HESA

Higher Education Strategy Associates

Category Archives: U.K.

February 18

Consumerism Dragging Down Student Achievement? Not so Fast

So, there was an interesting article from Studies in Higher Education making the rounds on social media yesterday. Written by a trio of UK researchers, the article is entitled “The Student-as-Consumer Approach in Higher Education and its Effects on Academic Performance”, and is – miraculously – available ungated, here. The short version is that students who have a consumerist attitude towards education tend to have lower academic performance. For those who bewail the encroachment of consumerist attitudes in higher education, this obviously was like a delicious, refreshing glass of I-told-you-so.

Upon closer inspection, though, this study isn’t quite all it’s cracked up to be. The basic set-up here was that the authors asked a group of students across a number of UK institutions to fill-in a questionnaire. The questionnaire asked a number of demographic questions, a set of questions about “learner identity” (basically attitudes towards learning, which in North America would be called “engagement”), and a set of questions labelled “consumer orientation”. It also asked about field of study, whether a student is paying for tuition him/herself (under the UK’s income-contingent system, only 20% said their parents were paying for their fees), and what their target grades were. The conclusion was that all of these things had some kind of significant effect on grades, but that a consumerist attitude had a mediating effect on all of them, all in a negative direction.

The most obvious problem here is that the dependent variable is a self-report of academic achievement. Anyone who’s ever worked with self-reports of grades will tell you: that’s a pretty iffy data source.

The next problem is that “consumerism”, as a notion, was constructed in a questionable way. The researchers asked students 15 questions, and based on their answers created an index of consumerist orientation. Some of those questions seem alright, for instance: “I think of my university degree as a product I am purchasing”, or “I am entitled to leave university with a good degree because I am paying for it” (a “good degree” in the UK means a degree with a high classification, which is sort of the same thing as a high GPA over here). However, some of the questions that make up the consumerist ranking are, to my mind,  indicators of having a utilitarian rather than a consumer outlook (e.g., “I only want to learn things which will help me in my career”, “my lecturers should round up my final grade a point or two if I am close to the next grade boundary”), and some of them are actually indicators of financial uncertainty (e.g. “I regularly think of the financial cost of my degree”). Throw all that together in a single index and it’s not clear to me that this is actually all that useful.

And this leads to the final problem: there are no family background demographics in the survey. Which means we don’t really know how much of the engagement and consumerism variables are really just reflections of class background and cultural capital. It’s fairly safe to assume that students from lower class backgrounds in the UK – especially first-generation students – would be more likely to be financially insecure, and more likely to have a utilitarian attitude towards school (that is, they attend for specific career goals). By lumping all of those factors into the “consumerist” category, what the authors may simply be picking up is that grades and class origins are positively correlated. Which we already kinda knew.

In other words: interesting hypothesis, but this study isn’t all that persuasive. Case unproven – so far, at least.

February 08

(#fake)Tenure, Governance, and Academic Freedom

If you follow higher education news from south of the border, one scrap you’ll probably have noticed over the past year or so is the one over tenure in Wisconsin.  Until recently, tenure provisions at the University of Wisconsin were inscribed in state law.  Last year, Wisconsin Governor and erstwhile presidential candidate Scott Walker decided to remove tenure protection, leaving the University’s Board of Regents to inscribe it in their own rules.  At the same time, the Governor gave university management more power, free from the scrutiny of Senate and other shared-governance arrangements, to close or modify programs.  Put these two things together, add the fact that public sector unions in Wisconsin are legally forbidden from bargaining over anything other than wages, and you have a situation where it’s a lot easier to get rid of professors than it used to be.

So far, so clear.  For obvious reasons, professors at Wisconsin are upset about this, and many are calling this new system #faketenure because they believe that any tenure protection given through new Board of Regents rules is effectively undermined by the new management powers to eliminate or modify programs.  This, they say, means that there will be a form of academic chill at Wisconsin, with people afraid to voice controversial opinions or undertake challenging research for fear of political backlash.

Now, I get why most professors would prefer the old regime to the new, but the idea that challenging or difficult research can only take place in environments where tenure is ironclad and all program modifications can only take place with faculty agreement is simply not true.  If this is genuinely your position, you have to have a good answer to the question: “what about the UK and Australia?”

In the late-1980s, the Thatcher government in the UK simply abolished tenure for anyone hired after 1987.  People were still hired on permanent contracts (though as in the US and Canada, massification also led to an increase in the use of part-time contracts), but there was nothing stopping institutions from making people redundant by chopping whole departments – as is the case in Wisconsin.  Of course, unions can deter this to some degree by insisting on buyouts, redeployments, etc (as indeed Canadian unions do, too – see here for more on this).  But essentially, the conditions in the UK are pretty close to what some in Wisconsin are calling #faketenure, and yet one doesn’t often encounter the claim that UK researchers are doing ideologically cowed, or less daring research.

It’s the same thing in Australia.  Universities give out “permanent” positions somewhat more quickly than our universities – their equivalent of “tenure-track” is maybe half as long as it is here – but academics are much more actively managed (a fall in publications will bring a rise in teaching load relatively quickly), and large-scale institutional restructuring is much more common (La Trobe University, for instance, more or less slashed its entire economics department a couple of years ago).  Again, possibly not a model to follow if you’re a prof, but can anyone really claim that Australian academics are less free, less bold, less daring than their counterparts elsewhere?

To put this simply: people make a lot of universal declaratory statements about tenure and academic freedom.  For the most part, they aren’t true.  There is lots of top-notch research – even in the social sciences and humanities, where a lot of the most controversial stuff is concentrated – that occurs in places without the specific North American context of tenure and shared governance.  This is undeniable.

Now, this isn’t to say that removing those kinds of protections over here in North America wouldn’t have an effect.  One of the reasons the loss of protection in Wisconsin is cause for concern is because Wisconsin’s Board of Regents is increasingly a partisan body, with its members entirely appointed by the Governor, and it’s not that far-fetched to imagine them going after specific programs or even specific professors.

But that’s precisely the point: claims about the effects/benefits/drawbacks of any particular constellation of policies on tenure and academic freedom need to take very close account of the legal and political context in which they are operating.  Claiming that tenure *has* to be inscribed in a collective bargaining agreement, or that it *has* to be inscribed in legislation are equally incorrect; the point is that there are many possible equilibria on tenure, governance, and academic freedom.  Claiming the opposite is simply evidence of a fairly limited imagination about how higher education can be run.

November 20

Quick Takes on Student Aid Around the World

Three quick hits:

Islamic Student Loans in the UK.  Loans and Muslim students are always a hot topic.  That’s partly because there are a number of Muslim students who don’t like the idea of loans with interest (not very many, but enough to be noticeable), and partly because certain soi-disant “progressive” white kids like to use Muslims’ reticence about interest as an excuse to argue that loans are effectively racist, and therefore should all be replaced by grants (yes, really).  So it’s interesting to note that buried in all the hoopla of the recent UK Green paper on higher education is a firm commitment from the UK government that it will move ahead with offering Shariah-compliant loans, making it the first non-majority Muslim country to do so (Malaysia has had them for some time).

Now this isn’t wholly surprising; the government indicated about a year ago that it was headed in this direction, after a series of public consultations on the matter.  The results of that consultation are here, and anyone interested in student aid should read from about page 6 on, because it goes into some useful detail about how to design Shariah-compliant loans that are neither more nor less generous than “mainstream” loans.  In the end, it recommends a “takaful” system, which is basically a co-operative lending fund in which participants mutually insure each others’ liabilities (n.b., for true student aid nerds: the mutuality aspect actually makes this system somewhat resemble the Yale Tuition Postponement option, which I described back here).

I said four years ago that the Government of Canada should consider offering Shariah-compliant loans.  Now that the UK government, in conjunction with Islamic banking experts, has done the heavy lifting on this, it’s time to pick up that torch.

How Difficult is it to go Full Australian?  Many people admire Australia’s HECS system (or HELP.  Or HECS-HELP.  It’s all a bit confusing because they keep changing the name).  No fees required at time of enrolment.  No real interest on the “contribution” (let’s not call it a loan).  No repayments required until the borrower is making $50K/year.  Repayment tied to income after that.  And from a convenience point of view, the idea that collection is handled through payroll witholding is pretty sweet.

It’s a system that of late has attracted a lot of attention in the US, especially because its own income-based relief program (which is HECS-ish in the way that our own Repayment Assistance Program is) would work a whole lot better if relief was automatic, which effectively would require a payroll withholding system.  But making HECS work is actually pretty complicated.  It requires a certain type of tax system, as well as practices in tax collection, and they don’t necessarily translate well. The trade-offs required to do this – some of which would apply here in Canada too – were well explained in a recent New America Foundation paper called Promise and Compromise: A Closer Look at Payroll Withholding for Federal Student Loans.  It’s a useful reminder of how tough some of the practical issues in student loan collection really are, and how going “full Australian” is much more difficult than casual admirers appreciate.

Malaysia Gets Tough on Loan Defaulters.  Really Tough.  For years, Malaysia’s loan system, the PTPTN (which longtime readers may recall has it’s own quite excellent anthem, available here) has been a disaster where repayment is concerned.  When I was there four years ago, I worked out that the agency was barely recouping a third of its money on an NPV basis.  More recent investigations by local researchers come to similar conclusions.

The government has gradually been tightening the system, mostly by starting to squeeze out private higher education providers (quite numerous in Malaysia).  But now it has decided to get tough by actually imposing a travel ban on people in student loans arrears.  The ban apparently applies to about 600,000 Malays, or about 2% of the country’s population.  This is actually somewhat more draconian than Kenya’s practice of refusing to renew the passport of anyone in arrears on their loans.  Interestingly, all student loans in Malaysia are required to have a guarantor (usually parents), but the government actually thinks a travel ban on the kids is politically more palatable than asking parents to make good on their guarantee.  Which of course makes you wonder what the guarantee was for in the first place.

Have a good weekend.

November 10

An Update on England’s Teaching Excellence Framework

Last week, the UK Minister for Business Innovation and Skills (which is responsible for higher education) released a green paper on higher ed.  It covered a lot of ground, most of which need not detain us here; I think I have a reasonable grasp of my readers’ interests, and my guess is that the number of you who have serious views about whether the Office For Fair Access should be merged into a new Office for Students, along with the Higher Education Funding Council for England, is vanishingly small (hi, Andrew!).  But it’s worth a quick peek into this document because it puts a bit more meat on the bones of that intriguing notion of a Teaching Excellence Framework.

You may remember that back in the summer I reviewed the announcement of a “Teaching Excellence Framework” wherein institutions that did well on a series of teaching metrics would be rewarded with the ability to charge higher tuition fees.  The question at the time was: what metrics would be used?  Well, the green paper is meant to be a basis for consultation, so we shouldn’t take this as final, but for the moment the leading candidates for metrics seem to be: i) post-graduation employment; ii) retention rates; and, iii) student satisfaction indicators.

Ludicrous?  Well, maybe.  At the undergraduate level, satisfaction tends to correlate with engagement, which at some vague level correlates with retention, so there’s sort of a case here – or would be if they weren’t already measuring retention.  Retention is not a silly outcome measure either, provided you can: a) control for entering grades (else retention be simply a function of selectivity), and b) figure out how to handle transfer students.  Unfortunately, it’s not clear from the document that either of these things has been thought through in any detail.

And as for using post-graduate employment? Again, it’s not necessarily a terrible idea. However, first: the regional distribution of graduate destinations matters a lot in a country where the capital city is so much richer than the rest of the country.  Second: the mantra that “what you study matters more than where you study” works in the UK, too – measuring success by graduate incomes only makes sense if you control for the types of degrees offered by each institution.  Third: the UK only looks at graduate incomes six months after graduation.  Presumably, a longer survey period is possible (Canada does it at three years, for instance), but the only thing on the table at the moment is the current laughably-short period.

So, there’s clearly a host of problems with the measures.  But perhaps even more troubling is what is on offer to institutions who do “well” on these measures.  The idea was that institutions would pay attention to “teaching” (or whatever the aforementioned load of indicators actually measures) if doing so allowed them to raise tuition above the current cap of £9,000.  However, according to the green paper, the maximum an institution will be allowed to increase fees every year is inflation.  Yet at the moment CPI is negative, which suggests this might not be much of an incentive.  Even if inflation returns to 1% or so, one has a hard time imagining this being enough of a carrot for all institutions to play along.

In sum, this is not a genuine attempt to find ways to encourage better teaching; rather, it is using a grab-bag of indicators to try to differentiate the sector into “better” and “worse” actors, and in so doing try to create more “signals of quality” to influence student decision-making.  Why does it want to do this?  Because it desperately wants higher education to work like a “normal” market, the government is trying to rationalize some of its weirder ideas about how the system should be run (the green paper also devotes quite a bit of space to market entry, which is code for letting private providers become universities with less oversight, as well as market exit, which is code for letting universities fail).

Though the idea of putting carrots in place to encourage better teaching has value, an effective policy would require a lot more hard thinking about metrics than the UK government appears willing to do.  As it stands, this policy is a dud.

September 22

David Cameron, Pork, and World-Class Universities

I am going to assume that by now you have all heard about the… um… interesting news regarding British Prime Minister David Cameron, which was in yesterday’s papers.  If you haven’t, then take a quick look here.  Then come back.  Quickly.  Maybe have a shower first.

Ready?

OK, so, my first thought about this story is “I wonder what kind of day Oxford’s PR folk are going to have?”  Because, honestly, at most universities, the idea that some of your students – indeed, some of your most famous alumni – have at some time in the past been involved in on-campus porcine frottage would not be good news.  The press would want to know what the university knew about these very un-kosher sexual rituals, and when did it know find out?  Is it still going on?  Etc. etc.  And you’d have administrators running around campus worrying: what will this do to applications?  What will this do to fundraising?  Disaster!  How quickly can we close down these clubs?

(This, by the way, has nothing to do with whether or not the story is true.  I think there are some very good reasons to think it isn’t.  The source, Lord Ashdown, has a well-known grudge against Cameron.  And accusations of pig-fiddling are one of the oldest tricks in the political book.  In Fear and Loathing on the Campaign Trail, Hunter S. Thomson described how LBJ had, in his Texas days, told his campaign manager to accuse his opponent of carnal knowledge of sows.  His campaign manager objected, saying they couldn’t call him a pig-f***** because no one would believe it.  To which Johnson replied: “I know, but let’s make the sonofabitch deny it”.)

But no.  On this question yesterday, silence.  No blowback at all on Oxford.  And I can guarantee you that no one – no one – at Oxford thought for a moment about next year’s application figures.  The problem is that everyone knows that whatever else Oxford may be, it’s a playground for Britain’s ruling class.  And let’s face it, the ruling class in Britain are known to get up to some pretty sordid stuff.  So in the popular imagination, it’s already only a small step from membership in the Bullingdon club to what appears to be a barnyard version of the orgy scene from Eyes Wide Shut.  And not to single out Britain here: the same could more or less be said of Yale, with its various Skull and Bones-type societies.  And nobody (well, not many, anyway) think the worst of them.  Indeed, for a certain demographic, the presence of elite kinkiness probably increases an institution’s attractiveness.

But we can abstract from Oxford to say something more general about World-Class Universities, and it is this: being a world-class university means never having to worry about bad PR.  Alumni in a bestiality/necrophilia story? No problem!  Prestigious science faculty in bizarre twitter rant about how 14-year old Muslim children actually conspired to get themselves accused of bomb-making in order to get an invite to the White House?  It is but a laugh.  PR events that would swamp other institutions simply glide off World-Class universities’ backs.

Academic prestige matters.  Built up over enough time it can shield you from pretty much anything.  If you don’t think that’s a motivating factor in institutions’ prestige-seeking activities, you’re simply not paying attention.

August 31

An Interesting Story about Access in the U.K.

Remember how, in 2012, tuition in England rose by about $10,000-$12,000 (depending on the currency exchange rate you care to use) for everyone, all at once?  Remember how the increase was only offset by an increase in loans, with no increase in means-tested grants?  Remember how everyone said how awful this was going to be for access?

Well, let me show you some interesting data.  The following comes from UCAS, which, at this time of year, does daily (yes, daily!) reports on “accepted applicants” (that is, applicants who have been offered a place at universities for the term commencing in a couple of weeks).  Figure 1 shows what’s happened to student numbers from families in the lowest income quintile since 2011, which was the year before the tuition increase.

Figure 1: Number of Accepted Applicants from the Lowest Income Quintile, England, 2011-15

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Big increase, right?  Over three years, it amounts to 19.8%.

“Oh well”, say the zero-tuition true believers, “this doesn’t prove anything.  What really matters is what happened to students from higher income backgrounds.  Surely, being less bound by financial constraints, their numbers grew even more”.

In a word: nope.  The rate of accepted applicants increased by more than three times faster for students from the bottom quintile (quintile 1) than it did for those from the top (quintile 5).  Of course that’s partly because they have a lot more room to grow: there are still about three times as many accepted applicants from the top quintile as the bottom quintile.  But the point is: contrary to expectations, the gap is closing.

Figure 2: Change in Number of Accepted Applicants by Income Quintile, England, 2011-2015, Indexed to 2011

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“Ok”, say the skeptics; “let’s look at counterfactuals: what’s going on in neighbouring countries, where policy didn’t involve a massive tuition fee increase?  What about Wales, where tuition stayed at a little over £3,000, or Scotland where tuition is free (for Scots: English kids still have to pay the £9,000)?”

Fair question.  Figure 3 shows what happened to students from the lowest income quintile in all three countries: in Scotland, rates of accepted applicants are up by 28%, in Wales by 21%, and in England by 17%.

Figure 3: Change in Rate of Accepted Applicants, England, Scotland, and Wales, 2011-15, Indexed to 2011

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“A-HA!”  Say the usual suspects.  “Clear evidence that free is better!”  Well, maybe.  But before declaring victory, why not look at rates of accepted applicants for low-income students across these three countries?   That is: what percentage of all youth from the bottom income quintile actually reach the stage of being “accepted applicants”?

Figure 4: Accepted Applicants from Bottom Quintile Families as a Percentage of all Bottom Quartile Youth, England Scotland, And Wales, 2011-2015

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Quite a different story, isn’t it?  Turns out that in horrible, vicious, neo-liberal, £9,000 tuition England, 18% of lowest-income quintile youth apply, and are admitted to university.  In idyllic, equality-loving, £0 tuition Scotland, the figure is not much more than half that, at 10%.  So let’s just say that the evidence claiming fees explain participation rates, and changes thereof, is pretty limited.

But getting beyond the issue of fees, I think there’s a bigger story here.  Right across the UK, regardless of tuition fee regime, there is a massive uptick in participation from low-income students over the last couple of years.  Clearly, something is going right there with respect to low-income students.  Is it a change in aspirations?  Expectations?  Academic preparation?  As far as I know, no one has published on this – I have a feeling everyone was so keyed on explaining expected declines in participation that no one was set up to explain the opposite.  But whatever is going on, it’s a success, and other countries would do well to learn from it.

August 04

Summer Updates from Abroad (2): The UK Teaching Excellence Framework

The weirdest – but also possibly most globally consequential – story from this year’s higher education silly season comes from England.  It’s about something called a “Teaching Excellence Framework”.

Now, news of nationally-specific higher education accountability mechanisms don’t often travel.  Because, honestly, who cares?  It’s enough trouble keeping track of accountability arrangements in one’s own country.  But there are few in academia, anywhere, who have not heard about the UK’s Research Excellence Framework (or its nearly-indistinguishable predecessor, the Research Assessment Exercise).  There is scarcely a living British academic who has travelled abroad in the last two decades without regaling foreign colleagues with tales of this legendary process, usually using words like “vast”, “bureaucratic”, “walls full of filing cabinets”, etc.  So news that the country may be looking at creating a second such framework, related to teaching, is sure to strike many as some sort of Orwellian joke.

But no, this government is serious.  It’s fair to say that the government was somewhat disappointed that its de-regulation of tuition fees did not force institutions to focus more on teaching quality.  With the market having failed in that task, they seem to be retreating to good old-fashioned regulation, mixed with financial incentives.

The idea – and, at the moment, it’s still just a pretty rough idea – is rather simple: institutions should be rated on the quality of their teaching.  But there are two catches: first, how do you measure it?  And second, what are the rewards for doing well?

The first of these seems to be up in the air.  Although the government has committed to the principle of assessing teaching at the institutional level, it genuinely seems to have not thought through in the least how it intends to achieve this.  There are a lot of options here: one could simply look at use of resources and presence of qualifications: student/teacher ratios, number of profs who have actually sought teaching qualifications, etc.  One could go the survey route, and ask students how they feel about teaching; one could also go the peer assessment route, and have profs rate each others’ teaching.  Or there’s the “learning gain” model, used by the Collegiate Learning Assessment, which was part of the AHELO system (from which, by the way, the UK has now officially withdrawn).  Of course, everyone knows that most of these measurements are either untested, or can be gamed, so there’s some fear that what the government really wants to do is to rely on – what might generously be called – lowest-common denominator statistics; namely, employment and income data.

Why might they want to do something this bell-ended, when everyone knows income is tied most closely to fields of study?  Well, the clue is in the rewards.  British universities have – as universities do – recently been clamouring for more money.  But according to this government, there is no more money to be had; in fact, at about the same time they announced the new excellence framework, they also announced a £150 million cut to the basic teaching grant, spread over two years.  So the proposed reward for good teaching is the ability to charge higher fees (so much for de-regulation… ) But as I explained a couple weeks backraising tuition doesn’t help much because, thanks to high debt and a generous loan forgiveness system, somewhere between 60 and 80% of any extra charges at the margin will end up on the public books circa 2048, anyway. 

But… if you only increase tuition at schools where income is the highest, the likelihood is that you will get a higher proportion of graduates earning enough to pay back their loans, over time.  And hence less money will need to be forgiven.  And hence this might not actually cost so much.  Which is why there is an incentive for government to do the wrong thing here.

Still, on the off-chance the government gets this initiative at least partially right, the impact could be global.  Governments all over the world are trying to get institutions to pay more attention to teaching; expect a lot of imitators if the results of this exercise look even half-promising.  Stay tuned.

July 22

Summer Updates from Abroad (1): England’s Demented Student Loans Policies

You’ll recall that the UK had an election in early May in which the Conservative Party, contrary to most polling, won a majority of seats, and thus was able to form a government without need for a coalition.  On July 8, the new government delivered its first budget, which contained a lot of policies that – to put it mildly – had not exactly been fully outlined to the electorate eight weeks earlier. In student aid, what that meant was the outright abolition of maintenance grants, and their replacement with student loans of slightly higher value.

Rewind a little bit here for some history: before 1992, the UK was a free-tuition, all-grant system.  In that year a student loan program was set up because the government felt it couldn’t continue to increase maintenance grants.  In 1998, means-tested tuition of up to £1,000 was introduced, and maintenance grants were abolished in favour of an all-loans system.  After 2006, when tuition was effectively hiked to £3,000, maintenance grants of up to £2,900 were re-introduced, alongside loans for fees, and maintenance loans of up to (roughly) £4,000 pounds (amounts were indexed).  The maintenance loan and grant system remained unchanged when fees were effectively raised to £9,000 in 2012 – that is, unchanged until now.

With means-tested grants being replaced by loans, and those loans being placed on top of the £27,000 (C$54,000) in fees that a three-year degree will bring, there are a lot of lurid headlines (like this one) about how the poorest students are now facing the largest debts – possibly over £52,000 (C$104,000) at the end of their education.  That figure is, strictly speaking, accurate – but it doesn’t quite capture the weirdness of what’s going on.

As I explained back here, there’s a certain fantasy element to student loans in England.  Repayment occurs in strict income-contingent fashion, with no payments on the first £21,000 (C$42,000) of income, and 9% of any income on top of that.  At the end of thirty years, any outstanding balance will be forgiven.  This creates some odd incentives: if you expect to pay back your loan at some point, there is a reason to accelerate payment because the loans are (barely) interest-bearing; on the other hand, if you don’t think the minimum payments will end up repaying your loan, there’s absolutely no incentive to try to repay the loan, since it will eventually be forgiven anyway.  In essence, for people in the latter group, these aren’t loans, but rather a 9% surtax on income over £21,000, which stays in place for 30 years.

Depending on whose estimates you’re using, it turns out that anywhere from 60 to 80% of present-day students are not expected to repay their loans (the range exists because, frankly, predicting repayment rates 30-years out is a bit tricky, and depends a lot on initial assumptions).  As a matter of logic then, if you load more debt onto these people by replacing grants with loans, it simply isn’t going to be repaid – it’s going to wind up as forgiven debt sometime in the late 2040s.  True, very poor students who end up among the wealthiest quartile of graduates will end up paying more, but for the most part this is just an accounting trick: the government is lending money to students now with the full intention of forgiving most it (with interest) in thirty years time.

Here’s the central dilemma: under the English loan system, raising student contributions is almost impossible unless you either change the repayment threshold, or you change the repayment rate.  The problem is the Tories initially promised they wouldn’t do either of these things, so now they’re “examining” the weasel option of raising real contributions over time by de-indexing the £21,000 threshold.  That will bring in more money, but it doesn’t change the reality that, in the main, this is just exchanging grants now, for loan forgiveness later.

A decent accounting scheme or auditor-general wouldn’t allow it.

For those want to know more, here’s the Institute of Fiscal Studies’ take on the budget changes; more reasonably, have a look at the excellent Andrew McGettigan’s summary thereof.

March 03

Lowering Tuition in the UK

So, the UK Labour Party has decided that if it gets elected this spring (odds: probably just less than even), it will bring tuition fees down from their current maximum of £9,000/year to a maximum of £6,000/year.

Progressive, right?  Not in a million years.

As I pointed out back here, the weirdness of the UK system of fees and income contingent loans is that fees have risen so high that very few people – about one in five – are expected to pay it back given how the repayment system is set up (no payments on income below £21,000 [C$40,300], and 9% on the everything above it).  The rest – 80% or so – are expected to see at least some of their loan forgiven.  So if/when tuition gets reduced, those who were not expected to repay more than two-thirds of their loans will not see any benefit.  All that happens is that the debt they wouldn’t ever repay gets paid to institutions in advance, rather than lent to students and later forgiven.  Neither will universities be any better off: all that’s going to happen is that public funding will replace government funding pound for pound.

The benefit, in fact, would only accrue to those who were expected to pay more than two-thirds, and the largest benefit would go to that 20% who was expected to pay off their loans in full – i.e. the very best-off graduates (they don’t quite get off 100% scot-free; some part of this gain will be clawed back through higher interest rates on wealthy graduates).  This is why the BBC ended its Sunday interview with Labour higher education spokesman Liam Byrne, by asking the pointed question: “why propose something that benefits the Goldman Sachs graduate more than the social work graduate?”

Fair question – and so it was no surprise that Byrne ducked it, and stuck instead to his talking point that “the present system is unsustainable”.  I think by this he meant that the exchequer will spend ever greater amounts in future on forgiving loans – but if that’s the rationale, it’s hard to understand how bringing those payments forward makes it any more sustainable. And indeed, it’s worth remembering that the cause of the unsustainability (i.e. all that loan forgiveness for lower-earning graduates) is the thing that makes it at least somewhat tolerable and lightly progressive.

Now, one shouldn’t give the ruling Tory party too much – or indeed any – credit here.  The current fee/loan system was more or less designed by mistake; the Tories were under the delusion that very few universities would jack up fees to the maximum £9,000, and so the size of student debts (and hence loan forgiveness) came as a complete surprise to them.  If they could do it again, they’d undoubtedly make it far less generous to lower earners – and indeed, now seem intent on doing so by stealth, by freezing the repayment threshold and allowing inflation to erode its value.

None of this, of course, is to say that more public funds wouldn’t be welcome in the UK.  The question is, if you had a couple of billion to spend, as Labour now seems to want to do, would you: a) give it to institutions so they can improve the education they provide?  b) give it to students from lower-income backgrounds by reducing their tuition upfront (as the UK did between 1998 and 2006)? or c) hand it over to the richest tranche of graduates?

For some reason, Labour’s answer is c).  And on the politics of it, it’s hard to say they are wrong – in a poll taken over the weekend, 60% of UK voters say they back Labour’s policy.  And of course it’s easy to understand why; if you’re not paying attention (and let’s be honest, most people aren’t), you might think the tuition fee policy was actually going to make life easier for all students.  And who wouldn’t vote for that?

Apparently UK politicians – like Canadian ones – seem to think it’s better to play populist games with tuition rather than to actually do things that help low-income students.  That’s deeply unfortunate, but unfortunately not surprising.

January 13

Packaging Student Aid

One of the things about student aid that makes it such great fun as a policy area is that it’s as much about framing as it is about actual policy.  For instance, which of the following two policies would you like to have?

a)      A policy where students are asked to bear a huge amount of debt – over $100,000 in some cases for an undergraduate degree – over 25 years, and where three-quarters of students will never repay their loans in full; or:

b)      A policy where graduates are asked to pay a 9% surtax for 25 years, up to a maximum of about $100,000, but much less (possibly even $0) if their earnings are low.

If you’re a regular reader of the Guardian, you’ll probably recognize the first policy as being the one implemented by the Cameron government in 2012, to cover fees in English universities.  That’s the one the progressive types are always pointing at and shouting: “Look!  Students are being horribly indebted AND the government is losing lots of money through the program!  Quelle fiasco!”

But here’s the thing: that second program is also the English loan scheme.  As I’ve explained before, for the three-quarters or so of graduates not expected to pay off their loans in full, the scheme is simply a graduate tax.  It’s not explained that way, but that’s what it is.  It’s a packaging issue.

There’s something similar going on in student aid policy in the United States; namely, the interest in something called “Income Share Agreements”.  It’s been kicking around for awhile (the American Enterprise Institute wrote about it a year ago), but is getting more of a hearing these days because Florida Senator, and potential Presidential candidate, Marco Rubio is now backing it.  It’s basically a Human Capital Contract – someone gives you money today, and you agree to give them a set portion of your income for a set number of years.

If that sounds like a Graduate Tax, that’s because it’s exactly how a graduate tax works – the difference in this case simply being that you’re not giving that money to government, but rather to an individual who has chosen to “invest” in you.  The beneficiary is different, but the flow of funds is precisely the same.  But that difference is enough to get the idea some love from a Tea Party favourite.

And that is to say nothing of our experience in Canada where the CFS, which absolutely hates income-contingent loans, and has done so for years, applauded the introduction of the Repayment Assistance Program (RAP) – which basically makes the Canada Student Loans Program fully income-contingent – because the government simply chose not to call the program “income contingent”.

This all goes to show: in student aid, few people actually look at substance.  The real debate is about the packaging.

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