TKP Response to The Government’s Augar Report Response

On 24th February 2022, the Government responded to the Augar Report, released in May 2019. The response included the Government’s plans to cap undergraduate home tuition fees and foundation year tuition fees and reintroduce student number controls.

The Changes

For current graduates, the repayment threshold is set to be frozen at £27,295 until 2025. From September 2023, the Government has announced changes to the repayment of undergraduate loans. The repayment threshold for students starting university will be reduced to £25,000, to increase annually with RPI. The interest rate on undergraduate loans will be reduced to RPI + 0%, so students do not repay more, in real terms, than they borrow. The repayment term is also set to increase, from 30 to 40 years. The aim of this is to increase the number of graduates who repay their loan in full, from 25% of current graduates to an estimated 52%.

To support talented, disadvantaged students, the Government announced it is working on a proposal for a national state scholarship, with the aim to improve student outcomes and destinations. The scholarship will enable these students to have wider provider and programme choice as their choices will not be limited by the availability of work to support their studies. Students will be more likely to attain a higher degree classification, as they will be able to dedicate more time to university rather than working, in turn improving their outcomes and destinations. The Government has said they will invest up to £75 million in scholarships to support these students.

To improve the quality of student outcomes, the Government is considering reintroducing Student Number Controls (SNCs) by Minimum Eligibility Requirements (MERs) for students to be able to access Student Finance. The Government proposed MERs at Level 2 (GCSEs) or Level 3 (A-Levels). The proposed MERs for Level 2 are a pass at GCSE English and Mathematics, without both students would not be able to access Student Finance. There were noted exceptions, for students undertaking foundation years or Access to HE courses, or achieving CCC at Level 3. It was not clearly stated if students who resat GCSE English or Mathematics examinations and achieved a pass on another attempt would be eligible for Student Finance. Using data from 2019/20, an estimated 4,800 students would have been ineligible for student finance with the implementation of MERs at Level 2. This increases to 6,200 students if MERs are introduced at Level 3.

The Implications

In 2019, the Augar Report suggested ‘Universities are using foundation years to create four-year degrees to entice students who do not otherwise meet their standard entry criteria’ and questioned if foundation year expansion had always been in the students’ best interest. Despite this, enrolments in foundation years have continued to increase, by 14.3% from 2019/20 to 2020/21, and by 120.9% between 2016/17 to 2020/21.

The Augar Report suggested removing Student Finance support to foundation year students. In response, the Government is introducing a maximum tuition fee and loan for foundation year students to be equal to the fees for Access to Higher Education courses. This reduces the maximum tuition fee from £9,250 to £5,197, ensuring value for money for students and the taxpayer. However, with the introduction of MERs at Level 2, it is possible to see an increase in the number of students enrolling on foundation years, as one exception from the MERs is the completion of a foundation year. Rather than reducing the number of students completing a degree, it could increase the number of those who do so through a foundation year. This could possibly lead to these students taking on unnecessary debt through an additional year at university, which otherwise would not have been required, and cost the taxpayer more. Additionally, if this is the case, more institutions may introduce foundation years to prevent students from studying elsewhere if they do not meet the MERs for undergraduate study. The introduction of MERs could further this, as students who do not meet the requirements to access Student Finance but want to go to university may undertake a foundation year to be eligible, increasing demand for foundation years, possibly increasing supply.

The possible increase in demand for foundation years from the introduction of MERs may be met by an increase in students who previously would have opted for an Access to HE course due to the price difference. Considering both of these factors, in addition to an already growing market, it is likely for enrolment to foundation years to increase further. This could result in an increase of HEIs offering foundation years to meet demand or a decrease in quality due to the additional students and limited capacity.

The Government also announced the launching of the Lifetime Loan Entitlement (LLE) in 2025. The LLE will offer individuals a loan worth the equivalent of four years of post-18 education, to use over their lifetime, for full-time and modular study. Higher technical and degree-level studies are eligible for the LLE. The Government stated their vision for the LLE is to “give people the opportunity to study, train, retrain and upskill throughout their lives” in response to the changing needs of the economy and communities over time. The introduction of the LLE may provide opportunities for HEIs to offer micro-credentials, a larger range of individual modules, and ‘pick and mix’ degrees, which many institutions have considered but are yet to offer in a big way. The introduction of the LLE may enable HEIs to commit further investment to develop these modules or degrees further.

The Outcomes

Overall, the outcomes of the report will bring both positive and negative consequences for both students and taxpayer. Up to £75 million of scholarships will be available for talented, disadvantaged students to enable them to achieve their potential with their choice of institution and course not being limited to job availability in the area. Additionally, the introduction of LLE will benefit students, the economy, and universities. Students will have the opportunity to upskill and retrain over their lifetime, to meet the needs of the economy, community, and personal goals. Universities will have the opportunity to invest more in micro-credentials, which have previously failed to gain traction. The reduction in tuition fees of foundation years will enable students’ greater choice when considering their education, as students who previously studied Access to HE courses due to financial constraints would have the opportunity to study a foundation year at university instead. It will be important, however, for university portfolios to respond to these changes in a strategic manner, gaining a strong understanding of where student demand for these types of courses truly lies and where they can best contribute to the needs of students and society.

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