A case of stay or pay

October 18, 2002

It's not just lost 'tuition fees' - there are hidden costs involved in the fall-out of the A-level fiasco, says Hilary Crook

The agony of waiting for the A-level regrading is over. Some students will be relieved to have achieved the grades they knew they deserved; others disappointed because their grades have not improved. But nobody is going to be worse off. Or are they?

All anxious students and worried parents are worse off because of the distress they have suffered, but this is to be expected. It is the unexpected that matters.

Universities have been advised to honour offers they originally made to regraded students, but this is not mandatory and even guaranteed places may not be available until next year. Deferral could be a disincentive for students who might otherwise switch. But if regraded students abandon courses they have just started, will some universities have to re-work their budgets? Apparently not. Education secretary Estelle Morris has given assurances that "no university or college will suffer financially as a result of student movement". What about universities that were undersubscribed because fewer students than predicted achieved the required grades?

The costs go further than lost tuition fees, however. Many universities offer residential accommodation to first-year students, who sign tenancy agreements committing them for the full academic year. Will students wanting to take up a place elsewhere be released from these tenancies? Some universities will have no option if their standard agreement automatically terminates when the tenant ceases to be a student there.

With universities being encouraged to be "generous", few are likely to insist on enforcing tenancy agreements for students who want to change institution. But who will pay for the empty rooms? Halls of residence must be self-financing and do not receive funding council money. Will the government's guarantee against financial loss cover the lost rents?

The students taking a year out could continue to live in - except that having non-students in halls would mean loss of council-tax exemption for the whole block. Universities are unlikely to be able to re-let rooms because those students who could not get into halls will have entered into legally binding tenancy agreements in the private sector.

As well as the shared student house, many students living in halls have private landlords under the private finance initiative. The companies providing the facilities' management have financial targets to meet, based on projected rental income. There is no assurance to private landlords that they will not suffer financial loss. Some will have insisted on payment by post-dated cheque at the start of the year, and others could be entitled to sue for unpaid rent. These and other private financial obligations could be an obstacle to students who want to change. In these cases, regrading may not undo the original injustice.

Although Morris says her biggest concern is "for the students", the government has not given them a financial guarantee. The Department for Education and Skills website asks: "Will I lose out financially if I initially took up my second-choice university, then, following regrading, am able to go to my first choice?" The reply? "The decision is ultimately one for the universities concerned."

That's all right, then. The universities can afford to be lavish and underwrite students' losses, relying on government assurances that no university will suffer financially as a result of student movement. How much these assurances will be worth in cash terms will depend on what losses are attributed to student movement and how many students actually move.

Whatever the amount of these hidden costs, it is once again the hard-pressed taxpayer who will be footing at least part of the bill.

Hilary Crook heads the education unit at law firm Denison Till. She advises a number of universities, further education colleges and schools.

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