INSTITUTE FOR EDUCATION POLICY RESEARCH Student Finance, Widening Participation and the Local University. Nick Adnett & Diana Tlupova

Structure The new student finance system –Origins –Implications for widening participation Local students and regeneration – a note of caution The new students and their choice of university –some initial survey findings Conclusions

The Switch Towards Private Funding of HE Pressures on government expenditure –↑sensitivity of producers to taxation – population ageing –↑participation in HE rising cost & falling externalities –↑relative cost of providing HE + High private returns to HE participation –general subsidies regressive and inefficient Perceived efficiency & equity gains from switching costs to students –likely to lead to a continual rise in tuition fees

THE NEW STUDENT FINANCE SYSTEM AND WIDENING PARTICIPATION Variable Tuition Fees Income-contingent Loans THE NEW STUDENT FINANCE SYSTEM Maintenance Grants Bursaries (£115 m in 2006/7) Government target – to switch more of HE funding on to students and their families whilst increasing HE participation to 50% of those aged by To achieve the latter by increasing participation of groups currently under-represented in higher education and achieve ‘fair access’.

A Threat to Widening Access? Non-traditional potential entrants more likely to be: –poorly informed about risks and returns –borrowing to fund HE –more debt-averse / risk-averse –lower returns to graduation? Hence ceteris paribus: –less likely to participate –more likely to choose low cost & low risk HE favour local HEIs and low fee, short-duration & vocational courses whilst continuing to work part- time.

Avoiding the Threat to Widening Access General funding rules: benefit and ability to pay principles: –Minimise up front payments –Provide insurance against low post-HE income –Minimise default risk In addition: –Target (cross-)subsidies at marginal non-traditional potential entrants –Discourage increased social segregation between HEIs –Promote student retention and attainment

Assessing the ‘English’ Model Scorecard: Low up-front payments  Insurance  Targeted subsidies ? Discourage segregation ? ComplexityX Encourage retention X Promote ↑attainment X

The New Student Finance System and the Local University Expectation that tuition fees will favour attendance at local university –and part-time and two year degree courses Some HEIs bursary schemes also discriminate in favour of local students –rationale? Increased complexity of decision-making for potential entrants –are non-traditional students less likely to be able to access, interpret and assess the necessary information?

Local Students and Regeneration Assumption that high graduate/population rate attracts footloose high-productivity employers or creates a more entrepreneurial culture –Evidence? relative attractiveness not absolute –Do HEIs develop the entrepreneurial skills and promote graduate start-ups etc. ? Do we really want more local students? –Faggian and McCann (Ox.Ec.Pap., 2006) little direct spillover from university research on local innovation, main development role of university system is to attract high quality human capital into a locality

FINDINGS: First Year Students 2006/7 sample – 1028 cases Research Question 1. How well informed are students about tuition fees, bursaries and grants available? Findings: 72% feel that they are well informed How well informed are they in reality?: 1. TUITION FEES: Overall awareness about the level of tuition fees. 88% knew the correct tuition fee. From these – 90% of those who feel well informed and 85% who do not feel well informed. BUT, 17% were not able to make comparison with tuition fees at other universities they had chosen.

MAIN FINDINGS 2. BURSARIES: Students appear to be less aware about bursaries.

MAIN FINDINGS 3. MAINTENANCE GRANTS: 19% of students do not know what level, if any, of maintenance grant they will receive (including 16% of those who feel that they are well informed about new student finance system). 4. Students who live locally to the University and those from minority ethnic backgrounds are significantly less likely to feel well informed about fees, bursaries and grants available.

MAIN FINDINGS Research Question 2. Is a student’s choice of Higher Education Institution influenced by financial considerations? Findings: Students were asked which where the three main reasons for their choice of the University. ‘The University has a course I wanted to study’ – 52% ‘The University was close to home’ – 48% ‘Reputation of the University’ – 30% ‘Modern facilities of the University’ – 30% ‘Low living costs’ – 7% ‘Unable to go far for financial reasons’ – 1% ‘Bursary available’ – 1%

MAIN FINDINGS How important were the following considerations in your final choice of university? (prompted question) ImportantNot important Course content946 Level of tuition fees2971 Cost of living in the area3466 Nightlife2971 Scholarship/Bursary provided3169 Other reasons3862

Student Finance, Choice of HEI and Local Students Local students statistically significantly more likely to view the level of tuition fees as being ‘important’ in their choice of an HEI (33% v. 25% for non-local students) Local students also significantly more likely to view scholarships and bursaries as being ‘important’ in their choice of an HEI (36% v. 28%)

MAIN FINDINGS Research Question 3. Will the new financial arrangements conflict with the government’s widening participation strategy? Findings: -Ethnic minority groups are less likely to feel well informed and in reality are less well-informed about the new student finance arrangements. -Students from low socio-economic status families were found to feel as well informed about fees, bursaries and grants available as those from high socio-economic status families.

Conclusions Current student finance system very complex Evidence that some groups of non-traditional and local students find it difficult to access/interpret this information HEIs need to address this issue Should HEIS favour local students in their fees/bursaries? –Depends upon their objectives and market position –Some indication that local students more sensitive to financial incentives