OBR should investigate whether student loan system provides value for money: Sutton Trust
The Independent Commission on Fees, set up by The Sutton Trust to investigate the impact of changes to university tuition fees and loans in England in 2012, is urging the Office for Budget Responsibility (OBR) to launch an investigation into the current student loan system and establish whether it provides value for money for both the student and tax payer.
The call came after it was announced in the last Budget that student grants will be abolished and replaced by further loans, while tuition fees will be allowed to rise with inflation in universities demonstrating excellent teaching. The recommendation is one of four published in the recently-published final report from the Independent Commission on Fees.
Although applications from 18 and 19 year olds continue at a more or less unchanged rate, the Commission, chaired by Will Hutton, is also warning the government to be wary of substantive increases in fees or removing the cap on fees completely. The Budget increases could see fees at some universities reaching £10,000 a year by 2020.
New polling from ComRes, commissioned for the report, shows that significant numbers of sixth formers are concerned about the cost of going to university. 78% of 1,017 16-18 year-olds interviewed across the UK said they are 'very' or 'fairly' concerned about the cost of living as a student, 68% say that they are concerned about high tuition fees and 58% say that they are concerned about having to repay student loans after their studies have finished.
Previous research by the Sutton Trust found that many students will still be paying off their student debts into their fifties while the Exchequer is forecast not to recoup around 45% of its loans. The report says there is little understanding of the long-term effects on the Exchequer of these unpaid debts.
Also revealed in the report, the Commission's analysis of the latest UCAS data shows that although a higher proportion of teenagers from disadvantaged backgrounds is now entering higher education, there remains a persistent gap in application and entry rates.
In England in 2010, UCAS analysis showed that 3.2 times as many advantaged students as disadvantaged students entered higher education. By 2014, this gap had narrowed to 2.5.
The report also finds there has been a significant and sustained fall in part-time and mature students applying to universities. Since 2009/10 there has been a 48.4% drop in part-time student numbers and a 10% drop in full-time mature students.
The Commission believes that the new fee regime is a major contributory factor in this decline and warns that this decline should be a major concern, especially from the perspective of social mobility, since the part time market has traditionally been a 'second chance' route for adults from less advantaged backgrounds. It is urging the Commons Select Committee for Business, Innovation and Skills to investigate the issue.
The report also shows that the gender gap has widened since fees were introduced. UCAS analysis has shown that 34.1% of 18 year-old girls now enter university compared with less than 25.8% of boys. Among disadvantaged pupils what was a 5-point gap in 2010 is now a 7-point gap, with 14.7% of boys from the poorest neighbourhoods entering higher education in 2014 and 21.8% of girls.
Will Hutton, Chair of the Independent Commission on Fees and Principal of Hertford College, said: "It is good news that the number of young people taking up places at university doesn't appear to have been affected by the introduction of increased tuition fees in 2012 and that we have seen a greater proportion of disadvantaged students going to university. But that should not blind us to some of the problems apparent in the new system.
"Debt is likely to become a bigger issue. Under the current system, nearly three-quarters of students will fail to clear their student loans before they are written off after thirty years, and the large majority will still be paying off their loans well into their forties, figures that will increase with the abolition of grants and increase in fees. It is not clear that students will continue to disregard debt.
"At the same time, it looks increasingly likely that any anticipated gains to the Treasury will be largely wiped out by these non-payments. It's absolutely vital that the OBR establishes what the knock-on effects of the student loan system will be in the future on both students and the national finances so we know whether the current system is offering us value for money and economic security.
"I am also very concerned about the big decline in the number of mature and part-time students. Since many of this group come from less advantaged backgrounds, the fees hike is potentially having a serious and detrimental impact on their social mobility".