The government’s “ill-conceived meddling” in university funding has left the higher education sector in disarray, with our own University set to lose millions of pounds.
Forge Press can reveal that quotas introduced by the government have led to 600 fewer admissions at the University of Sheffield, and many other higher education institutions have been hit. This could cost the University substantially, with millions of pounds being lost in fees, which Union officers fear may result in cuts to outreach and retention.
Wendy Piatt, director general of the Russell Group, said that the drop could cost Russell Group universities £80 million.
Many more universities are charging the full £9,000 than the government expected. With graduate earnings projected to decrease, the repayments to student loans will fall, causing the government’s costs to soar.
There are also fears that the government’s miscalculation will result in the dismantling of parts of the higher education sector that don’t produce high-earning graduates, leaving humanities courses and ex-polytechnics at risk. The government could also renegotiate student loan repayments, ending the 30-year cap.
The government aimed to gain £1 billion from tripling fees, when in fact the cost of subsidising loans for the fees may amount to as much as £680 million, leaving a £1.6 billion gap between expectations and reality.
Richard Alderman, Students’ Union education officer, said: “The government have got their sums wrong” and went on to express his fear that outreach and retention programs could suffer.
The situation has also been criticised by Sheffield Central MP, Paul Blomfield, who told Forge Press: “Students and universities are paying the price of this government’s ill-conceived meddling with our higher education system.”
Many of the problems are to do with universities’ RAB (Resource Accounting and Budgeting) charge, which is how much money loaned to students the government do not expect to be paid back. The government initially expected the RAB shortfall to be around 30 per cent, but Alderman said current levels are as much as 32 per cent, and the Institute for Fiscal Studies estimate this figure to be closer to 37 per cent.
When the government lifted the cap on tuition fees, they expected competition between universities to drive down fee levels for most universities, with £9,000 being the exception, rather than the rule.
When it became clear that was not the case, the government came up with a plan to intervene with admissions, discouraging universities from charging £9,000. This plan, designed to allow the government to keep on top of the cost of student loans, has resulted in the University of Sheffield being unable to fill all of its undergraduate places. The University has seen a fall of more than 600 undergraduate students this academic year.
A spokesperson for the University of Sheffield said:
“For the academic year 2012/13 there are about 600 fewer home undergraduate students than the University originally planned for.
“Recruitment figures for all undergraduate students are not finalised until December 1.
“It is not known by how much, or even if, this will impact on what is available for outreach and recruitment until the University receives the final figure for what will be spent on bursaries.”
In the ‘core and margins’ model, universities charging more than £7,500 have been stripped of 20,000 places, so those charging under this sum can bid for a greater allocation. Universities charging higher fees can increase their quota of ‘core’ students by decreasing their fee levels.
This has left the University of Sheffield with only 1,300 places for students with less than AAB grades at A-level. The remaining 3,200 places were intended to be made up of “high-achieving” applicants, but these were not filled.
Intake for this academic year was down by over 600 students, even after all but three departments entered clearing for the first time to attempt to find AAB students.
While admitting the policy is an “effective means for reducing the cost of loans”, a report from the Higher Education Policy Institute (HEPI) said: “The price is a heavy one in terms of the sacrifice of an approach based on the market, choice and competition in favour of state control over fees and student numbers.”
Until now, universities have been reluctant to reveal the figures until they are obligated to in January. The University of Sheffield has seen a 13.3 per cent drop, the highest proportion released so far, with over 600 places empty, figures known to the University for some time.
In January, the sector will be forced to publish its figures for this academic year, with all universities except Southampton keeping quiet on their worrying financial situation until this week.
As Forge Press went to print, institutions including Bolton and Salford have revealed that they have also suffered a drop in numbers leading to millions in fees lost to universities in Greater Manchester.
Blomfield MP said: “Many top universities have been hit by the government’s new student number rules. The Select Committee on Business Innovation and Skills, of which I’m a member, warned the Secretary of State, Vince Cable, not to introduce these changes in the same year as the massive hike in tuition fees.
“We said it would cause instability in the sector and, sadly, we were right. I reminded him of this when he was in front of us this week and he was forced to accept that their changes have had a negative impact.”
With what Blomfield described as “instability” in the sector, ministers will have to consider either slashing student numbers, or renegotiating student loan repayments on different terms.
In a change to the policy next year, the threshold for core and margins will be lowered to ABB.