Has the market delivered for students in higher education?

Paul Wellings and Toni Pearce consider the impact of higher fees

November 27, 2014

Dale Edwin Murray illustration ( November 2014)

Source: Dale Edwin Murray

Higher education policy is an unlikely source of inspiration for creative artists, but in the past few months, I have encountered two examples of the extent to which tensions about the cost and value of a degree have seeped into the American cultural consciousness.

One was at an exhibition called NYC Makers: The MAD Biennial at the Museum of Arts and Design in New York. Amid the array of exhibits, my eye was caught by a piece by the collective BFAMFAPhD (BFA and MFA standing for bachelor and master of fine arts respectively). This posed the question “What is a work of art in the age of $120,000 [£75,000] art degrees?” The work included a mapping of graduate destinations for a cohort coming out of various arts disciplines. A large proportion of graduates work in service jobs, under pressure to begin repaying their debts.

Then I watched Andrew Rossi’s new documentary, Ivory Tower, which examines the student experience at a variety of US universities in the context of progressive disinvestment by governments and the consequent rise in tuition fees. The film is critical of the learning environment in some institutions and questions the evidence that graduates leave with the skills and knowledge needed in a modern workforce.

It is worth reflecting on this. Both the UK and Australia are moving towards a system in which student numbers are deregulated, private providers are able to access public funds and caps on tuition fees are either high (the UK) or non-existent (Australia). Some commentators like to characterise this trend as the “Americanisation” of the Anglo-Australian university system. That description is intended to recognise high levels of individual graduate debt among Americans and the risks associated with managing America’s $1 trillion in student loan debt, where the creditor is the taxpayer. But it misses the point because both the Australian and British systems of student support began in a radically different place.

Both systems are based on the policies of the Australian Labor government led by Bob Hawke in the late 1980s, which introduced the concept that university education should be universally available and free at the point of delivery but that graduates should repay part of the cost of their university education when their salaries rise above defined thresholds. Assuming that we do not tamper with this machinery, it should prevent the toxicity of the US graduate debt model from spilling over into the Australian and English systems.

The Australian government is currently trying to push through parliament a bill that would deregulate the fees that universities can charge domestic undergraduates (student numbers are already deregulated). Complete uncapping is likely to prevent all universities’ fee levels from clustering together, as happened in England. But it has triggered alarm about the potential level of fees that different universities might set and raised familiar concerns in Australia’s treasury over the prospect of increasing default by graduates.

However, the core of the political controversy has been the government’s intention – also enshrined in the bill – to introduce a real interest rate on student debt and to reduce the salary threshold at which repayment begins. Critics fear this will have unintended consequences for graduates who take career breaks or who work in low-earning but essential professions. Interestingly, though, there has been little discussion about what Australian universities might need to do differently.

For example, unlike in the UK, the Australian system does not explicitly allocate separate funds for teaching and research. As a result, there is a substantial cross-subsidisation of research by income from block grants and student fees. If fees rise, those universities with the highest increases may come under pressure to be much more explicit about how they allocate their fee income. Students will inevitably define themselves as consumers and put pressure on universities to enhance the student experience and place more emphasis on graduate employability. Here, Australian universities could learn much from their English cousins’ recent investments in their campus facilities and learning technologies, and their increased level of engagement with their student bodies.

If graduates are to be required to pay a greater proportion of the total cost of their degrees, then universities may need to clarify the nature of graduate attributes they instil and the evidence that particular courses result in career-ready individuals. Assuming the Australian legislation passes, the enhanced level of resources arising from deregulated fees will mean that the country’s universities will be able to run with the handbrake off – but, as a trade-off, they will need to listen more carefully to the passengers.

Paul Wellings is vice-chancellor of the University of Wollongong. He gave the Higher Education Policy Institute’s annual lecture on 26 November 2014, looking at the features that the UK and Australian higher education systems have in common.

Dale Edwin Murray illustration ( November 2014)

Last week, following a nine-month inquiry, a commission of education and business leaders said that it “fundamentally” questioned a funding system that charges for higher education “at a rate where the average graduate will not be able to pay it back”.

The Higher Education Commission’s report, Too Good to Fail: The Financial Sustainability of Higher Education in England, is the latest in a long line to argue that the current funding system for higher education is unsustainable. The government’s own figures have shown that the prospect of a huge black hole looming over the budget is very real. While ministers have been quick to dismiss such concerns, they can no longer ignore the sheer weight of evidence: this is a system that is bad for students, bad for the sector and bad for the taxpayer.

But too much discussion about the funding of higher education ignores vital questions about the principles upon which such a system should be based, including the question of who benefits from higher education.

The current system is based on the principle that most of the benefit goes to the individuals who study for a degree – but this idea is fundamentally wrong.

Since the peak of the Industrial Revolution, the economic value of higher education in the UK – to society, public life and private businesses – has continued to increase, while the relative financial value of a degree to an individual has declined. Yet individuals are bearing more and more of the financial cost.

I believe that the UK tertiary education system is one of the greatest public systems that we have, that we should deem it to be of the same level of value to society as primary and secondary education, the NHS and other public services, that it should be paid for in the same way, and that everyone should have access to it.

I did not go to university but I am more than happy to pay for others to have access to universal schooling and healthcare, and I would love to have the opportunity to pay for them to have universal access to higher education. And I believe the public would too.

Ministers promised that the new system would force universities to improve quality in a bid to attract students. In reality, universities have been forced to ramp up their spending on marketing (a 33 per cent increase between 2010-11 and 2012-13, according to a Freedom of Information request), and students’ newfound “consumer” power does not extend much further than their power to choose their university. The market has not delivered a better teaching and learning experience for students: it has delivered a culture in which our universities compete with each other over shiny buildings and expensive facilities. It has not improved long-term employment prospects for graduates and it has not saved the taxpayer any money.

The government also promised better information for students. But students are being asked to make decisions about where and what course to study based on information from the Destinations of Leavers from Higher Education survey of graduates, which is widely discredited within the sector, and the National Student Survey, which is subject to huge levels of institutional pressure. Universities continue to tell students that poor feedback in the NSS could lower the organisation’s prestige, and therefore the value of their degree, while at one university I visited, third-year students were offered access to a VIP lounge, cocktails and massages before they completed it.

The coalition’s experiment has failed. If we want to stop our institutions becoming a homogeneous blob of identikit universities all vying to get “bums on seats”, we need to return to the principles of public value, collaboration, academic and vocational excellence, partnership and community.

Last week the National Union of Students launched A Roadmap for Free Education, which explains how we would fund free education through progressive taxation – and how we are going to win the argument.

But we have to start by standing up to the powerful few who have lobbied behind closed doors for years to let the market rip. Before the last general election, very few vice-chancellors spoke out against the market, and we can’t let them get away with it again.

Free education isn’t just right for students, it is the only thing that will protect our universities. So it is time to expose the conversations that the people who run our institutions have behind closed doors. If they really care about higher education, they will be on our side.

Toni Pearce is president of the National Union of Students.

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Reader's comments (1)

You state that in the UK system, like the Australian one "graduates should repay part of the cost of their university education when their salaries rise above defined thresholds". When the UK went down this path, I naively thought that this would be a general rule for the whole populace, applied retrospectively so that people like me - an oldie with good salary after a free degree - would also contribute. I can't for the life of me see why it is fair to load the younger generation with these bills and let the older generation pay nothing. In fact, not only do I pay nothing - I now am being encouraged to 'protect' my pension from tax, under new legislation that allows me to do so. In fact, I regard higher education as a public good that we sould all pay for through taxation - but if we are going to argue that more should be paid by those who benefit, then this logic should be applied to all the population, not just the young.

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