Lucy Hunter: University challenge over fees

The logic of Scottish institutions charging students from the rest of the United Kingdom less than those from the European Union is open to question, writes Lucy Hunter

With a cap on the number of Scottish students, there are concerns that home-grown applicants are being turned away in favour of those who pay fees . Picture: Jane Barlow

It IS clearing season and the access of Scots to university places is in the news again. The cry of unfairness is up. Last year, the Scottish Government removed controls on how many students universities can recruit from the rest of the UK (rUK), while keeping a cap on places for Scots and for European Union students from outside the UK. This is because students from rUK are now paying fees of up to £9,000 a year, unlike Scots and other EU students.

Concern about Scottish applicants being turned away from university while others are admitted is not new. When all UK students were still subject to identical controls, the stories instead highlighted cases involving fee-paying international students from beyond the EU.

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Back then, the argument was, as it still is, that undergraduate numbers need to be controlled when the government is paying for them – but not otherwise. It is a position rooted in experience.

During the 1990s, uncontrolled growth in UK student numbers increased the demand for student support (grants, loans and some elements of fees), while reducing sharply the amount of money universities had to spend per head. Student support cost the taxpayer more, teaching groups grew in size, pay and conditions deteriorated and investment in buildings and equipment suffered. By the turn of the century, underfunded growth had generated a sense of crisis around higher education funding.

The response in the rest of the UK was to introduce fees and replace grants with loans. Over the years, fees have risen, though grants have also been re-introduced. The response in Scotland after devolution was different. Except for the limited and short-lived experiment with the graduate endowment, extracting payments from students was rejected. The response here instead was to cap numbers, allowing only limited further growth. More was invested in universities, both as revenue and capital. Grants were brought back. Further investment in universities has continued under more recent Scottish governments, although from this autumn student grants will be substantially replaced by loans, to help balance the books.

As long as Scottish students are being funded by the taxpayer, Scottish ministers can easily defend the cap on places for Scots, as a way of protecting public finances and preserving the quality of the student experience, but the decision to remove all controls on rUK recruitment is more open to question.

There is already no limit on the number of fee-paying overseas students universities can recruit. RUK students, the argument now goes, have simply shifted over the line, from subsidised to fee-paying.

But there is a problem here: rUK students pay much lower fees than non-EU international students. For example, at the University of Glasgow an engineering student from overseas will be charged £13,500 a year, while an rUK student will be charged £6,750. This pattern holds across the system.

Higher international fees in part reflect higher costs, for example to recruit and support these students. However, as there is no government control over these fees, institutions are able to charge enough not only to cover all their costs but also to generate extra income. This they do.

By contrast, rUK fees in Scotland have followed the £9,000 cap invented south of the Border, which under recent Scottish legislation looks likely to become the legal limit here also. Fees of £9,000 a year are universal for medicine, veterinary science and dentistry, and also at some universities (including Edinburgh and St Andrews). Others charge £9,000 a year but set a total cap of £27,000 over four years (eg Strathclyde). Commonly, rUK fees are £7,000 a year or less, to limit the cost of four years in Scotland to that of three years in England.

Are all these students paying the full cost of their teaching? Some are, but some are not. In the most extreme case, for medicine, dentistry and veterinary science, the Scottish Funding Council (SFC) gives institutions £16,796 a year for Scottish and non-rUK EU students. An rUK student on any of these courses is paying nearly £8,000 less than that each year. An rUK student studying physics at the University of Glasgow will pay £6,750 a year, while the SFC provides £9,530 for Scottish students, an annual difference of £2,780.

The SFC has recognised there is a problem here and is compensating some institutions for the gap between rUK fee levels and the cost of putting on certain high-cost courses. In other cases, institutions will need to meet the difference.

Does this matter? Many rUK students are on cheaper courses and some of these will be generating a surplus. Indeed, the available figures suggest that fee income from rUK students as a whole is roughly in line with what the SFC funding model would provide for similar Scots.

But if rUK students drift more towards higher-cost courses over time without a rise in fees, that will change. Also, the SFC rates are based on an austere assessment of actual costs. Some would argue that there is an embedded loss in the SFC rates to start with.

RUK fee-payers account for about 15 per cent of UK and EU undergraduates. Even if they did cost more to teach than they paid in fees, it would be a marginal effect – as long as the number of students coming here remained much as now. Politicians of all parties can be expected, rightly, to emphasise the wider value to Scotland of attracting students from around the UK.

However, individual Scots unable to obtain a place might reasonably query the fairness of the new arrangements. There are many more Scottish applicants to university than there are places, even though the number of Scots being admitted is rising. Also, because free tuition is only available to those who stay in Scotland, the Scottish Government arguably has a particular responsibility to provide places locally for those of its students qualified to do a degree. It cannot look to the rest of the UK to provide a safety valve for unmet demand.

That suggests a problem in terms of fairness with turning away individual Scottish applicants, to avoid breaching the cap on subsidised places, while continuing to admit in unlimited numbers any students from rUK who are paying significantly less than the full cost of their course.

The fact that history students at St Andrews, say, pay more than the SFC rate for their course may cut little ice with those more inclined to compare themselves with individual cases that work the other way.

For a handful of subjects (most importantly here, medicine and dentistry) controls on total numbers still affect rUK students as well. But these are exceptions, and even in medicine there have been reports of places made available in clearing to rUK students but not to Scots.

There are also potential system-wide effects to watch out for. Applications from the rest of the UK to Scottish universities rose by 14 per cent this year. Universities have been quick in the past to respond to opportunities to increase student numbers, even when these have not been fully funded. It would be over the top to predict a re-run of the 1990s, but the potential is there for new, unmanaged pressures to build quietly in individual universities, or the system as a whole, all the same.

Most students from the rest of the UK are not as generously subsidised by the Scottish Government as those from Scotland and the rest of the EU. But neither is this group self-financing in the same way as international students. They sit somewhere in between and the logic for removing all control over their numbers, particularly wherever they are paying less than full cost, is open to challenge.

• Lucy Hunter is a freelance analyst and formerly head of higher education, science and student support in the Scottish Executive.