Alex Usher: Sobre politica inglesa de educacion superior
Agosto 7, 2015

July 22

Summer Updates from Abroad (1): England’s Demented Student Loans Policies

You’ll recall that the UK had an election in early May in which the Conservative Party, contrary to most polling, won a majority of seats, and thus was able to form a government without need for a coalition.  On July 8, the new government delivered its first budget, which contained a lot of policies that – to put it mildly – had not exactly been fully outlined to the electorate eight weeks earlier. In student aid, what that meant was the outright abolition of maintenance grants, and their replacement with student loans of slightly higher value.


Rewind a little bit here for some history: before 1992, the UK was a free-tuition, all-grant system.  In that year a student loan program was set up because the government felt it couldn’t continue to increase maintenance grants.  In 1998, means-tested tuition of up to £1,000 was introduced, and maintenance grants were abolished in favour of an all-loans system.  After 2006, when tuition was effectively hiked to £3,000, maintenance grants of up to £2,900 were re-introduced, alongside loans for fees, and maintenance loans of up to (roughly) £4,000 pounds (amounts were indexed).  The maintenance loan and grant system remained unchanged when fees were effectively raised to £9,000 in 2012 – that is, unchanged until now.

With means-tested grants being replaced by loans, and those loans being placed on top of the £27,000 (C$54,000) in fees that a three-year degree will bring, there are a lot of lurid headlines (like this one) about how the poorest students are now facing the largest debts – possibly over £52,000 (C$104,000) at the end of their education.  That figure is, strictly speaking, accurate – but it doesn’t quite capture the weirdness of what’s going on.

As I explained back here, there’s a certain fantasy element to student loans in England.  Repayment occurs in strict income-contingent fashion, with no payments on the first £21,000 (C$42,000) of income, and 9% of any income on top of that.  At the end of thirty years, any outstanding balance will be forgiven.  This creates some odd incentives: if you expect to pay back your loan at some point, there is a reason to accelerate payment because the loans are (barely) interest-bearing; on the other hand, if you don’t think the minimum payments will end up repaying your loan, there’s absolutely no incentive to try to repay the loan, since it will eventually be forgiven anyway.  In essence, for people in the latter group, these aren’t loans, but rather a 9% surtax on income over £21,000, which stays in place for 30 years.

Depending on whose estimates you’re using, it turns out that anywhere from 60 to 80% of present-day students are not expected to repay their loans (the range exists because, frankly, predicting repayment rates 30-years out is a bit tricky, and depends a lot on initial assumptions).  As a matter of logic then, if you load more debt onto these people by replacing grants with loans, it simply isn’t going to be repaid – it’s going to wind up as forgiven debt sometime in the late 2040s.  True, very poor students who end up among the wealthiest quartile of graduates will end up paying more, but for the most part this is just an accounting trick: the government is lending money to students now with the full intention of forgiving most it (with interest) in thirty years time.

Here’s the central dilemma: under the English loan system, raising student contributions is almost impossible unless you either change the repayment threshold, or you change the repayment rate.  The problem is the Tories initially promised they wouldn’t do either of these things, so now they’re “examining” the weasel option of raising real contributions over time by de-indexing the £21,000 threshold.  That will bring in more money, but it doesn’t change the reality that, in the main, this is just exchanging grants now, for loan forgiveness later.

A decent accounting scheme or auditor-general wouldn’t allow it.

For those want to know more, here’s the Institute of Fiscal Studies’ take on the budget changes; more reasonably, have a look at the excellent Andrew McGettigan’s summary thereof.

Posted in student aid, student debt, student loans, U.K.Respond to this post » 

August 04

Summer Updates from Abroad (2): The UK Teaching Excellence Framework

The weirdest – but also possibly most globally consequential – story from this year’s higher education silly season comes from England.  It’s about something called a “Teaching Excellence Framework”.Now, news of nationally-specific higher education accountability mechanisms don’t often travel.  Because, honestly, who cares?  It’s enough trouble keeping track of accountability arrangements in one’s own country.  But there are few in academia, anywhere, who have not heard about the UK’s Research Excellence Framework (or its nearly-indistinguishable predecessor, the Research Assessment Exercise).  There is scarcely a living British academic who has travelled abroad in the last two decades without regaling foreign colleagues with tales of this legendary process, usually using words like “vast”, “bureaucratic”, “walls full of filing cabinets”, etc.  So news that the country may be looking at creating a second such framework, related to teaching, is sure to strike many as some sort of Orwellian joke.

But no, this government is serious.  It’s fair to say that the government was somewhat disappointed that its de-regulation of tuition fees did not force institutions to focus more on teaching quality.  With the market having failed in that task, they seem to be retreating to good old-fashioned regulation, mixed with financial incentives.

The idea – and, at the moment, it’s still just a pretty rough idea – is rather simple: institutions should be rated on the quality of their teaching.  But there are two catches: first, how do you measure it?  And second, what are the rewards for doing well?

The first of these seems to be up in the air.  Although the government has committed to the principle of assessing teaching at the institutional level, it genuinely seems to have not thought through in the least how it intends to achieve this.  There are a lot of options here: one could simply look at use of resources and presence of qualifications: student/teacher ratios, number of profs who have actually sought teaching qualifications, etc.  One could go the survey route, and ask students how they feel about teaching; one could also go the peer assessment route, and have profs rate each others’ teaching.  Or there’s the “learning gain” model, used by the Collegiate Learning Assessment, which was part of the AHELO system (from which, by the way, the UK has now officially withdrawn).  Of course, everyone knows that most of these measurements are either untested, or can be gamed, so there’s some fear that what the government really wants to do is to rely on – what might generously be called – lowest-common denominator statistics; namely, employment and income data.

Why might they want to do something this bell-ended, when everyone knows income is tied most closely to fields of study?  Well, the clue is in the rewards.  British universities have – as universities do – recently been clamouring for more money.  But according to this government, there is no more money to be had; in fact, at about the same time they announced the new excellence framework, they also announced a £150 million cut to the basic teaching grant, spread over two years.  So the proposed reward for good teaching is the ability to charge higher fees (so much for de-regulation… ) But as I explained a couple weeks back, raising tuition doesn’t help much because, thanks to high debt and a generous loan forgiveness system, somewhere between 60 and 80% of any extra charges at the margin will end up on the public books circa 2048, anyway.

But… if you only increase tuition at schools where income is the highest, the likelihood is that you will get a higher proportion of graduates earning enough to pay back their loans, over time.  And hence less money will need to be forgiven.  And hence this might not actually cost so much.  Which is why there is an incentive for government to do the wrong thing here.

Still, on the off-chance the government gets this initiative at least partially right, the impact could be global.  Governments all over the world are trying to get institutions to pay more attention to teaching; expect a lot of imitators if the results of this exercise look even half-promising.  Stay tuned.


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