Wednesday, 17 July 2013

Postgraduate education: better funding and better access

a CentreForum paper edited by Tom Frostick and Tom Gault published June 2013

Executive Summary

Postgraduate education in Britain is like an exclusive golf club. Home graduates who lack the means to pay course fees upfront need not apply. There is no undergraduate style loans system to ensure fair access, and only very limited funding available from universities, government bodies, employers and commercial lenders. The Professional and Career Development Loan scheme, which the government underwrites, has proven to be breathtakingly inadequate. In 2010 only 5,700 students secured one of these loans – less than 3% of the total number of home students who started a postgraduate course that year.

Importantly, the huge rise in participation at the postgraduate taught level since the 1990s has not been driven by UK entrants but by a substantial increase in the number of overseas students. Participation in postgraduate research has remained broadly static during this period and the number of home graduates enrolling on taught courses has risen only gradually, appearing now to be in decline. There was a 4.5% fall in UK postgraduate participation at English institutions in 2011, while first year part time enrolments in England fell by almost a quarter. Without policy intervention, these trends are likely to continue – the club is getting more exclusive.

In this report we maintain that policymakers should seek to increase the levels of public and private investment in postgraduate education, in particular, postgraduate taught courses such as MAs and MScs. These deliver a high rate of return for individuals and government and are often a prerequisite for those wishing to undertake postgraduate research (PhD, DPhil, EngD or equivalent).

Raising funding levels will address two problems: a numbers problem and an access problem. First, if more British people obtain postgraduate qualifications, the UK will see a corresponding rise in the number of workers with higher level skills (not to mention homegrown academic talent). Employers increasingly desire these skills – evidenced by the widening ‘postgraduate degree/first degree only’ wage gap – and so should government. No country has ever seen its growth rate fall because it has overeducated its population, but there are plenty examples of countries that have suffered from having too few skilled workers.

Then there is the access problem. Postgraduate education has been described by the Sutton Trust as “the new frontier of social mobility”. The majority of home graduates who access it are from upper middle income backgrounds. They have succeeded at school, gone to university and are in a strong position to return to education. A postgraduate funding settlement is necessary to ensure better access to education’s highest tier, and is particularly important when postgraduate qualifications are becoming a common way to differentiate between candidates in an elite labour market. For some professions, they are already a de facto requirement.

CentreForum is not alone in arguing that postgraduate education needs more funding, as the independent contributions in Chapters 2 to 5 serve to illustrate. NUS, the CBI and economists Joanne Lindley and Stephen Machin present the argument from the perspective of students, employers and proponents of social mobility, while the British Academy’s Nigel Vincent and Russell Group’s Wendy Piatt present it from the point of view of academia. The latter two are especially concerned that the funding debate includes postgraduate research, with Nigel Vincent suggesting we should drop the “simplistic distinction” between postgraduate taught and postgraduate research (PGT and PGR), as taught and research programmes become ever more integrated. Wendy Piatt reminds us of the importance of postgraduate research in boosting growth and innovation and attracting investment to the UK.

In 2011, CentreForum put forward the case for income contingent loans for postgraduate taught courses. We revisit this scheme in Chapter 6 on the basis that it attracted considerable support across the higher education sector. NUS have since built upon the idea, and so we include their modelling too. An income contingent loan scheme will support growth by increasing the number of British workers with higher level skills, and it will support social mobility by widening access to postgraduate study. Better still, it is estimated to be cost neutral, as the government is in the unique position of being able to borrow at 0% real interest rates over a long period.

We accept, however, that the funding challenge will not be conquered simply through introducing income contingent loans. The contributors to Chapter 7 illustrate that there are important supplementary actions that can be taken. First, Joel Mullan from the Higher Education Commission suggests that the sector could do more to accommodate part time students by offering more flexible learning, and exploring alternative sources of finance, such as bond markets. Conor Ryan of the Sutton Trust argues that British universities should replicate the success of US institutions in increasing their endowment capacity. He persuades home institutions to set aside a significant proportion of this funding for postgraduate study, citing the University of Sheffield as an example of best practice. Finally, Andy Westwood from GuildHE urges government to proceed with caution when reforming a funding system for postgraduates that balances contributions from individuals, government, employers and universities.

In Chapter 8 we put forward a set of practical recommendations, drawn from our contributors’ analysis and our own thinking, which is intended to inform the debate around postgraduate finance over the remainder of this parliament and beyond.

Key recommendations for government
  • Government should prioritise the collection of data to establish whether current funding arrangements are suppressing demand for postgraduate education.
  • A representative pilot should be commissioned to test the postgraduate loans models put forward by CentreForum and NUS.
  • Government should amend Home Office rules on the employment of overseas students in the UK workforce after finishing their studies.
  • Funding and scholarship models for postgraduate research should be structured around a four year minimum period of study (not three).
Key recommendations for universities and the private sector
  • Groups of universities should source funds from financial markets and use the money raised from bond issuances as a facility for postgraduate students to access.
  • The tax treatment of large donations to universities should be made simpler to incentivise giving and help institutions increase their endowment capacity.
  • Universities should link a proportion of their endowment funding to a postgraduate scholarship programme targeted at students from low income backgrounds.
  • Successful collaboration between universities and business should be actively promoted by the sector.
  • As a matter of urgency, universities must review their flexible learning arrangements to ensure they can cater for students who do not wish to commit to full-time postgraduate study.
Full text (PDF 57pp)

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