in place), reduced fees would benefit the richest graduates the most (as around three quarters of graduates don't pay off their current debt) and risk funding for other public services, that some of the poorest families rely on.

Equally, the reintroduction of maintenance grants has gained political support across be spectrum. While a positive move, this would hardly be revolutionary, taking us back only to the situation pre 2016.

The question facing this review should be how we create a fairer post-18 system, driving access from all backgrounds and age groups, with flexibility to meet the current and future demands our economy and society will have, and designed to achieve inclusive economic growth in a way that doesn't risk taking money from incredibly overstretched public services. No mean feat.

Whatever system can do that, it is not the current one.

To us the answer lies in disconnecting what universities receive for teaching from what graduates pay back (whether through taxes or a graduate contribution). The government are right that universities’ income should more closely align to the cost of teaching. And they are right that graduates should pay on the basis of how much they benefit. The trouble is a fee system is unlikely to be able do both, and could risk doing neither (as now). Looking to the very different student finance arrangements in the four countries of the UK could be instructive for this review, and could help England to learn from the policy divergence we’ve seen in the UK since devolution.

The tuition fee debate can too often get sucked into false dichotomies. Between free education or £9k fees. Between universities and colleges, young and old and full-time and part-time. And too often we can miss the progressive solutions possible in between the extremes. To avoid coming back to this issue again in a few years’ time there needs to be a genuine review of post-18 education funding in England, that provides clarity as to the aims of the system, and proposes fundamental progressive reform to achieve it.

Russell Gunson is Director of IPPR Scotland. He tweets @russellgunson.