Honorary Member & Former Treasurer
Leading research universities are facing a major funding gap. The cost of world-class teaching and research far exceeds government subsidy. This is why the Russell Group are lobbying hard for an increase in the tuition fee.
Like in 2004 their lobbying looks set to pay dividends. The Government’s review of higher education will report in 2011 and an increase in the fee to £5,000 is the likely recommendation.
Student groups have cause to be concerned. From 2013 the average student is likely to graduate with a debt of at least £30,000 (excluding living expenses). Furthermore, higher fees will inflate the student loan book and increase the scheme’s service cost. The likely outcome is the phasing out of the rate subsidy on student loans.
There is, however, a more innovative and responsive solution. What if leading universities were free to set their own fees on the condition that they operate a ‘Needs Blind’ admissions policy, by which students are admitted on academic merit alone? Those who require financial support would have their fees and maintenance waived. Students with parents earning less than £50,000 per annum would be entitled to full support with a sliding scale thereafter. The funds would come from university endowments.
This is where we can learn from the American model. The extraordinary performance of U.S universities in global rankings is hardly surprising given their accumulated wealth. Thirty U.S universities have endowments of over $1 billion – Harvard alone has accumulated over $20 billion. In contrast, only Oxford and Cambridge in the U.K have endowments which exceed the one billion mark.
The key is their autonomy. It has been shown that increased autonomy leads to higher alumni donations. This is because private individuals tend not to support state-aided institutions. Furthermore, over time altruism becomes reciprocal. Alumni who have benefited from bursaries are more likely to donate in the future, and in greater sums.
This is a good option from a number of angles. First, students would be admitted on merit alone and the cost waived. Second, the funding gap would close altogether. And third, universities would be encouraged to replenish their endowments. Under such a system we would avoid a uniform increase in the tuition fee and avoid indebting future generations.
More broadly, if we are to begin to repair society, we should start by strengthening institutions. Independent, well-endowed universities are the only way that the benefit of world-class teaching and research can be brought to people on the basis of merit and merit alone.