Are University Tuition Fees a Fair Price?

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The cost of university tuition fees has consistently been a politically rousing topic. Since fees trebled under the coalition government in 2010, many continue to ask: can you put a price on education? With the promise of a review of higher education funding later this year, it seems that perhaps we may be coming closer to getting an answer.

At the end of last year, a government think tank proposed the idea of cutting tuition fees to £6,500 a year but raising the cost of STEM subjects to £13,500, accounting for the need for specialised equipment and presumed higher earnings. This idea has been criticised by the former Education Secretary, Justine Greening, and by universities themselves. The fear is that by lowering the costs of arts subjects, it places them at a lower value to society; and some argue that a cut in fees could trigger job losses in humanities departments. Many also argue that this proposal would hinder social mobility because this system could push those from lower income backgrounds out of STEM subjects towards subjects with lower fees.

This review puts a new light on the government’s attitude towards the student loans system. Until December last year, student loans did not count as government spending. The ONS (Office for National Statistics) changed its mind, creating another £12bn in government deficit. The BBC reported that under the previous system, money lent to students as tuition and maintenance loans did not show up as a negative in public finances, despite the fact that there are £118bn in outstanding student debt. 

This raises many questions about the nature of tuition and how universities work as a financial body. It is evident that STEM subjects cost the government more, but should it be the responsibility of the students to foot the extra cost? 

Looking at the annual accounts for the University of Leeds, their net income for 2017/18 was £706m and total expenditure was £697m leaving a £9m profit, a considerable amount for a not-for-profit business. The majority of this funding comes from student fees, the rest coming from grants from various bodies and a small amount from investment and donations. If the majority of courses were to reduce their fees, then where would the extra money come from? Previously this would be from government grants; how Scottish universities are currently funded. The governmental think tank suggests nothing of grants to balance the loss of income. This is what worries Universities because the suggestion of a fee reduction would likely result in job losses to make up the costs – not to mention the loss of international grants expected with Brexit later this year. Universities are understandably worried about any further loss of income. 

Radio 4’s ‘The Bottom Line’ interviewed two university chancellors, as well as a Doctor from the Department of Education at Oxford, on the topic of funding. Both chancellors agreed that £9,250 is not pound-for-pound what it takes to host one student for a year, but the cost is distributed more widely, for heating, maintenance and on broader resources rather than just the academic resources for a particular course. Dr Helen Carasso noted that a study revealed that student fees only cover half of the maintenance costs, the rest being footed by the government and other sources. Professor Nick Petford, Vice Chancellor of Northampton University said: “Universities have not done a good job, to be fair, of explaining where that fee goes, I think we need more transparency.”  

However, a University of Leeds spokesperson said: “The cost of hosting an undergraduate student over a year varies and includes staff costs, student support, and the provision of the best learning environment. The University receives Government grants to help fund higher-cost subjects such as those that require laboratory equipment. Student tuition fees are set by Government and the funding model for universities is one of the topics for the Government’s review of post-18 education.”

With the UCU strikes over pensions last year, and net income for academic staff dropping in the last year, the suggestion of redundancies would create a further drop in morale in academic circles. One factor that is hard to reconcile is the slow rise of university fees coinciding with a pay rise for Vice Chancellors. The Tab revealed in an investigation that Vice Chancellors and Principles receive on average 12 times as much as a minimum wage university staff member. Is this a questionably large sum for the head of a public-sector service? This amount would not cover the disparity in direct funding from students and that of other sources, but it does raise questions about the nature of university structures. If the Vice Chancellors are being paid competitive CEO wages, should universities themselves be treated more like private businesses? 

I agree with Nick Petford in that there needs to be more transparency, not only over expenditure of universities, but the full details of their income as well. The nature of being a public service is that they are held accountable not only to their students but to the general public. In the current climate, universities teeter somewhere between public and private enterprises, which could very much change dependent on the political outcomes of the next few years. It will be interesting to see what the review will illuminate about university funding and what decisions the government will make in light of it.

Chloe Lovatt