The debate over ‘low value’ HE has reached a stalemate. Numerous government ministers both past and present and the independent review of post-18 education chaired by Philip Augar (the ‘Augar Review’) have criticised universities for delivering degree courses that do not offer sufficient ‘value’ – primarily in the form of higher graduate salaries and better employment prospects. After all, graduates who do not secure a job with a sufficiently high salary after completing their studies will not repay much (if any) of their student loan, leaving other taxpayers to foot the considerable bill. The level of outstanding student loan debt was an eye-watering £161 billion at the end of 2019/20 and is set to grow by £15-20 billion every year for the foreseeable future. It is no wonder, then, that the Government is keen to reduce the cost to taxpayers of the Higher Education (HE) system, which is why bearing down on supposedly ‘low value’ courses is a tempting proposition.
The concerns aired by politicians and policymakers about ‘low value’ HE inevitably raise the question of what ‘value’ means in the context of HE. In fairness, it is difficult to see how an HE institution (HEI) can confidently identify, let alone reduce, the provision of ‘low value’ courses if they are not privy to how ‘value’ is being defined. This may explain why HEIs have largely dismissed the accusations of ‘low value’ degrees while also questioning the metrics and approaches being employed to justify such criticism. In doing so, the HE sector has inadvertently given the impression that they are keener to defend the status quo than they are to put forward any alternative solutions to the Government’s financial predicament.
This report starts from the premise that determining the ‘value’ of an institution or course is ultimately a subjective judgement, which is why students, ministers, employers, parents and HEIs are always likely to hold differing views. The measures currently used by government to assess the ‘value’ of different degrees and HE providers therefore warrant further investigation, as do the other options available to ministers regarding how they might try to increase the ‘value’ of HE in future. Given that politicians, policymakers, university leaders and commentators are unable to agree on what should be labelled as ‘low value’ HE, this report explores the merits (or otherwise) of their respective positions to understand whether there is indeed a problem with ‘low value’ HE and, if so, what should be done about it.
What is the purpose of Higher Education?
When seeking to determine the ‘value’ of an institution or course, there needs to be some agreement on what the institution or course is trying to achieve. Discussing the purpose of HE is thus a surprising omission from most debates on ‘low value’ courses. Major reviews of the HE sector such as the Robbins Report in 1963 and the Dearing Review in 1997 as well as the Augar Review in 2019 share the view that HE serves a number of purposes within the education system and in wider society:
- Preparing students for the world of work
- Providing intellectual stretch and challenge
- Improving social mobility and widening participation
- Supporting civic engagement and local communities
- Promoting lifelong learning
- Contributing to research and development
- Supporting the UK’s position in global education
Although politicians largely support these purposes for the HE sector as a whole, it is legitimate to question whether individual HE providers can deliver all of these purposes. Past initiatives such as Colleges of Advanced Technology in the 1950s and polytechnics from the 1960s sought to expand the provision of more specialist technical courses and programmes, but they both struggled for traction and were eventually absorbed into the university collective. More recently, the Dearing Review (published five years after polytechnics had disappeared from the HE landscape) found that the diversity of institutions and courses had been adversely affected by “the unintended pressure towards institutional homogeneity” because “institutions, whilst autonomous, are increasingly making similar choices in response to the range of funding options available to them.” As a result, HE institutions “perceive no explicit financial reward or incentive for pursuing a distinctive mission”.
The same problem exists today, as the current HE funding model makes little distinction between institutions as it merely funds the courses being provided. Coupled with the competitive nature of the HE system in which institutions vie with one another to attract students, it was always likely that institutions would ‘chase the cash’, as one vice-Chancellor recently noted. In truth, the pressure towards homogeneity has only intensified with every increase in tuition fees since the Dearing Review first proposed ‘graduate contributions’ in 1997. Without reasserting the value of institutions retaining a diversity of missions and purposes, which both Robbins and Dearing supported, it is hard to see how substantive progress can be made in reasserting the value of HE.
How is ‘value’ currently assessed?
A recent review of the Teaching Excellence and Student Outcomes Framework (TEF) by Dame Shirley Pearce (the ‘Pearce Review’) stated that “the student interest is best met by using TEF to identify excellence and enhance the educational experience and outcomes that students receive”. The evidence suggest otherwise. A recent survey by UCAS found that only 22 per cent of applicants “actively used TEF to make decisions about where to study” and the TEF was “the least important factor out of 15 different decision-making factors that students consider”. Even applicants who had heard of the TEF and knew ‘a lot’ or ‘a fair amount’ about it still ranked the TEF as the least important factor in their decision-making process. In the end, the Review had no choice but to conclude that the evidence “appears to suggest that the most important factors cannot be reduced into a single rating.” To make matters worse, another purpose of the TEF – meeting the needs of employers – was similarly dismantled when the Review accepted that “employers are largely unaware of the TEF”. The Government’s recent proposal to only update the TEF every 4-5 years rather than annually will add to the underlying doubts about the validity and usefulness of the TEF. In short, the TEF is of little value when seeking to identify ‘low value’ HE.
The most controversial method of trying to measure the ‘value’ of HE concerns the use of Longitudinal Education Outcomes (LEO) data, which records how graduates with degrees in different subjects from different institutions fare one, three, five and ten years after they graduated in terms of their employment and earnings. The most recent LEO data (covering the period up to the 2018/19 tax year) found that the median earnings of graduates five years after they finish studying is £27,400. However, this masks considerable variations by subject. Similarly, the LEO data shows that 86.7 per cent of graduates are in sustained employment, further study or both five years after completing their degree but there are significant variations between subjects on this metric as well.
Variations in the salaries of graduates from different HE providers are also hard to ignore. If one looks at institutions with at least 1,000 students, the provider with the highest median salary is the University of Oxford (£42,100) and the lowest median salary is found at Bath Spa University (£21,900). The highest proportion of graduates in employment, further study or both at a provider with over 1,000 students is the University of Winchester (90.4 per cent) whereas the lowest proportion is from London Metropolitan University (79.3 per cent).
One may be tempted to draw conclusions about the ‘value’ of specific courses or institutions based on these figures. However, the statistical robustness of those conclusions would be highly questionable due to the long list of caveats associated with LEO data. These include:
- There is no geographical adjustment of the salary or employment data, meaning that universities in more prosperous areas are likely to perform better in terms of salaries and employment rates than those in less prosperous locations;
- Many graduates are not captured by the LEO data, such as those who have left the labour force or indeed left the UK (which could explain the low employment / further study rates of language graduates, for example);
- LEO data does not distinguish between full-time and part-time employment, so sectors with a larger proportion of part-time workers (e.g. creative industries / performing arts) could inadvertently look worse in terms of median salaries;
- It is not possible to use LEO data to make direct comparisons between courses and institutions in terms of how much they have ‘added’ to a student’s earnings and employment because LEO does not directly account for their different social or educational starting points.
With such a wide array of caveats, it is no wonder that the potential use of LEO data to inform policymaking and even support regulatory action against HEIs who deliver ‘low value’ degrees has proved so acrimonious.
Other methods that seek to identify ‘low value’ HE have also encountered statistical obstacles. From 2014/15 to 2018/19, the mean non-continuation (‘drop-out’) rate for students was 6.7 per cent. Some providers were significantly above the average while others were well below it. Again, one might try to use this data to judge institutions and courses but such an approach would be far from straightforward. For example, mature students and those with lower prior qualifications on entry have higher drop-out rates, which would work against any institution aiming to provide opportunities to under-represented groups. Moreover, there are large variations between subjects. Medicine & Dentistry and Veterinary science had a combined non-continuation rate of 1.4 per cent, with the next lowest being Languages and Historical & philosophical studies (4.3 per cent), while at the other end of the scale Computer sciences had 9.2 per cent and Business & administrative studies had 8.6 per cent. These stark variations are compounded by the lack of consensus over what counts as an acceptable non-continuation rate. Even so, the Department for Education (DfE) and the Office for Students (OfS), the HE regulator, seem determined to heap pressure on institutions with higher drop-out rates despite the failure to establish a direct link between this measure and the ‘value’ of a degree programme or HEI.
Many of the other options available to ministers are just as riddled with flaws. Introducing ‘minimum entry requirements’ to prevent applicants with low prior attainment from accessing HE would disproportionately restrict opportunities for those from more deprived backgrounds. Even the Augar Review recognised that this “would be a significant intervention”, and that is before one considers the logistical barriers that may be caused by the likelihood of needing multiple exceptions (e.g. disabled students, care leavers, courses where admissions are based on portfolios or performances). Meanwhile, the prospect of the Government reintroducing caps on student numbers (most likely on particular courses and/or institutions) would involve making entirely arbitrary judgements on the relative ‘value’ of degree courses and institutions, which would be fraught with difficulty. Scrapping ‘foundation years’, as proposed by the Augar Review, would be an equally blunt tool. The Review was perfectly entitled to ask whether the expansion of foundation years – almost quadrupling from 2012 to 2019, with a questionable focus on ‘Business and Administrative Studies’ – has been in the best interests of students. Even so, the evidence seems to suggest that foundation years can be valuable for some prospective full-degree students, especially from less privileged backgrounds, so the complete withdrawal of funding for this route to a degree course would be contentious.
In the debate over the ‘value’ of HE, the growth in low-cost subjects has attracted considerable attention. As the Augar Review highlighted, “because funding increased at a much faster rate for lower cost subjects due to the near universal setting of fees at [£9,000], lower cost subjects have seen a larger percentage increase in spending”. To illustrate the point, Leisure studies, Media studies, Design and creative arts, Humanities and Social studies saw funding increases of over 30 per cent after tuition fees were raised. The Review felt that this “potentially incentivises institutions to prioritise them because they provide a higher margin” rather than because they are ‘high value’ courses. To resolve this, the Augar Review proposed that tuition fees should be capped at £7,500 to allow for “better targeting of taxpayer investment” while reducing students’ debt, with additional government funding going to universities that deliver high-cost subjects. However, the precise relationship between the level of tuition fees and the ‘value’ of degree courses was never explored in detail by the Augar Review, save for their concern at the expansion of cheaper courses. This means that even if tuition fees are lowered, there is no guarantee that the ‘value’ of HE would necessarily improve.
Leaving aside the cost to students of attending university, the cost to taxpayers of supporting the HE system has become increasingly visible in recent years. The seemingly endless ratcheting-up of the earnings threshold for repaying student loans (now at £27,295) has left the public finances in a perilous state due to the sheer volume of unpaid loans. Recent estimates suggest that the RAB charge (the proportion of fee loans that will not be paid back) stands at 54 per cent, with 88 per cent of students never repaying their student loan in full and 33 per cent never repaying any part of their loan. In this context, it would be unsurprising if the Government considered altering the repayment terms of student loans to generate savings because any unpaid loans will have to be paid off by other taxpayers instead.
The Dearing Review rightly underscored the importance of a “strong bond of mutual interdependence” between the HE sector and society. A quarter of a century later, this crucial bond appears to be fraying. The rapid growth of low-cost degrees, foundation years and overall enrolments has unwisely fed the narrative of ‘low value’ HE and raised serious questions about whether some parts of the sector are acting out of financial self-interest as opposed to the national interest. Universities and other HE providers can undoubtedly make a major contribution to local, regional and national prosperity, yet the behaviour of some institutions has led to a perception among policymakers and politicians that they are more interested in attracting tuition fee income than they are serving their students, local communities and society as a whole.
Neither the HE sector nor the Government are blameless in the debate over ‘low value’. The sector has been quick to criticise the Government’s stance on ‘low value’ courses and institutions without offering alternative solutions. At the same time, the Government has focused too much on what it doesn’t want from HE without explaining what it does want instead. If the Government continues to rail against ‘low value’ HE without describing a clear vision for what a ‘high value’ sector looks like, there can be few complaints from ministers if universities continue down their present path. What’s more, the notion that politicians and civil servants can judge the ‘value’ of any course or institution across the country based on little more than graduate salaries, employment outcomes or drop-out rates is not a tenable proposition from either a policy or statistical perspective. The DfE and OfS should acknowledge that the subjectivity surrounding the concept of ‘value’ is precisely why they must allow the choices of students, employers and other stakeholders to drive out ‘low value’ HE rather than trying to intervene themselves.
To align the interests of government and the HE sector when discussing ‘low value’ HE, a coherent narrative about the role and purpose of HE must be constructed. This report argues that the best way to build a positive and aspirational narrative while maintaining a strong and diverse HE sector is to introduce a new framework based on ‘local’ and ‘national’ universities. By giving ‘local’ and ‘national’ universities a distinctive mandate and set of responsibilities, the value of HE will become more apparent. This would put the whole sector on a more sustainable path by breaking away from the homogeneity that exists today. Some in the HE sector may be perfectly content with maintaining the status quo, but that would be a mistake. It is time for the HE sector to put forward a new agenda that aims to deliver ‘high value’ courses and institutions, and this report explains how it can be done.
The subjective nature of ‘value’ inevitably makes it harder to quantify. Even so, the following recommendations seek to promote ‘high value’ provision in line with the seven main purposes of HE outlined earlier. In addition, to reflect the present national policy imperatives as well as the concerns of Robbins and Dearing about the absence of any coordinating principles for the HE sector, this new narrative will be underpinned by three objectives:
- A place-based framework that recognises the importance of the local areas in which many HEIs operate;
- A stronger sense of purpose and clear objectives for different institutions; and
- A renewed emphasis on collaboration instead of excessive competition.
How universities can deliver better value
- RECOMMENDATION 1: By the 2023/24 academic year, all universities should be required to formally designate themselves as either a ‘local university’ or ‘national university’ to reflect their primary purpose as an institution.
- RECOMMENDATION 2: ‘Local universities’ will be the engines of local economic growth, social mobility and lifelong learning. They will be tasked with delivering courses at degree and sub-degree level that promote civic engagement with the local community and support employers. This will be achieved by working in close collaboration with the new ‘Tertiary Education Commissioner’ in each area as well as local FE colleges to create a ‘local tertiary ecosystem’.
- RECOMMENDATION 3: ‘National universities’ will take the lead in enhancing the national and international reputation of our Higher Education system. These universities will focus on providing degree-level courses and research programmes that are targeted at students with higher prior attainment from across the country as well as attracting international students.
How government can get better value from HE courses
- RECOMMENDATION 4: The Government and the Office for Students should not use data on graduate salary or employment outcomes to judge the ‘value’ or ‘quality’ of HE courses, as the underlying LEO data cannot generate statistically valid conclusions on such matters. The use of salary and employment outcomes would also potentially undermine the Government’s ‘levelling up’ agenda by penalising universities based in areas of the country with the poorest employment prospects for graduates.
- RECOMMENDATION 5: The Teaching Excellence and Student Outcomes Framework should be scrapped as it does not provide meaningful or reliable information to prospective students about the value or quality of degree programmes.
- RECOMMENDATION 6: To improve the value of HE, the Government should introduce a new system of ‘accredited’ and ‘non-accredited’ degree courses. To be ‘accredited’, a degree must either: (i) Get approval by a Professional, Statutory and Regulatory Body; (ii) Receive letters of support from one large or five small employers; (iii) Use external exams designed by an awarding organisation; or (iv) be signed-off by a local Tertiary Education Commissioner. Tuition fees will remain the same for accredited and non-accredited degrees but non-accredited degrees will have their government funding reduced by £1,500 per student.
- RECOMMENDATION 7: To discourage Higher Education institutions from recruiting students who are not suitable for their course, the Office for Students should fine institutions who record excessively high non-continuation rates relative to a benchmark set for individual institutions.
- RECOMMENDATION 8: Instead of banning foundation years, the Government should restrict their provision to ‘local universities’. In addition, the tuition fee cap for foundation years should be set at £6,000 to reflect their position between an ‘Access to HE’ Diploma and a full undergraduate degree course.
How students can promote better value in HE
- RECOMMENDATION 9: To encourage students to seek out the courses and institutions that will offer them the greatest value, the repayment of student loans should be based on a new ‘tiered’ set of repayment thresholds:
- Earnings up to £12,570 – 0%
- The next £5,000 of earnings (£12,570-17,570) – 3%
- The next £5,000 of earnings (£17,570-22,570) – 6%
- The remaining amount (above £22,570) – 9%
The new tiered repayment thresholds should be incrementally introduced over a period of 10 years, beginning with lowering the 9% threshold and then creating the lower tiers.
- RECOMMENDATION 10: The repayment period for student loans should be extended from 30 years to 40 years to reflect the long careers that those graduates will have over their lifetime.
- RECOMMENDATION 11: By 2030, the Government should introduce a post-18 funding model based on ‘Individual Education Budgets’. The Government should place up to £20,000 into every learner’s ‘Budget’ account, and learners would then be free to choose the course (university degree, college course or apprenticeship) and mode of learning (full-time or part-time; whole course or a course unit) that suits them. All learners should also be given access to a new ‘lifetime loan limit’ of £75,000.