It couldn’t happen here?

The pitfalls of the American experience of marketisation are well known, but the UK need not make the same mistakes

August 21, 2014

The financial crisis began with the bursting of the US housing bubble, an event that burned the word “sub-prime” into the global consciousness.

Seven years on, the same language is frequently invoked by critics of marketisation in higher education, who see the US system as similarly overheated.

That all is not well in the state of American higher education was amply illustrated by the Senate inquiry into for-profit higher education that published its report in 2012. The fact that undergraduate fees in some cases top $60,000 (£35,800) a year tells a story, too.

But writing this week, Nick Hillman, director of the Higher Education Policy Institute, argues that while there are transatlantic lessons to be learned in both directions, it is a mistake to draw too strong a parallel between the funding regime in the US – with its private universities, sky-high fees and struggling public loan system – and the direction in which we’re heading in the UK.

In the UK, overseas fees are the one income stream largely under universities’ control and have covered a multitude of sins in the system

As one of the key architects of the UK fees and loans system, perhaps Hillman would say that. But funding in the US does differ in many respects: take, for example, the elite private not-for-profits, which charge eye-watering sums but operate genuinely needs-blind admissions thanks to huge endowments.

If Hillman is right that it’s too crude an exercise in crystal-ball gazing simply to say that we’re importing a broken model from America, what other harbingers might help to predict the future landscape under a UK interpretation of an uncapped, marketised system?

One possibility is the UK’s overseas student market. Hillman observes of the US experience that if tuition fees are allowed to float until they find their own level, “that level is always higher tomorrow than it was yesterday”. So it is with overseas fees in the UK, which as the one income stream largely under universities’ control has covered a multitude of sins in the wider funding system.

As our annual analysis of international and postgraduate student fees reveals this week, the average fee for undergraduates rose by 4.8 per cent in classroom-based subjects to just under £12,000 this year, and by 4.6 per cent, to £13,774, in lab-based disciplines. For international postgraduates, the average rise was 5.5 per cent, while for MBAs, which draw the least price-sensitive students, the highest fee was £42,640 (at the University of Oxford).

There will be some cross-subsidisation in these figures, given the way in which overseas fees have been used to top up deficits in other areas; and it’s also worth acknowledging that international students represent a privileged stratum of global society, so what this market can bear may differ from the home undergraduate market. But despite the caveats, it gives us an idea of what a free market may look like should one ever emerge from the swamp.

Meanwhile, in our news pages we analyse the effect of the past three years of policy turmoil on individual disciplines – the subjects that are winning and losing in the Darwinian battle.

It is six years since the collapse of Lehman Brothers bank, but the financial crisis still influences global affairs in almost every sphere. In higher education, the push to a market-driven – or at least market-informed – system looks set to dominate for the foreseeable future in much the same way.

john.gill@tesglobal.com

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