Recently the Government announced plans to make changes to how universities in England are allowed to charge tuition fees. Although the changes have been reported as a ‘rise’ in fees, this isn’t exactly true. To make things clearer for you about what is actually going to happen we asked the experts at Wonkhe to explain what the future of tuition fees is likely to look like and how it might affect you.
If you're considering going to university in the future this is a must-read.
University fees were only increased a few years ago, why is this happening again?
In 2010 the Conservative and Liberal Democrat coalition voted to treble university fees in England to £9000 per year, in order to replace funding that had previously been given directly to universities by the government. Under the previous fee system, the maximum fee was £3000 per year and the government gave more money directly to universities for teaching.
What's the deal with inflation and university fees?
From 2006-2011, although people often talked about fees being £3000, they were actually rising each year in line with inflation. This meant that students entering university in 2011, the last year with the old cap, were actually paying £3225.
What is inflation?
Inflation looks at how much the prices of goods, services and wages increase each year. Inflation generally increases yearly by 1-3% which is normal in a stable economy. For example in 1990 a Mars Bar was 26p but in today’s money it costs 60p. In real terms the price hasn’t really increased because wages have risen too.
The problem with fixing fees at £9000 per year
When fees were increased to £9000 per year, the government decided that the limit would not be allowed to increase each year with inflation. The maximum fee in 2012 was £9000, and it is still exactly £9000. Universities have not been very happy about this, because their costs and expenses have risen since then, but the limit on fees mean their income has not.
It sounds like universities are actually becoming poorer?
Yes. £9000 in 2011 bought more than £9000 in 2016 – economists sometimes call this a change in ‘purchasing power’. Staff salaries go up; journal and book costs for libraries go up; equipment and building costs go up. In effect, this means that universities are losing money every year because £9000 buys them less and less.
The government agreed that fees should increase in line with inflation. This year, they agreed to the universities’ requests to increase fees to ‘keep up’ with the annual inflation in costs. However, the government have demanded something in return from the universities in order for them to keep the buying power of fees the same from year to year. Universities must show that their teaching is good enough to justify the higher fees, through an evaluation called the ‘Teaching Excellence Framework’, or TEF.
What is the Teaching Excellence Framework?
The TEF will begin in 2017, though it won’t be fully in action until 2019. In 2017 and 2018, we expect most universities to meet the minimum standard required to increase their fees by the rate of inflation.
I want to start uni in 2017, what will I pay?
If you are taking your A Levels in the coming year and go straight to university in September 2017, you can expect to pay 2.8% higher fees, or £9252 after you graduate (if you earn enough to pay it back).
I’ve just done my GCSEs, what will I pay in 2018?
If you are taking your GCSEs right now and plan to go to university in 2018, we forecast that you will pay £9557 at most universities based on anticipated inflation.
Will the TEF mean more changes in the future?
In 2019, things get more complicated. The TEF will start to have higher expectations of universities in order for them to fully increase fees.
Universities will be graded at:
- Meets Expectations
- Outstanding teaching
If they get a ‘Meets Expectations’ grade, they can increase fees by half of that year’s inflation; if they get an ‘Excellent’ or ‘Outstanding’ grade, they can increase fees by the full year’s inflation rate.
Do universities have to be part of the TEF?
Universities may also choose not to participate in the TEF, in which case they will not be allowed any increase at all.
|Applying to uni help on TSR :
Everything you need to know about applying to uni
Search for uni courses on TSR
Eight steps to applying to uni
So how much will uni cost in 2019?
This means there will be three main fee levels for students entering university in 2019.
- Universities that do not enter the TEF will charge £9000.
- Universities that ‘Meet Expectations’ in the TEF will charge £9701.
- Universities that are ‘Excellent’ or ‘Outstanding’ in the TEF will charge £9844.
The government expect that at least half of universities will meet this grade and so be able to charge the highest fees.
Don’t be put off! Are you really paying more?
£9844 sounds like a lot more than the £9000 that students currently pay – it’s almost £1000 more! However, there are two reasons why this should not put you off going to university in those years.
Start thinking 2019 money
Firstly, it helps to think about £9844 in ‘2019 money’ as being equivalent to £9000 in ‘2016 money’. As noted above, inflation changes the value of money from year-to-year. £1 in 2016 will buy you less than £1 bought you in 2013, but more than £1 is expected to buy you in 2019.
So when you consider the fees in future years in ‘2016 money’, some universities will actually cost less than they do now, just as universities today cost less, in relative terms, than they did last year. So in 2017 and 2018, fees will still be £9000 in ‘2016 money’.
In 2019, universities that do not enter the TEF will cost £8228 in ‘2016 money’. Universities that ‘Meet Expectations’ in the TEF will cost in £8869 in ‘2016 money’. And universities that are ‘Excellent’ or ‘Outstanding’ in the TEF will still only be £9000 in ‘2016 money’. Economists sometimes call this the ‘real terms value’ of money. So if a course is advertised as costing you £9844 in 2019, remember that is really the same amount of money as £9000 today.
Paying off your loan
The second reason you not be put off university by any of this is that - unless you are very very wealthy and don’t need a tuition fee loan – you will not pay for any of these fee increases when you start university. In fact, there’s a very good chance that you will never pay for it at all, even when paying back your loan after you graduate. You don’t need to have the cash up front to pay for university.
|Student finance help on TSR :
Find out about student finance options
Speak to Student Finance England on TSR
Student finance guides
Student loans can be complicated and confusing. But the important point with fee rises is that your outstanding student debt will be written-off by the government 30 years after you graduate. The amount you pay back each month is linked to how much you earn. This means that the only people who will pay off the whole of their loans are those who are in the top 30% of earners. These are the only people who will pay back the extra fee increases: most of you will not.
The higher education think tank Wonkhe (pronounced wonky) aims to improve policy-making in HE and provide a platform for the new or previously unheard voices and perspectives in the sector. You can find out more about Wonkhe here and sign up for their weekly newsletter here.