A degree too close to home? Call for price cut if students go local

Think-tank says proposal will help universities fend off an ‘avalanche of austerity’

Students who live at home while attending their local university should be offered cut-price degrees costing just £5,000 a year, an influential commission into the future of higher education is to recommend.

The commission, set up by the Institute for Public Policy Research, argues that the discounted degrees would save the Government £10,000 per student in maintenance loans. The measure would also help keep up student numbers as universities grapple with further cuts in spending.

The plan is to be put forward by the commission – dominated by vice-chancellors – to spare universities from what they believe will be an “avalanche of austerity” once details of the Government’s comprehensive spending review are published.

Their document envisages that the cheap degrees will be offered only to those who live at home or work part-time, and will be given on the understanding that those who receive them will not be entitled to maintenance grants to meet accommodation costs.

Nigel Thrift, the vice-chancellor of Warwick University and the chairman of the commission, said: “Higher education has to play its part and find its fair share of deficit reduction but we should not let the work universities and colleges do in driving economic prosperity be swept away by an avalanche of austerity.

“We are going to make major cost savings in the short term as well… The only way we will be able to afford to expand the number of students is if we offer a new type of degree.”

He said the current system, whereby most students pay £9,000 a year and are offered loans to cover the cost, “privileges full-time residential courses”. Those studying while living at home face the same fees.

“This not appropriate for many potential students who want to study vocational courses in their local area, live at home and combine their studies with paid employment,” Professor Thrift added.

“So universities and colleges should be able to offer a new £5,000 fee degree, focused on vocational learning and offered to local students who would be eligible for fee loans but not maintenance loans or grants.”

One method of delivering the new cut-price courses could be through local further education colleges, using materials produced by established universities – a model that the Universities Minister David Willetts favours. This would allow students in parts of the country without a nearby university to earn a degree, although there would be a minority in far-flung areas who would still not be able to access the scheme. They could take alternative routes – such as an Open University degree.

The report, due to be published on 10 June, also warns that the present system of fees and loans is “not sustainable” and echoes estimates by the respected Higher Education Policy Institute think-tank last year that there could be a £1bn a year “black hole” in government finances as a results of students failing to pay back the loans.  At present repayments do not start until a student is earning £21,000 a year, and any remaining debts are written off after 30 years.

The Government originally estimated that 30 per cent of loans could go unpaid, but the commission reckons this figure could actually be as high as 40 per cent.

It also urges ministers to at least “hold steady” to the current percentage of 18- to 21-year-olds going to university through the financial squeeze.  It says a drop in the birth rate means that the numbers in the age cohort will reduce until 2020 – thus saving the Government up to £3bn over the next seven years as student number are reduced while retaining the same quality of students going to university.

The cut-price degree plan received a lukewarm reception last night from the Russell Group – which represents 24 of the most research-intensive universities including Oxford and Cambridge.

Dr Wendy Piatt, its director general, said it was “an idea that should be explored”. However, she added: “£5,000 may not be enough to offer a high quality degree.  For Russell Group universities, which are committed to providing a world-class research-led learning experience, it would be impossible.”

She added that cutting public expenditure on higher education “would be a false economy”.

Case study

Joshua Pauley,  18, lives in Southampton

This week I’m coming to the end of my first year studying music journalism at Southampton Solent University.

The fees are around £7,000 but they are going up next year. Once uni is finished I have to be on £21,000 a year to start paying off the loan, so there’s not an immediate pressure to pay it back.

From the start I decided I wanted to stay at home and study nearby, but over the past few months I’ve thought I might want to live on my own. The way things are now, without paying rent I can afford to pay for my own food and laundry and stuff so I’m not leeching off my mum even though I’m still at home.

But if I had to pay rent I would probably end up having to go to her for money for other stuff and I don’t want to do that.

A lot of my friends who live in halls have had to take extra jobs to afford it, and have to go into their overdraft on top of all their loans. I don’t actually think I should get cheaper fees for living at home, but maybe cheaper fees should be across the board.

Also, if you did get more money for not leaving home, people who really want to study elsewhere might end up staying at home.”

In numbers

5,000 The cost for cut-price degrees, as suggested by the think-tank.

30 The percentage of loans that the government originally estimated could go unpaid but the Commission reckons this figure could be as high as 40 per cent.

£1bn There could be a £1 billion a year “black hole” in government finances as a results of students failing to pay back the loans.