Could means-tested fees help poorer students get into university?
In most countries, there is a chasm between the proportion of richer people who make it to higher education and the proportion of poorer people who do so. Introducing means-tested fees could be a way to address this.
Means-tested fees offer a “third way” between systems with no fees but tightly-controlled student numbers (like Scotland) and systems with fees that are so high they could be squeezing out good students (as in England).
We know poorer families tend to be more debt-averse, and that graduates from poorer families typically earn less than those from richer families. Means-testing is also cost-effective to governments because it focuses help on those least likely to repay all their student debt.
This is why the policy is spreading like wildfire across five continents, in Canada, Chile, Italy, Japan and South Africa. On closer inspection, it’s clear that each country stumbled across it independently.
That shows how powerfully attractive the concept is. But it also makes the policy harder to explain as different jurisdictions have adopted different approaches to getting the reduced fee into the hands of students, which changes precisely who benefits and which sorts of institutions are covered.
The UK has already experimented with means-tested fees. In 1998, Tony Blair and David Blunkett imposed a means-tested upfront tuition fee of £1,000, which students from poorer households were not expected to pay. It lasted less than a decade before higher fees for all students, backed by income-contingent loans, became the norm in England from 2006.
There are plenty of reasons why the time is right for policy makers in the UK to look at the concept again. England is currently awaiting the outcome of the Augar review of post-18 education and funding. Rumours suggest the review team and the Department for Education remain interested in some sort of reduction in student costs. The Labour party is also committed to reducing the tuition fee burden. Means-tested fees might provide a sensible starting point, as it has done in Chile.
Student finance is a live political issue in Scotland too, where means-tested fees could be an option for improving university finances and increasing student places without imposing high fees on everyone.
The review by the Office for National Statistics may result in some of the student loan book – most likely, the part expected never to be repaid by graduates – appearing in government accounts as current public spending, rather than being deferred to the future. If that happens, it would remove some of the government’s logic for the existing high-fee systems in England and Wales. We may as well reduce the headline fee for some students and pay the cash direct to universities without pretending it is a repayable loan.
We mustn’t ignore the challenges that means-tested fees pose. One downside is that people who start poor but end up rich will owe much less than people who start rich but end up poor. Means-tested fees are also a complexity that some people might find hard to understand, and they could be costly to administer. The money assigned to means-testing fees could arguably be spent more efficiently on other things, such as top-notch outreach programmes.
There are obvious counter-arguments, but they must be weighed against the advantages of providing a clear, generous and progressive system. Whatever the outcome, targeted tuition fees should be on the menu of options under consideration by the government’s tuition fee review.