HE policy update 15th January 2024

Politics and Parliament

The PM has confirmed that 2 by-elections will be held in February. (from the FT)

  • The Conservatives on Thursday moved the writ for by-elections to be held in Wellingborough in the east Midlands and Kingswood, near Bristol, both of which were held by Tory MPs. Peter Bone won Wellingborough in 2019 with a majority of 18,540 over Labour but was forced out of the House of Commons after an inquiry upheld claims of bullying and sexual misconduct against a staff member. … The Wellingborough contest has been given additional interest by the decision of local Conservatives to choose Bone’s partner, Tory councillor Helen Harrison, as their candidate.
  • The Kingswood contest was triggered by the resignation of former energy minister Chris Skidmore in protest at Sunak’s plan to promote North Sea oil and gas drilling. Skidmore secured an 11,220 majority over Labour in 2019.
  • The moving of the writs means the contests must be held within 21 and 27 working days; polling in both constituencies is therefore expected to take place on Thursday February 15.

Education

Lifelong learning

All this is coming soon, including changes to the way that fees are calculated and paid to providers so that they are not based on years but on credits.  This means that there will be no more special arrangements for accelerated programmes.

But will there be any demand for modular programmes?  The OfS ran a big trial:

  • In autumn 2021 the Office for Students (OfS) launched the ‘Higher Education Short Course trial’ Challenge Competition, through which higher education (HE) providers bid for funding to develop short courses of 30 or 40 credits at Levels 4-6 in science, technology, engineering and mathematics (STEM), education, digital innovation and healthcare subjects and to help meet skills needs for Net Zero. Employers were to be closely involved in designing and developing the provision.
  • Through this competition, 22 providers received a total of £2 million to develop new short courses. Over 100 new courses were proposed in total, most to commence delivery in autumn 2022, with projections that over 2000 students in total would participate in 2022-23.

And the takeup for loans for the short courses was very small.  Out of 96 courses offered, only 17 were launched by 10 of the 22 providers, and instead of the 2000 participants planned, there were 240 applicants and 125 enrolments; with only 41 taking up the new student loan product.

The paper includes a lot of recommendations.  Wonkhe article here.

Apprenticeships

The government have pledged to increase apprenticeships at the cost, perhaps of “traditional” degrees.

In practice, apart from a lot of bigging them up in speeches and so on, this means that the OfS have been told to fund development of apprenticeships and they have been doing so:

  • The OfS will distribute up to £40 million through a competitive bidding exercise, which is now open for applications from OfS-registered higher education providers. Of the £40 million, up to £16 million will be allocated to projects that will complete before 31 July 2024 and up to £24 million is available for projects that will complete before 31 July 2025.
  • The funding competition aims to:
    • Expand course provision at higher education providers already offering Level 6 degree apprenticeships
    • Increase the number of students on Level 6 degree apprenticeships
    • Expand course provision at higher education providers who are new to offering Level 6 degree apprenticeships
    • Increase equality of opportunity within Level 6 degree apprenticeships

Note the focus on L6.  The government have made noises in the past about being unhappy with the volume of L7 apprentices being funded through the levy, especially where these are already senior employees, and this is something that may be addressed through policy changes in the future, e.g. restricting the use of the levy to L6 and below.  As noted last week, Labour have suggested repurposing the levy for apprenticeships and skills, which would also probably result in a reduction of the proportion of levy available for L7 apprenticeships, depending on how the changes were implemented, unless the amount available under the levy was increased.

Student experience, wellbeing and finances

We talked about cost of living in last week’s report, there was a December Sutton Trust analysis which makes grim reading.

  • Polling by Savanta for the Trust shows that 62% spend less than £37 a week on food, which is the minimum needed for a single person to buy essential food items, according to the Joseph Rowntree Foundation and the Trussell Trust.
  • Overall, students living at university in England outside of London have median costs of £11,400 a year on essential spending. These essential costs include accommodation (on average 52% of their spending), groceries (12%), and bills (6%). However, the median total loan in England outside of London of £7,000, equivalent to 61% of spend, does not come near to covering these basic needs.
  • And although the median loan in London is higher at £8,500, this is drastically less than the median spending of £17,287 by students in the capital.
  • To make ends meet, two thirds of students reported taking on paid work, with 20% working 16-30 hours per week. 49% have missed classes as a result, and 23% reported that they had missed a deadline or asked for an extension in order to work.
  • The maintenance package in England is now at its lowest value in real terms for seven years, as maximum loan amounts have not kept pace with inflation. Furthermore, fewer students are eligible for maximum loans as the parental earnings threshold has also been frozen since 2008. To secure the maximum loan, a student’s household must earn under £25,000 per year, which captures far fewer households than it did 15 years ago.

Here is the December Wonkhe story.

What are the characteristics of students?

Alongside the TEF outcomes published last year (and updated with most of the pending awards just before Christmas, were summaries of the characteristics data for students in the UK for the 4 years to 2020-21. This is interesting to consider, and although some of this might seem obvious, does it hold true for our own cohorts and it is that obvious really?

We tend to talk a lot in the sector about student outcomes in the context of student characteristics, achievement gaps and so on.  But the other aspect, which I have been discussing with Shelley recently, is what this means for education practice.  A couple of examples – there is more to think about here and BU’s numbers are different from the sector in some ways:

  • Only 52% of full time undergraduate students come in to HE with only A levels: while that is still a lot, 48% is a lot of students with different learning experiences.
  • 40% of full time PGT students are over 25, which suggests that they have had work or other experience since they completed their UG programmes.

Age on entry:

Part-time students and apprentices are generally older.  In particular there is a much higher proportion of apprentices who are over 31, which is not surprising given that many degree level apprentices at L6 and L7 will be people already in work who are being asked by their employers to upskill via an apprenticeship, and this is consistent with the lifelong learning/skills agenda

Disability:

  • A higher proportion of part-time students have declared disabilities than full time -this may be one of the reasons for students choosing to study part-time.
  • A smaller proportion of PG students, full-time and part-time, have declared a disability.
  • A smaller proportion of apprentices have a disability than full time students (for both UG and PG).
  • Cognitive or learning difficulties is the biggest category of disabilities

Ethnicity:

  • There are large proportions of “unknown” ethnicity for full-time PG students; this may reflect the high proportion of PG international students and makes any comparison between full-time UG and PG unreliable.
  • Part-time students and apprentices are much more likely to be white.

Qualifications on entry (UG only):

  • There is a smaller proportion of part-time students with A levels or BTECs, and a larger proportion of part-time students from access or foundation courses or with no, or unknown qualifications. There is also a large proportion (34%) with HE level qualifications undertaking part-time programmes.
  • 52% of full-time UG students have 3 A levels, and 16% have a BTEC or a combination.
  • There is a larger proportion of apprentices with HE qualifications, and also with no, or unknown qualifications.

HE sector sustainability and change

You will have seen from the policy updates over the last year the negative rhetoric around “poor quality” courses: of course we all agree that we don’t want those.  Some noses were put out of joint by the Autumn Statement’s only reference to HE: “Proposals will be implemented to decrease the number of people studying poor-quality degrees, and to increase take-up of apprenticeships”.

As noted last week, as far as we can tell, this does not mean new measures but continuing to instruct the OfS to use its existing powers of regulation plus a continued focus on funding and promoting apprenticeships.

This House of Commons library research briefing on student number controls from August 2023 is an interesting read.

Here are some extracts from the press release from July 2023 when the final bit of the Augar changes (no sector wide student number caps or minimum entry levels):

  • The UK has some of the world’s leading universities, but a minority of the courses on offer leave students saddled with debt, low earnings and faced with poor job prospects. The government wants to make the system fairer for them, but also for taxpayers – who make a huge investment in higher education and are liable for billions of pounds in unrecovered tuition fees if graduate earnings are low.
  • Figures from the Office for Students show that nearly three in ten graduates do not progress into highly skilled jobs or further study 15 months after graduating. The Institute for Fiscal Studies also estimates that one in five graduates would be better off financially if they hadn’t gone to university. [more on those figures below]

And none of this is helped by the increasing cost to the government of funding the HE system.  The IfS published a report on 9th January: ”higher long-term inters rates and the cost of student loans”.

The debate around funding student loans has largely focused on what share of student loans will be repaid, and what share of the cost will need to be picked up by the taxpayer. Much less attention has been paid to the government cost of financing student loans that do get repaid. In this report, we investigate how the cost of student loans including these financing costs has changed as a result of increases in government borrowing costs over the past two years.

  • The cost of government borrowing as measured by the 15-year gilt yield has risen from 1.2% to 4.0% over the past two years. Relative to expected RPI inflation, this is a 3 percentage point increase. As the interest rate on student loans is now the rate of RPI inflation, this means that the government can expect to pay 1.6 percentage points more in interest on its debt than the interest rate it charges on student loans. Two years ago, just before the most recent student loans reform, it could expect to pay 1.4 percentage points less than the rate of RPI inflation.
  • This increase in government borrowing costs translates to an increase in the expected cost of student loans including financing costs of more than £10 billion per year. With borrowing costs as at the end of 2021, the government could have expected to earn a total net profit of £3.2 billion on student loans to the 2023 university entry cohort, arising from the positive spread between the interest it charged on student loans and the interest it paid on its debt. With today’s borrowing costs, this interest rate spread is negative, and the government can expect to make a loss of £7.3 billion. 
  • Concerningly, this extra cost is not reflected in either of the government’s official measures of the cost of student loans. The ONS measure does not take the cost of government borrowing into account at all. The DfE measure that underlies the so-called RAB charge uses a backward-looking measure of borrowing costs, which does not yet capture the sharp rise in gilt yields over the last two years.

Quality

This crackdown on perceived low quality has so far consisted of several waves of OfS quality assessments, last week I highlighted the first published outcomes of the first waves of assessments in business and management and computing: the regulatory consequences of these assessments are yet to be announced (with concerns only confirmed at 2 of the 6), but where problems are found the OfS can do lots of things including a combination of these:

  • launch a formal investigation;
  • apply more frequent or intensive monitoring;
  • impose specific licence conditions on a provider (i.e. specific action that the provider must take (or not take): to note specifically this could include recruitment limits or student number controls for a provider in general or linked to specific subjects;
  • impose a fine;
  • refuse to renew an access and participation plan (note that has consequences for fee caps);
  • suspend aspects of a providers registration, including access to student support funding or OfS grant funding;
  • vary or revoke degree awarding powers or permission to call itself a university; and/or
  • deregister a provider.

Another interesting point to note: providers have to pay fees to cover the cost of the investigation if they are subject to a regulatory investigation by the OfS unless they are completely exonerated.

This Wonhke article from July 23 describes when the OfS has already imposed licence conditions relating to B3: most of these required improvement plans and most (other than 2) related to colleges or alternative providers rather than universities.

It is worth reading the article which includes a response from Burton and South Derbyshire College.  Their main point is that the OfS is using very old data: the latest OfS dashboard data is for continuation for students starting in 2020-21, and of course graduate outcomes and completion data is by definition for students who started much longer ago than that; and who are following a programme which is likely to have change quite a lot since they started.  Just as a counter-balance to that, for existing providers (rather than newly registered providers) sanctions will usually follow an investigation, so although the outcomes data may be old, the practice and actions taken by the provider that the OfS are reviewing is current.  Before imposing a restriction, the OfS would need to form a view that those current actions and other steps were not likely to be adequate on their own to address the issues flagged by the (old) data.

The latest quality assessments have focussed on two subjects, and have looked at a wide range of student outcomes and experience in the context of the B licence conditions.  Often discussions of the B conditions focus on B3 (minimum absolute levels of student outcomes), but there is a lot more to the B conditions than those.

These were covered extensively when the consultations about these new conditions were ongoing several years ago, but as a lot has happened since then, here is a reminder.

I’ll talk more about the TEF and some of these conditions and other licence conditions in future updates.

Student numbers and admissions

This from Wonkhe in the daily update on Friday 12th January makes interesting reading in the light of all the concerns from the OfS about risky dependence on international student numbers

  • International student recruitment from Pakistan has overtaken the “languishing” Nigerian market for the January 2024 intake, according to the latest data from recruitment platform Enroly – which suggests that deposits are down 37 per cent compared to the same period last year, with a similar fall in the number of Confirmation of Acceptance for Studies (CAS) issued.
  • The data, based on a sample of 68,000 international students from the firm’s partner institutions, also shows that CAS issuance for students from India looks to have fallen by over 34 per cent, accompanied by a drop of more than 70 per cent in the Nigerian market – survey data suggests “unfriendly government policies” are playing a role in the decrease. But for students from Pakistan, deposits are up by 22.5 per cent, and CAS issuance by 14.2 per cent.

Financial sustainability

There has been a lot of press about financial sustainability and a lot of providers have been in the press for their efforts to manage financial gaps, arising from a whole range of issues as discussed last week.

To add to the doom and gloom here are some articles on the topic:

FT article 11th Jan 24: Senior leaders at four English universities told the FT in December they were experiencing a slowdown in international recruitment, driven in part by renewed competition from the US and Australia, which closed their borders during the Covid-19 pandemic. Data collected by the Enroly web platform that helps international students through the bureaucratic process of joining universities has indicated a sharp drop-off in enrolments from Nigeria and India. The company said a representative sample from more than 68,000 applicants to small and large UK universities found that overall deposit payments were down by 37 per cent for the January 2024 intake when compared with the previous year.

Research Professional article 5th Jan 24: universities at risk of insolvency in 2024

  • “These issues affect individual institutions in different ways and many universities remain financially secure, but we have a big and diverse higher education sector and a minority of universities are undoubtedly under the cosh financially at the moment,” Hillman said.
  • There are very few recent examples of UK higher education institutions closing down. In July 2019, the private provider GSM London—formerly known as the Greenwich School of Management—went into administration, and earlier that year Heythrop College, formerly part of the University of London, closed permanently. There have also been a number of mergers between providers.

ITV news: November 2023 Higher education sector in ‘existential crisis’ as one in four universities make losses

  • Data seen by ITV News paints a bleak picture of the higher education sector, which experts have described as being in an “existential crisis”.
  • One-quarter of universities are currently making a loss and total losses over the entire sector sits at a staggering £2 billion, a huge increase from the £200 million from the year before.
  • Professor Jenny Higham, from Universities UK, the umbrella body which represents 142 universities across the country, told ITV News an urgent solution was needed or the consequences would be severe.
  • “If [universities] continue not to be able to make up that deficit the end result will be universities will close,” Professor Higham said. “We need to work with everybody who has a vested interest in universities and their output to come up to solution for this problem.”

Universities UK report: sustainable university funding, September 2023

  • While it is not true that international students are displacing home students, it is the case that income from international students mitigates losses in teaching domestic students, and in turn helps grow, and make viable, domestic student capacity. Compared with a £1 billion loss in teaching domestic students, teaching international students brings in a £3 billion surplus. Given losses incurred in teaching domestic students, growth in international student income is needed to help grow domestic student capacity, which is needed as there is an increasing number of 18-year-olds projected in the UK population. It is debatable whether further growth in international student income is feasible, given increased competition from other countries, potential geopolitical risks to this income stream and recent government actions. Without this growth, and no further funding for teaching, it is likely that the chance of entering university for future cohorts will be more restricted than for previous cohorts.

The House of Commons library research briefing on student number controls from August 2023 referred to above also describes the upcoming cap on fees for some foundation years from the 2025/26 academic year: we are awaiting a consultation on the detail of this

It’s not easy in Wales or Scotland either, see recent articles from Wonkhe at the links.

There are OfS licence conditions about financial sustainability too: OFS licence conditions: financial sustainability and student protection in the case of a risk of market exit.

Minimum service levels

Something you may have missed in the run up to the holiday was the announcement of a consultation on minimum service levels in education (consultation closes 30th January 2024):

  • Any minimum service levels regulations we might implement following the consultation would apply on days when strike action is taking place in education services, and help minimise disruption to children and learners across education settings.

In the consultation document the section on HE starts on page 27