Hefce's grant plan 'perverse'

Universities with the highest student drop-out rates would make substantial financial gains under reforms to teaching grants being considered by the Higher Education Funding Council for England.

The proposal to link teaching funds to credits awarded to undergraduates during a course, instead of the numbers of undergraduates who complete an academic year, has been criticised by the Russell Group.

Under the current system, universities do not receive funding for students who drop out of their course during the academic year.

But a study commissioned by Hefce looked at how teaching funds could be linked to credits attained by students before they leave university.

According to the study, carried out by the Higher Education Consultancy Group and the Commonwealth Higher Education Management Service, credit funding would encourage widening participation by offering a flexible system for students to move from further education or work-based learning to higher education.

But Michael Sterling, chairman of the Russell Group, said: "It sounds like a perverse idea, even if it is only something that's in the wind. At the moment, there is encouragement to get good completion rates and put the effort into making sure students progress properly - if you have a high drop-out rate, you don't get funded, which seems to me to be entirely appropriate.

"If you don't assess every module formally, then all you are doing is paying for a student to register, which would really be a perverse incentive to pack them in."

But Michael Driscoll, chairman of Campaigning for Mainstream Universities - the body representing post-92 institutions - said: "At the moment, the very institutions that make the biggest contribution to widening participation are in effect penalised for what they are doing.

"If students drop out - which can happen for a variety of reasons and is nothing to do with the quality of provision - it is not the fault of the institution. If we are to believe the Government's rhetoric about widening participation, then ministers need to incentivise it and give high weighting to the unit of teaching funding at the universities that are making the biggest contribution and taking the biggest risks with recruiting students and offering opportunities."

The study says that the proposed changes will "tend to favour those (universities) that are highly involved in widening participation, lifelong learning and related agendas, or those that intend to run accelerated degree programmes."

The report adds that the changes will mean a "relatively modest" redistribution of funds between institutions "although a small number might gain substantially". The study offers seven options for the reform of teaching grants (which total £4 billion a year). These range from no change in the funding system to a hybrid that would allow universities to pick "a funding model most appropriate to their mission".

Hefce said that the report was "part of the overall process of our review of teaching funding and will inform the debate".

The study comes in the wake of the Burgess report on measuring and recording student achievement, which recommended English universities adopt a credit framework.

The report will be considered by Hefce's board in September and is likely to form part of a teaching funding consultation in October.

paul.hill@thes.co.uk