Funding panel: keep £9K fees, boost living costs support

England’s £9,000 fee system is “broadly fit for purpose” and “does not require wholesale reform”, but maintenance support for students should be enhanced, according to a new report

June 15, 2015

The Student Funding Panel, an independent panel established by Universities UK, also says that should rising government costs in the student loan system be of concern in the short term, then repayment thresholds for graduates could be frozen to offer savings.

A seven-year freeze from 2016 would mean that by 2023, the £21,000 earnings threshold at which repayments start would meet the real value of the £15,000 threshold under the previous fees system.

The report comes as the Department for Business, Innovation and Skills is seeking to identify potential targets for cuts in the higher education budget – starting with a £450 million reduction in the department’s budget for 2015-16. The panel stresses the importance of maintenance grants for students, reportedly seen by the government as a source of savings if grants were switched to loans.

The Student Funding Panel was chaired by Sir Christopher Snowden, the UUK president and University of Surrey vice-chancellor, and included Paul Johnson, director of the Institute for Fiscal Studies; Will Hutton, principal of Hertford College, Oxford; Emran Mian, director of the Social Market Foundation; Janet Beer, vice-chancellor of the University of Liverpool; Sir David Bell, vice-chancellor of the University of Reading; and Sir Steve Smith, vice-chancellor of the University of Exeter.

The panel was established to examine the impact of the 2012 changes to undergraduate funding and look at options for reform.

UUK said that as part of its evidence gathering, the panel collected submissions from a range of organisations and individuals – including responses from more than 3,000 students – and selected “witnesses”.

There is “no evidence to suggest that the student funding reforms have deterred students from applying to university”, says the report, titled “An analysis of the design, impact and options for reform of the student fees and loans system in England”.

“The current system of student funding in England is broadly fit for purpose, does not require wholesale reform, and needs to be given time to work,” it also says.

Other options looked at by the panel, and rejected, included a “pseudo” graduate tax and the Labour Party’s pre-election plan to lower fees to £6,000.

But the report also says that “if concern about the long-run costs to government of the loan subsidy increases in the short term, then some modifications to the system could be made. Of the options analysed, the [panel’s preferred one] is the threshold freeze model where the lower and upper income thresholds for repayment are frozen in nominal terms for a period, meaning their real value declines with inflation.”

On maintenance, the report says: “Current evidence suggests that students are more concerned about the level of maintenance support they receive while studying than they are about the long-term debt arising from the increase in student loans. Responses to a survey carried out by the Student Funding Panel showed that 58 per cent of students were worried about living costs, while 42 per cent were worried about fee levels.”

It adds that maintenance support should be improved “in terms both of quantity and targeting”.

The report also looked at proposals to tie university funding more closely to the earnings of their graduates or to sell the student loan book. But it says that “none of the longer term options analysed was thought to be sufficiently well-developed to be capable of being implemented at present (if at all)”.

Nicola Dandridge, the Universities UK chief executive, said the report was “clear that a number of improvements to the system are required”.

She added: “An important challenge to be addressed is enhancing financial support for student’s living costs.”

And she continued: “Universities UK believes that the student funding system must be sustainable and support affordable, high-quality higher education.”

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