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Uncle Sam can teach us a thing or two about unfair student finance
21 May 2009
Funding trends have crossed the Atlantic, but the UK should learn from, not slavishly repeat, America's mistakes, says Donald E. Heller
Later this year, the Government will undertake a review of the student financing scheme put in place by the Higher Education Act 2004. This review comes at a turbulent time both for the country and for higher education. The national and global economies are experiencing a recession the magnitude of which has not been seen in most of our lifetimes, with concomitant constraints on government revenues. At the same time, the UK is still pursuing the goal of increasing participation in higher education to 50 per cent of the 18- to 30-year-old cohort.
There is little doubt that a major issue to be considered in the review is the tuition fees cap. The 2004 Act allows English universities to charge anything from nil up to a maximum amount of £3,145.
In conjunction with fees, a system of tuition fee loans, maintenance grants and maintenance loans was put in place so that students face little or no upfront costs for their education. They can also get a portion of the costs subsidised by the Government through maintenance grants if they are able to meet means-tested guidelines. The remainder of the cost is covered after graduation through income-based loan repayments.
Also established, although mostly as an afterthought, was a system of bursaries provided by universities, including mandatory, means-tested and discretionary bursaries. The means-tested aid was supposed to ensure that financial barriers did not prevent academically qualified students from attending university.
The US has a similar system of financial aid, featuring government-provided grants and loans and institutional bursaries. The foundation of much of the system dates back to the Higher Education Act 1965, meaning that the US has more than four decades of experience that could help inform the UK's forthcoming review.
Unlike here, tuition rates in the US are largely deregulated. The federal Government has no control over what universities charge, and many of the 50 states have devolved that authority to individual institutions. One impact of this is that the value of the national student grant has eroded over time. In the early 1970s, the maximum Pell Grant (as it is now known) covered 80 per cent of the total cost for a student attending an average-priced public university (tuition fees, living costs, books, etc). Today, it meets only 30 per cent of the cost.
A second significant change in the US is that institutional bursaries, which are the single largest source of grant aid for undergraduate students, have shifted away from being awarded to moderate-income students through means testing and towards higher-income students through merit awards.
This trend has been driven by the desire of universities to improve their league-table rankings, an important component of which are the academic qualifications of the students enrolled.
Fewer bursaries are being awarded to financially needy students, for whom grants are a critical incentive for attending university, and more are going to wealthier students who, research has shown, would attend even without the aid.
Both of these changes occurred partly as a result of the US Government's lack of control over universities' fees and grants policies. This has been an important factor in the country's inability to close the gap in higher education participation and degree attainment between rich and poor, as well as between white and most racial minority groups.
While there are other important differences between the two countries' higher education systems, there is a valuable lesson to be learnt from the American experience. If the UK Government contemplates a large increase in the fees cap - a scenario outlined by the Universities UK fees report issued in March - or perhaps even total deregulation, it should consider doing so only in consort with statutorily linked increases in maintenance grants, as well as fees and maintenance loans.
Similarly, the Government needs to ensure that university bursaries are being used to promote fair-access goals. Research by Claire Callender, professor of higher education policy at Birkbeck, University of London, has shown that many bursaries are already being awarded not through means testing, but rather based on academic merit or other student characteristics, mirroring the trend seen in the US. Providing more control over institutional bursaries would require that the Office for Fair Access be given stronger statutory authority over negotiating and auditing fair-access agreements with universities.
The student financing review should ensure that any changes made are done so with the best interests of financially needy students at heart.
Donald E. Heller is professor of education, senior scientist and director of the Centre for the Study of Higher Education, Pennsylvania State University. He is currently visiting professor at Birkbeck, University of London.
Readers' comments
I agree with much of what Prof Heller says, except with respect to an aspect of the merit-based bursary system. In the US, what causes the system to fail is the fact that rich and academically strong students are given bursaries, even though they might not need the money, thus leaving less funding available for poorer students (i.e. inadequate funds to enable them to attend). The reason this is done is a matter of competition among the best universities for the best students, a goal which has academic merit, but which results in a distinct lack of social justice. Despite the fact that a student might not need the money, he/she will often be motivated to choose an institution, all other things being roughly equal, on the basis of how much of a bursary he is offered. While I think it's fine to offer bursaries to the strongest students, these should NOT be given to students who are fully able to pay fees without assistance. If the UK were to offer merit-based bursaries for students from poor/underserved backgrounds, then the goals of fair access would be met, while at the same time, mitigating the current trend of dumbing down the academic entry requirements. Only good students should be rewarded with bursaries. Those who simply lack financial means, but whose academic profile is poor, do not deserve bursaries, any more than a rich person with a poor profile does. A poor academic entry profile should NEVER be rewarded. If such a practice, as described above were to be adopted on a wide scale in the UK, it would provide one of the strongest incentives to students from disadvantaged backrounds to strive to achieve BEFORE they arrive at university, rather than from when it is far to late, day one of their university experience.
I think the UK should follow the US trend of financial support. The UK institutions treat overseas students as customers. @ UG level the financial support and scholarships offered for International students is very poor. So my opinion is in times to come top UK universities will loose out the brightest ones to US. This is one of the main reasons why US is the No1 in research and University rankings and UK falling behind.So UK should take steps to increase the funding for international students aswell specially @ UG level.
The last time I heard was that for postgraduate studies in general, the UK pays only the difference between local and overseas fees to overseas students through their lousy ORS scheme, even if these students are good students. No system is fair, but the UK is worse than the US when it comes to funding overseas students. Take a look at yourself before pointing your fingers on others.
Howard Frdericks' comment on Don Heller's article proposes what in the USA is called 'merit within need' or 'preferential packaging' (more grant, less loan burden) for needy student sof superior quality. This aid still does not do much for disadvantaged students with good promise but not great test scores. Fredericks also misses the point that in the USA the biggest pressure to give 'merit' scholarships not based on need comes from institutions further down the pecking order, which reckon they need to give these scholarship to get better studenfs -- and so benefit their other students. The same will probably happen here unless capped by government formulas. All these things are much more closely debated in the USA than the UK, as my book, AIDING STUDENTS, BUYING STUDENTS explores historically. Good to see that THES now recognises that we can learn a lot about student support from the USA -- learn what to imiitate and what not. Rupert Wilkinson
LEARNING FROM CALIFORNIA Further to my comment above, UK higher-ed policy makers concerned about tuition fees and student costs might take a look at the University of California's 'return to aid' policy in the 19990s. The Oakland head office of this multi-campus university required individual campuses to 'return' to the students a proportion of tuition increases in the form of student aid. And only a small and fixed percentage of the returned aid could be 'merit' scholarships, not based on financial need. A similar formula here could slide the merit cap down, so that higher tuition fees qualified for less merit aid. Rupert Wilkinson (Author of AIDING STUEDNTS, BUYING STUENTS: Financial Aid in America, Vanderbilt UP, 2005).
We are not world power like US. Our own students need support. Drop this overseas nonsense. As for overseas students they can work up to 21 hours in the UK , where as in the US except for on-campus work, overseas students are not allowed to work. We are swamped with so called overseas students who really come to work and not study. Our Student Visa system is very lax where as American consulates requires students physical presence and answer questions unlike the UK to issue students visa, F-1 kind.. In America unlike UK the bogus colleges are at best none. Grow up and support our students. As for these students bringing in billions, we have done some research and it is nothing of the kind. They take out from the society more than they give. If anything give overseas recruitment a break, downsize some of the new universities and give more funding to recruit home students. Enough is enough.
As one who has served in the UK as a permanent lecturer and in the US in tenured appointments, I agree that aping the US is not the answer. The underbelly to the American pricing system is known but to a few insiders. At one very elite liberal arts college where I work, for example, tuition is set with the goal of remaining at the median of a self-selected group of peers. To fall lower would be to fall in perception of quality. Though price fixing is not legal, admissions officers gaher informal information from their peers to maintain status quo. Last year, when the government set up a watchdog list of those who would raise tuition above 6% (a plan that was abandoned), this college, like all its peers , drooped originally-planned tuition hikes of 6+ % down to under 3% or 4% overnight. American students are willing to pay for perceptions of quality, in this case 50,000+ a year! And their parents pay to ensure that they remain within the same class into which they have been born. The small intimate world of elite liberal arts colleges ensure the latter, though they also adhere to a limosine brand of liberalism by a tactical and strategic adherence to racial and ethnic diversity.
If your visa system is lax, that's your own problem (by the way the visa system now is much better than before, ok?). That doesn't justify not supporting good overseas students who play by the rules. Your argument is lame and contradictory - so my question to you then is why don't you fix your visa system instead of blaming the students? Actually, I would rather advise overseas students against going to the UK - if you are an overseas student and you need to pay for your own education, you might as well go elsewhere. Why? Because the education quality in the UK is low COMPARED to the US. Also, if one calculates the total expenses for an overseas student in the UK for tuition, living expenses, etc., it comes out to be the same as the required sum for an out-of-state student at many of the top public universities in the US. So why should a brilliant student want to waste his or her money getting a comparatively low quality education? This question underscores the fact that most overseas students in the UK aren't that brilliant to start with (there are exceptions of course, for e.g., if a brilliant student is able to secure one of the rare number of scholarships) - that may explain why most of them do not have the intention to study anyway and ended up seeking illegal employment.