‘Horrific’ cuts to the pipeline for universities and English students | University funding
England’s vice-chancellors have said they are preparing for the announcement of steep funding cuts later this year as the Treasury and No 10 fight over proposals to reduce the government’s exposure to student loans bad debts which are currently growing to around £ 10 billion a year.
A vice-chancellor said the comprehensive spending review slated for fall was ‘horrible’ for universities, Downing Street and the Treasury scrambling over what to include in the government’s funding guidance document , which is due for release within the next two months. .
The Treasury fears that adding more loans under Boris Johnson’s ‘Lifetime Skills Guarantee’ – offering all adults four years of education or training – will add billions to the exposure of the government to unpaid student loans. Instead, he wants to cut loans to undergraduates taking college courses, which are expected to hit £ 20bn a year within three years, to create room for new adult loans.
The Treasury alarm follows its most recent post-pandemic forecast showing a further increase in the government’s resource accounting and budgeting burden, known as the Rab charge. The charge calculates the present value of future student loan write-offs and interest subsidies that will eventually hit public finances, now exceeding 50 pence for every pound loaned.
“The Treasury is now dragged down by Rab’s load, not really asking why the graduate job market is struggling so hard,” a vice-chancellor said.
Among the options discussed is a reduction in annual tuition fees, from £ 9,250 to £ 7,500, as the Augar review of higher education funding suggested two years ago. Other measures would increase the amount graduates pay back, extending the 30-year repayment window and lowering the income threshold for repayments from the current level of £ 27,295 per year.
Other options include limiting the number of university students eligible for loans each year. This could see the introduction of minimum entry requirements based on GCSE scores, or by the government reintroducing limits on the number of students. One option is to cap the number of courses such as humanities or social sciences, or those deemed “low value”, while allowing unlimited recruitment for preferred subjects such as nursing or science, technology, engineering and mathematics (Stem).
But sources in Whitehall say the No.10 is resisting more extreme measures from the Treasury, as it and the Department of Education (DfE) fight over which measures to include for consultation ahead of the spending review.
“There’s a big fight going on about what’s going to happen [the policy paper]Said an insider. University leaders who spoke to the Guardian said there was little clarity so far on the end result.
“We know something is coming and it’s going to be bad. We just don’t know what it is yet, ”a vice-chancellor said.
Advisors No.10 argue that general tuition fee cuts will hurt universities that depend on tuition fees for the bulk of their income the most. This could financially destabilize universities in cities in England, where universities are the main local employers and sources of renewal.
Tuition fee cuts or number controls – which could hurt institutions like Teesside University in Middlesbrough or jeopardize Durham University’s expansion in Stockton – would meet opposition from Tory MPs and politicians such as Ben Houchen, the popular mayor of Tees Valley.
But even the heads of the Russell Group universities, which receive substantial research funding, admit that the tuition fee cuts create “a very real risk” to their operations.
The magnitude of the impact would depend on the additional teaching subsidy that the Treasury allowed for privileged subjects. The current tuition fee of £ 9,250 – which has been eroded by inflation since its inception in 2017 – does not cover the full cost of teaching subjects such as health, science and engineering, which receive awards. complementary teaching grants. These privileged subjects would see their grants increased, while the DfE has already planned cuts in grants for courses in creative arts and archeology.
The increase in grants would mean higher upfront costs to the treasury and lower repayments for high-income graduates. Currently, around 20-30% of graduates are expected to repay their loans in full, meaning they would benefit from reduced fees or interest.
The implication of the DfE has been to seek new powers for the Student Office (OfS), the higher education regulator, to sanction universities and courses that fall below “minimum expectations”, without taking into account takes into account the differences that could affect these results, such as the background of the students involved.
With finances already exhausted by the pandemic, several universities have decided to anticipate government decisions and trigger a wave of class closings and staff layoffs.
In one case, officials at London South Bank University told staff that below-average graduate scores could lead to the loss of their graduation powers. Staff were warned, “The LSBU needs to change these statistics as a matter of priority to avoid OfS sanctions.”