University leaders said their sector could be pushed into “survival mode” if the funding cuts proposed by a new report into student financing become government policy.
The Augar report on post-18 education in England, commissioned by Theresa May, recommended a shift in funding away from universities towards further education (FE) and vocational training, with the report sharply criticising universities for offering too many “low value” courses.
The report seeks to make degrees less attractive by increasing student loan repayments by low and middle income graduates. It recommends loan repayments starting at a lower salary level and their timeframe being extended from 30 years to 40 years.
The report also recommends that the government cut undergraduate tuition fees – from £9,250 to £7,500 – and use replacement funding “more effectively targeted on cost of provision and characteristics of students” – rewarding institutions whose students go on to high-paying graduate jobs. But the Institute for Fiscal Studies (IFS) estimates that only the wealthiest students would pay less from the combined changes to tuition fees and repayments.
Adam Tickell, vice-chancellor of the University of Sussex, warned thatcuts to tuition fees would leave institutions with less to spend on teaching and student support.
“Many students would actually end up paying more for their education, because they would be repaying over 40 years rather than 30, but universities would potentially have £2bn less to invest in teaching, mental-health support and infrastructure,” Tickell said.
“This would be a cut in government spending on higher education masquerading as a gift to students, when in fact very few would benefit and the vast majority would have a poorer educational experience.
“It would push many universities into survival mode at a time when the country critically needs them to thrive.”
Vanessa Wilson, chief executive of the University Alliance group that includes the Open University, said: “This is a serious, detailed report but we have real doubts that the money, legislative space or political impetus is there. Theresa May’s review risks being dead on arrival.”
The funding changes were also criticised by Jo Johnson, the former universities minister, who said they would “destabilise” university finances, reverse progress on widening participation and mainly benefit higher earning graduates. “Bad policy, bad politics,” Johnson tweeted.
Researchers at the IFS said the proposals would lead to a more regressive funding system for students.
“The highest earning graduates [will benefit] the most from the proposed changes, while lower and middle earning graduates will be squeezed,” said Jack Britton, senior research economist at the IFS.
The improved support for FE colleges was welcomed by both the TUC and the CBI, with further education having suffered from a decade of underinvestment, including a 25% fall in FE student funding since 2010.
The report – by a panel chaired by former financier Philip Augar – proposed that students taking higher national certificates and diplomas would see loan funding similar to those as students at universities, with an aim of significantly increasing their popularity.
Nick Hillman, head of the Higher Education Policy Institute, said it was clear the report’s authors wanted to shift students from undergraduate courses to diploma or certificate courses, to match employers’ needs.
“Personally, I am a little sceptical that a high proportion of school leavers will switch their sights from three-year offerings to two-year offerings because the lure of the traditional university experience is very strong,” Hillman said.
Any cut in tuition fees would also have a substantial impact on the finances of universities in Scotland and Wales. Around 22,000 students from England currently attend Scottish universities, paying £9,250 while local students pay no fees.
Alastair Sim, director of Universities Scotland, said the income from English tuition fees were “an important part of the funding mix” for Scottish universities.
“We want to see the UK government take the time to carefully consider its responsibilities to students and universities across the whole of the UK, as well as those based in England,” Sim said.