Bright Blue has launched a new report calling on the Government to introduce a  ‘graduate levy’ on large graduate employers to subsidise a new lifetime loan account to enable all UK and EU adults to pay for several Higher Education (HE) courses in England throughout their lives

The report, entitled Going part-time, highlights the worrying decline in participation in part-time HE study at English universities in recent years. There was a 46% decline in the number of undergraduate entrants and a 28% decline in the number of taught postgraduate entrants for part-time HE courses in England between 2010-11 and 2013-14.

It includes new polling which finds that 37% of English adults who have no experience of part-time HE have considered undertaking a part-time HE course in the past five years but ultimately did not enrol. These ‘considerers’ are most likely to report not being able to afford to undertake part-time HE as the main reason for not pursuing their interest further.

Commenting on the report, co-author of the paper and Director of Bright Blue, Ryan Shorthouse, said:

“Since part-time higher education is critical for individual and national prosperity, its decline - especially in England - is alarming and urgently needs addressing.

There are three main beneficiaries from increased participation in higher education: participating individuals, the taxpayer and employers. In recent decades, the responsibility for the financing of universities has shifted from taxpayers to individuals. This is right - graduates earn on average significantly more than an average taxpayer. But it is now time for large graduate employers in the UK to contribute more by paying a ‘graduate levy’ to enable more people to participate in HE. 

The biggest barrier people face when considering part-time HE is being unable to afford to do it. The extension of tuition fee loans to part-time undergraduates in 2012-13 was welcome but it is insufficient: only 31% of undergraduate part-time students are eligible for this support. Ineligibility is caused by the fact that many are undertaking modular courses or courses that are equivalent or lower qualifications to what they have previously obtained. 

Government is extending tuition fee loans to some postgraduates and PhD students.  This is the right approach but it means only those pursuing an elite academic route will be supported. All UK and EU students - no matter what type of HE course they undertake - should be able to access financial support from a lifetime HE tuition fee loan account to pay fees at English institutions, enabling many more people to upskill and reskill throughout their lives.

This new lifetime loan account will mean that the number of UK and EU individuals entitled to tuition fee loans will rise significantly, as will the total amount being borrowed. To be credible, this new loan scheme has to be fiscally neutral and progressive. This can be achieved by making repayment parameters - such as the minimum salary threshold for repayment and interest rate graduates are charged - stricter for every new qualification a student takes or if the student is older. To increase progressivity, high lifetime earners could pay more through their repayments. However, what would be even fairer, is if the revenue from the graduate levy subsidised this lifetime HE tuition fee loan account.” 

New polling from Bright Blue and ComRes of the English public, which included a booster sample of those who had considered part-time HE in the past five years but ultimately did not pursue it, found the following:

- 37% of English adults with no experience of part-time HE study have considered undertaking part-time HE, but ultimately did not pursue it, in the last five years. 43% of English women have considered part-time HE compared to 32% of English men. 56% of 18-24s had considered part-time HE compared to just 22% of over 65s. 

The report identifies three types of barriers to accessing part-time HE: financial, practical and informational barriers.

- The polling finds that financial barriers, especially credit constraints, are the biggest barrier: the highest proportion (24%) of considerers indicated that not being able to afford it was the main reason for not undertaking part-time HE.

- In order to judge how important different barriers were to different socio-demographic groups, we asked all considerers to list the three main reasons for not undertaking part-time HE. We found that 56% of those from the lowest social grade (DE) reported ‘could not afford it’ as one of the three most important barriers compared to 39% of those from the highest social grade (AB).

- Another financial barrier is support constraints, in particular a lack of support from employers and government. This is unsurprising considering there has been a 44% decline in the number of students reporting their employer as their main source of funding between 2010-11 and 2012-13. 44% of considerers cited access to loans and finance as a significant problem to accessing part-time HE.

- Practical barriers were also a problem - including being able to juggle work with the course and family. Our polling finds that 11% of considerers cite being unable to juggle work and study as the most important reason for not pursuing an interest in part-time HE further.

- This was more of a problem for those from the highest social grade: 32% of those from the highest social grade (AB) indicated that this was one of the three main reasons for not pursuing an interest in part-time HE futher compared to only 22% of those in the lowest social grade (DE).

- We also found informational constraints as a barrier: 4% of considerers cited this as the main reason they did not pursue their interest in HE. This was especially the case among younger adults. This is reflected in the lack of knowledge about the financial support available to considerers. A majority of considerers (79%) did not know or believed they could access maintenance loans to support their part-time study. A firm majority are therefore either wrong or do not know. A large proportion of students (45%) were unaware of the arrangements for students studying for an equivalent or lower qualification.

- Considerers from the lowest social grade are more likely to be unaware of the finance arrangements for part-time students. For example, 40% of those in the DE social grade do not know whether part-time students are eligible for government tuition loans compared to 29% of those in the AB social grade.

The report has two main policy recommendations which meet three key tests: fiscal neutrality (government not spending any more money), progressivity (those on the lowest incomes pay less than those on the highest incomes for participation in part-time HE), and a fair funding settlement between the key beneficiaries of HE (individuals, taxpayers and employers).

The introduction of a lifetime HE tuition fee loan account

All eligible adults from the UK and other EU aged 18 onwards should be entitled to access a lifetime HE tuition fee loan account from government to pay for tuition of any HE course - full-time or part-time - in England during their lifetime.

The amount in the lifetime loan account should be determined after extensive consultation led by government. It should take into account that the amount would have to be high enough to take into account people studying multiple degrees. However, the loan account should also be low enough to trigger price competition and, in particular, downward pressure on undergraduate tuition fees in England. 

Similar to the current system, students will repay the amount they have borrowed from their lifetime loan account to the Student Loans Company through the PAYE system. This tuition fee loan will be separate and junior to the maintenance loan UK students can obtain for a first undergraduate degree.

To achieve a key test of fiscal neutrality, the report proposes that: the government’s cap (currently £9,000, but could rise with inflation for those proving they comply with the new Teaching Excellence Framework from 2017-18 on undergraduate tuition fees at English public universities) should remain; and, the parameters for the repayment of the lifetime HE tuition fee loan account (for example, the minimum salary for repayment or the interest rate) should be stricter for every additional qualification an individual obtains or if they are above a certain age when drawing down from the account.

To achieve a key test of progressivity, the report suggests maintaining sufficient subsidy to write-off in part the loans of low lifetime earners. To do this, the government should seek higher repayments from high lifetime earners and introduce a ‘graduate levy’ on large graduate employers.

49% of the English public find the idea of a lifetime loan account personally appealing compared to only 15% who would find it unappealing. 61% of considerers found the lifetime loan account personally appealing compared to 11% who found it unappealing.

A ‘graduate levy’ on large graduate employers

The report proposes the introduction of a new ‘graduate levy’ on all large UK employers (private and public) where a significantly large proportion of their total workforce in the UK is graduate-level. 

The amount of the levy is unspecified. As is the size of the employer. So is the proportion of their workforce which should be graduate-level before this levy applies. The government should lead an extensive consultation to determine these specifics, as it is currently doing for the ‘apprenticeship levy’ it is introducing

The funding raised from our proposed graduate levy should be used to subsidise our proposed lifetime HE tuition fee loan account. This achieves our third key test: a fair funding settlement between the key beneficiaries of HE. A majority of the public agree that companies with a large amount of graduate employees (61%) should pay at least some of the cost of part-time HE study.

A majority of the public (57%) find this idea of a graduate levy on large graduate employers  ‘personally appealing’. Only 9% find it unappealing.

Vice-Chancellor of The Open University, Peter Horrocks, said:

“This report sends a clear message that there is a real appetite for part-time study in this country, but that the appropriate loan funding is not available to support the learning needs of many part-time students.  Part-time students are just the kind of people the government talks about supporting – those with a desire to succeed who make a contribution to our economy.  The report offers some eye-catching suggestions to fund lifelong learning and is a valuable contribution to the debate about how we support an important driver of national prosperity.”