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Why we must challenge notion that there are too many students

The debate around how to finance undergraduate education at English universities has been reignited by a new report from the business, innovation and skills select committee questioning the sustainability…

More people should get to do this. Chris Ison/PA Wire

The debate around how to finance undergraduate education at English universities has been reignited by a new report from the business, innovation and skills select committee questioning the sustainability of the current student finance system. Business secretary Vince Cable has also announced that he plans to put on hold the sell-off of the student loan book in this parliament.

This has led some in the higher education sector, including the Russell Group of universities, to call on the government to abandon its plan to remove the cap on the number of students universities will be able to recruit in 2015-16, citing concerns about affordability and value for money.

Last autumn, the chancellor George Osborne announced the government’s plan to lift controls on how many students could study at English universities.

According to the Institute of Fiscal Studies, selling off the loan book to pay for more students is “economic nonsense”. It always seemed like an accountancy trick in order to expand the sector without affecting the government’s borrowing figures. The Office of Budget Responsibility indicated the decision to abandon the student loan book sale could be worth £12bn.

I sincerely hope Mathew Hilton, director of higher education at the department for business innovation and skills, is proved correct after having told the committee in January that the Treasury intends “to underwrite the policy”.

Don’t ruin a hugely progressive policy

A U-turn on uncapping student numbers as a result of not selling the loan book would be a huge mistake. This is the coalition’s most progressive higher education policy.

Allowing universities to recruit as many students as they wish will expand opportunity and foster greater competition between institutions. It will mean more students will be able to go to their first choice university and help resolve the existing problem of tens of thousands of students who have got the grades to get a place, having to apply the following year because of a failure of the system to match supply with demand.

What this policy won’t do, as some fear, is drive standards down. Universities are measured on the students they recruit, so it is not in the interests of vice-chancellors to admit more students to the cost of their reputations.

Not too many students

Yet there is still a prevailing view, which you often read in the papers, that “there are too many students”. This idea needs to be challenged because it is the opposite of what we should be encouraging. In the “global race” as the government describes it, competition between developed economies will grow, but the UK’s tertiary participation rate is below the likes of South Korea, Australia, and the United States.

A lower quality supply of labour will mean business going overseas, or relying more heavily on migration. Robust evidence shows that graduates are more productive and more innovative – in other words by increasing the supply of graduates the economy expands faster.

Having more graduates will benefit Britain, but only 55% of the student loans they take out under the new system will be paid back, according to the latest projections. As the select committee said this week, we are approaching a “tipping point for the financial viability of the student loan system”. So how can any government after the election reconcile growing the student population with a system that is affordable for the Treasury?

Other options on the table

The representative organisation that my institution is a member of, University Alliance, has just published a report detailing the way in which the government could protect funding for universities, grow student numbers, provide a long-term sustainable system and reduce tuition fees.

The catch is that graduates would be required to pay back more per month than under the current arrangements. But they will pay off their loans much quicker and their total loan will be less. Initial evidence suggests this approach is supported by students, who favour paying back their loan faster.

Of course the next government may not wish to be so bold and could instead tinker with the repayment model to ensure a much bigger proportion of loans are paid back. But our proposal has the added advantage of tackling some of the more fundamental problems in UK higher education, such as the decline in part-time students, how postgraduates are funded and how we are going to pay for the re-skilling of the workforce so they can adapt to an ever-changing economy.

However the next government decides to alter higher education funding or not, I hope we can move away from discussing loan subsidies to ways in which our higher education system can meet the challenges of the future. How and what people study should be at the forefront of policy making, not debates about how many students and what’s affordable. We need a system that fits around the lives of learners, and meets the needs of a flexible economy. That’s the great challenge for our sector – and one politicians of all parties should be debating.


Next, read this: Is the new student loan system more progressive than its predecessor?