I’m not clear enough on the workings of the British Parliament to know whether Blair’s 5-vote win on the second reading of his education bill means that the political fight is over, but I thought I’d have my say anyway.
First, I’ll respond to other CT bloggers who’ve discussed this issue. Chris primarily makes the argument that, given that money isn’t going to come from anywhere else, or on any other terms, it’s better to take what’s on offer than to refuse on the basis that the terms are bad ones. I suppose I agree with this, but it’s not a helpful basis on which to discuss policy. Assuming you don’t want the Tories back, the same argument could be used for acquiescence in whatever policy Blair chooses to propose. Chris also dismisses concerns about variable fees, and I’ll return to this.
Daniel argues on risk grounds against the repayment mechanism (borrowed from the Australian HECS scheme) and, in my view, gets the risk analysis wrong. For precisely the reasons he outlines for not using NPV rules in assessing the effects of fees, the insurance implicit in the provision that no repayment is required until/unless earnings exceed some percentage of average earnings is considerably more valuable than he suggests. Assuming the proportion is set to give a level higher than the average earnings of non-graduates, it makes education a one-way bet. If you win, by earning more than you would have expected otherwise, you pay back some of your winnings. If you lose, you pay nothing. I don’t know what the actual proportion is, so I should stress that my support for the repayment scheme depends critically on this variable – in the absence of a high threshold substantial insurance, Daniel’s analysis is correct.
The critical sticking point, though, is not the level of fees but the principle of variable fees. If this provision had been dropped, it seems clear that the rest of the package would have passed fairly easily. The claim that these are not the same variable fees that were specifically excluded in the manifesto is nonsense, and the determination with which Blair and Clarke have stuck to them shows this.
The variable fees proposal raises two main issues. The first, which I assume is dominant for Blair and Clarke, is the desirability of a market-based and profit-driven higher education system, in which prices determine the allocation of resources. I could go to great length on why this is a bad idea, but most of the arguments will be familiar to readers so I’ll raise one that I borrow from archetypal Chicago economist, George Stigler who formulated the ‘survivor principle’. Stigler argued that if you want to determine the optimal firm size and structure for a given industry, you shouldn’t rely on abstract theoretical arguments or engineering estimates of cost functions. Instead, you should look to see which firms have actually survived. In the case of education, for-profit providers have (almost) always and (almost) everywhere failed in competition with non-profit and state providers, even when competing on apparently level playing fields. The big exception is that of providing vocational training to adults (commercial trade schools and the University of Phoenix are examples) . But this is the exception that proves (tests) the rule, since most of the standard arguments against for-profit education don’t apply in this case.
Chris raises the framing issue of whether there would be similar objections to discounts from a set fee as to top-ups. In principle, my answer is “Yes”, but in practice there are two offsetting observations. On the one hand, discounting is very difficult to stop. On the other hand, unless the basic fee is set too high, relative to the cost of provision, discounting will be a marginal issue.
The other major issue is that of equity, and raises afresh a whole lot of issues which have been debated at length in relation to school education, notably with respect to selective education and the 11-plus examination. Supporters of the proposal take it for granted that some university students (for example, those going to Oxford and Cambridge) should receive a substantially better education than others, even when both are undertaking essentially the same course of study. If so, it seems only fair that those receiving the better education should pay more. And since the extra payments go to the university, the difference in quality can be maintained indefinitely.
The same case can be made for a user-pays system in almost any public service, once the principle of unequal provision is accepted. Long after the NHS was introduced, health services were better in rich areas than poor ones, and the same arguments could have been applied for user charges, which would then have perpetuated the inequalities.
The only way in which variable fees could be regarded as egalitarian would be if the grants to top universities were reduced in line with their capacity to charge higher fees. That is, in effect, Oxford and Cambridge would be taxed on the capital accumulated during centuries of state and church support.
An important difference that used to apply to higher education was that only a small proportion of the population, selected on the basis of competitive examination, went to university. In these circumstances, there was no obvious reason for trying to equalise provision within this group. But this difference has ceased to be relevant. In most developed countries, a majority of people can be expected to undertake some form of post-secondary education.
This means that the issues applying to the funding and organisation of post-secondary education are, in essence, the same as for school education (particularly for the post-compulsory age group). The primary objective of public policy ought to be the provision of a high standard of universal education, encouraging diversity in the type of education provided (traditional university, technical and so on) but not in quality. If there’s some extra money for a few flagships like Oxford and Cambridge, well and good, but they should not be allowed to set the pattern.
To the extent that there’s a case for “elite” universities, it relates primarily to research. But even here, the case for elite institutions is weak. There’s no particular reason why the best economics department and the best physics department should be located at the same place, and this is recognised in the Research Assessment procedure which focuses on disciplines rather than institutions. The link between top-quality research and undergraduate education is made much of, but is quite tenuous these days, The distance between research frontiers and undergraduate work now is as great as the distance between research and upper secondary school was thirty or forty years ago in many disciplines – certainly this is true in economics.
Moving on to the blue-sky department, I’d suggest that since post-secondary education is unlikely to become properly universal for a long time, we could think about providing every 18-year old with a capital loan which could either be traded for a post-secondary education or used for some purpose such as establishing a business, with the whole being repaid by a tax surcharge when (if) incomes exceed average earnings.
[Posted with ecto]
{ 32 comments }
kuan im 01.28.04 at 12:14 am
hear hear. let me say that I am singularly unmoved by Russell Group people grabbing at any straw offered (including uncapped tuition fees) to justify supporting a return to business as usual on the grounds that nobel prize winners need to be produced and americans enticed to these shores. To try and justify what is effectively an expensive taste (some notion of superexcellence in research) at the potential expense of ensuring as equally good education for all (and let’s face it, given the intake, the case for the value added that elite universities provide to their education is highly tenuous) does not, it seems to be to be seemly.
Belle Waring 01.28.04 at 12:27 am
I must say that this argument seems very strange to an American, even a fairly egalitarian-minded one. It just seems obvious to me that you could very easily destroy Oxford and Cambridge as elite institutions of higher learning without actually gaining anything for the other universities and polytechnics, other than improved self-esteem. And if the value of an Oxbridge degree is higher in the workplace, then there seems to be little harm in charging more for it, given that (as I understand it) provisions are made for low-income students and this no-lose bet on student loans is in effect. Now, I know we colonials can be easily over-awed by a little history, but isn’t there something moderately stirring about the long tradition of academic achievement, etc. etc.? Maybe this is all because they made me read Harrison Bergeron in my public school gifted program…
anne 01.28.04 at 12:42 am
Belle: why, apart from sentiment, is it important to preserve elite institutions? Although a non-earner these days, I remain very stirred by my (free) Oxford degree, but fail to see why these should continue to be subsidised, once we view degrees as commodities. Or am I just pulling up the ladder behind me, in a sort of misplaced over-compensation for guilt over my privilege? I could argue that there is a value over and above the economic value to the individual graduate – to the university, to society – to posterity… but is that enough to warrant public subsidy?
ahem 01.28.04 at 12:45 am
I’m not clear enough on the workings of the British Parliament to know whether Blair’s 5-vote win on the second reading of his education bill means that the political fight is over…
It may transmute into a revival of the West Lothian Question, given that had Scottish MPs not been able to vote on the matter — the Scottish executive having abolished fees already — Labour would have lost.
if the value of an Oxbridge degree is higher in the workplace, then there seems to be little harm in charging more for it, given that (as I understand it) provisions are made for low-income students and this no-lose bet on student loans is in effect.
See Daniel’s post from earlier: and the value of Oxbridge isn’t necessarily as elite centres of learning. There’s a schizoid quality to it: part finishing school for those who’ve had an expensive education in the private sector; part leg-up for those outside the establishment. (Which makes it pretty different to the Ivy League.)
And if you consider that the traditional career path from Oxford and Cambridge is to a reasonably well-paid job in London, the fees/loans simply add to the housing crisis, in which new arrivals have to live in sub-student-dosshouse-level accommodation for several years before coming close to getting a mortgage.
Also, remember that while repayments on student loans are deferred if you earn less than something like £16,000 p.a., earning that amount in London guarantees you a fairly low standard of living, meaning that repayments make a pretty big dent in your income just as you’re trying to get on the housing ladder. It doesn’t feel progressive, that’s for sure. And will feel increasingly less progressive for those who don’t have parents with enough equity or savings to support their graduate children. Perhaps this may offset the UK’s ridiculous dependence upon London, but that’ll be an accidental benefit.
James Surowiecki 01.28.04 at 2:12 am
I don’t really fully understand the nuances of this debate, so forgive me if this question is ignorant, but why are variable fees necessarily connected to “for-profit” education? Many hospitals in the U.S. are not-for-profit, but they don’t all charge the same fees. And the same is obviously true of American universities, too.
For the same reason, I can’t see how the survivor principle is an argument against variable fees. American universities have survived, and thrived, by charging variable fees, and I think a higher percentage of high school graduates (it’s around 50%) go to college in the U.S. than in any other country. By that standard, couldn’t you just as easily argue that the survivor principle says variable fees are optimal?
Finally, with regard to the equity question, I’m confused. (And this, I suspect, is because I don’t understand something important about the British system.) Are students who go to Oxford and Cambridge right now not already receiving a “substantially better education” than others? If so, how does charging the people who go to Oxford and Cambridge more violate the equity principle? Is the idea that variable payments will institutionalize Oxford’s and Cambridge’s superiority? If so, isn’t it a bit unrealistic to think that you’re ever going to do away with differences of quality between schools at the college and graduate level?
ahem 01.28.04 at 4:28 am
Are students who go to Oxford and Cambridge right now not already receiving a “substantially better education†than others?
Nah. Imperial does science as well or even better, Bristol and Durham have really strong departments, Edinburgh has a great clinical medicine school. What Ox/Cam benefits from, in a loose academic sense, is the tutorial system and college autonomy, and it’s that primarily which their VCs want subsidising, and what other VCs want to challenge.
If Oxford and Cambridge pooled their colleges’ endowments more equitably, they could survive quite comfortably. What I suspect is happening here is that the Ox/Cam VCs want to be at the high-end of the variable pricing regime for the same reason that Levi 501s are priced at £70/pair.
Chris Bertram 01.28.04 at 9:51 am
I’ve a very busy schedule today which means I can’t respond as comprehensively as I’d like, so some disconnected points:
_ I suppose I agree with this, but it’s not a helpful basis on which to discuss policy. _
No, but it is a helpful basis on which to decide whether to support this or that bit of legislation which is going through now.
_the desirability of a market-based and profit-driven higher education system, in which prices determine the allocation of resources._
But a key issue here is that there is _already_ a market in academic labour and one which is global in scope. Unlike the international market for, say, advertising executives’ services, which is part of a bogus argument to jack up someone’s salary, this market is real and the University of Oxbridge, unlike the University of Popleton (formerly the Popleton School of Agriculture and Dressmaking) has to compete on it for the services of top academics (or, alternatively, surrender its status).
The reason fees are on the agenda now is because governments have starved the universities of funds and the VCs have said: “We are independent institutions, if you won’t give us the money we need then please let us raise the money ourselves.” The manifesto commitment was all about stopping them from doing that.
Perhaps elite institutions are an “expensive taste” as one commenter suggested. But there is (normally) no law against indulging expensive tastes, just a presumption against the state subsidising them…. You can’t have it both ways though: either the taxpayer pays or these independent institutions ought to be allowed to raise the funds themselves. (And variability comes in partly because the labour-market that Oxbridge competes in is different from that for Popleton.)
At least, that’s one argument but one which ignores issues of equity and the transimission of inequality from generation to generation. There’s a legitimate interest in addressing that question, but if you address it primarily coercively rather than providing the universities either with the funds or the means to raise them then the consequence will be that those who can will walk (to more attractive posts elsewhere in the world), and those who would have entered academia in earlier generations will pursue careers where they are (a) better paid and (b) aren’t faced with implementing a social policy and quality assurance agenda of the government’s devising.
—–
Some of JQ’s arguments are of the form if X for universities then why not X for all public services? The rhetorical point here is to make us want to draw back from user charges here or to see the HE sector as analagous to the schools sector for other purposes. But, of course, we do tolerate user charges in health to a significant extent (for glasses and teeth) and we don’t have a nationalised higher education system either. Maybe we should, but no-one (so far) has put that argument.
John Q 01.28.04 at 10:18 am
I’m happy to put the argument now, although I’d claim that the system is already effectively nationalised. Education is a basic responsibility of the state and should be treated as such. This doesn’t mean that every school and university should be under direct central government control, but it does mean that policy should be directed towards a primary goal of universal provision.
I haven’t argued against user charges in general, as Chris suggests, but against the idea that public services should be provided on the basis of differential charges designed to reinforce historical inequalities in service provision or to reintroduce inequalities that had been abolished.
Chris Bertram 01.28.04 at 10:34 am
_ policy should be directed towards a primary goal of universal provision. _
But that’s completely vague as a policy goal (and the phrase “a primary” is evasive – what is the relationship of this goal to others?). If universality here means everyone gets the same then we can easily achieve that at a very low level.
If universality means that everyone gets to _some basic degree_ then it isn’t clear that HE is a responsibility of government at all. (It wouldn’t follow from the fact that education is government’s responsibility that _all and any_ education is government’s responsibility: an evening class in wine appreciation is education, but it isn’t any business of the government.)
If universality means (more plausibly) that everyone get the opportunity to be educated to the appropriate degree for them (given their native abilities) and that inability to pay shouldn’t be an obstacle then that is perfectly compatible with means-tested fees, or fees offset by bursaries.
Simon Kinahan 01.28.04 at 11:02 am
I see two problems with this argument. First, I don’t see why variable fees necessarily have anything to do with universities being for-profit. Second, I don’t see a necessary connection between the amount an education costs to provide and any measure of its quality.
The first point is self-explanatory. Many, many countries, in particular the USA, charge students some proportion of the cost of their tertiary education determined by the institution. Almost none of the universities concerned are for-profit.
On the second: Oxford and Cambridge are, naturally, going to charge £3k or whatever the maximum is. To my mind, this scheme is not really going to do much for the elite universities, though. They’re so massively inefficient (as are most of the rest of the Russell Group) than a bit more money is going to make very little difference to the way they work. It will be much more interesting to see what happens with the more financially astute polytechnics and glass and steel universities. In some areas these institutions already provide as good an education (Heriot Watt in Scotland is an excellent example), possibly better, but they will not need to charge top whack fees. Many of them have developed commmercial connections and alumni operations in the style of American universities than mean they’re already doing OK, even though they can’t charge undergraduates anything like the full cost of their education.
John Q 01.28.04 at 11:12 am
Chris, since I’ve argued in support of charges (with exemptions for poor students and income-contingent repayments) there’s no disagreement there.
The real issue, in terms of the distinction you make is whether university education is more like wine appreciation or more like secondary education. I think the answer to that is clear. A larger proportion of students go to university now than completed high school a few decades ago. Treating post-secondary education as if it was some sort of luxury consumer item will ensure that inequality in educational outcomes is the same as for other luxury goods.
On the suggestion of evasion, I said “The primary objective of public policy ought to be the provision of a high standard of universal education” which (unlike your quoted “a primary”) makes the relationship to other goals quite clear and indicates a rejection of the suggestion of a uniform but low standard. Of course, I haven’t yet defined my terms, but I’d suggest that a reasonable aspiration is to match the educational standard of good-quality state universities in the United States. I would say that Australia managed something close to this standard until the cuts (in the ratio of public higher education spending to GD) of the last decade and could do so again if those cuts were restored – not a utopian proposal in my view, but you may disagree.
As regards the global academic labour market, in my view, this is mainly a problem with respect to high-end research (I’m biased since I’m the beneficiary of a government grant designed to keep researchers from being lured overseas or to encourage expatriates to return). At least in Australia, the bigger problem is that the erosion of conditions has been so great that many people are leaving universities for non-academic jobs.
Matthew 01.28.04 at 11:26 am
The problem then is the efficiency of those bursaries, both effective and psychological.
But you have to love last saturday’s Guardian take on that vote:
“We have to be on Blair’s side for this regressive policy, and forget his other regrettable non-progressive decisions of the past years, or this will be the end of progressive politics.”
dsquared 01.28.04 at 11:33 am
Unlike the international market for, say, advertising executives’ services, which is part of a bogus argument to jack up someone’s salary, this market is real
To be honest, I know a lot more ad execs who have gone over to the States for good money than academics. Looking at Invisible Adjunct’s site, I’m not at all sure that labour market competition other than at the very high end is something that favours US over UK.
dsquared 01.28.04 at 11:50 am
I’d add that while undergraduates internalise the benefits of their university education, it’s not at all obvious that they get the benefit of high-end research carried out at universities, meaning that I don’t see that it’s fair to ask them to pay for it. I think Chris’ argument is on a sounder footing in so far as the funding shortfall relates to premises and junior salaries, rather than “world-class” academics.
Barry 01.28.04 at 12:07 pm
“I think Chris’ argument is on a sounder footing in so far as the funding shortfall relates to premises and junior salaries, rather than “world-class†academics.”
And, judging from Invisible Adjunct’s blog, money won’t rectify those shortfalls. US universities, rich and poor, dump on adjuncts all of the time, for the simple reason that they can. Yale grad students have fought to organize a union, due to treatment, even though Yale has an endowment of $US 1 billion (http://www.yale.edu/opa/v32.n5/story7.html).
For those familiar with US labor law, organizing a union is extremely difficult. Firing organizing workers, although illegal, is rarely punished (the punishment is that the employer has to pay some back pay). For graduate students, who can be expelled rather than fired, and who have a very high turnover, plus a mindset where a few years of suffering will be paid off with a professorship, it’s like climbing a cliff. However, things are bad enough that the students at Yale have spent years fighting to organize a union.
Even science students (in the US, more right-wing than the liberal arts and humanities) are sympathetic. According to an article in ‘The Scientist (http://www.biomedcentral.com/news/20030303/03/),
this is because the science students have figured out what their years of toughing it out in grad school get them – more years of toughing it out in post-doc positions.
Chris Bertram 01.28.04 at 12:09 pm
JQ: I quoted “a primary etc” from your comment rather than the original post. Sorry, should have checked the main item again.
Barry 01.28.04 at 12:12 pm
Chris:
“Unlike the international market for, say, advertising executives’ services, which is part of a bogus argument to jack up someone’s salary, this market is real”
Danial:
“To be honest, I know a lot more ad execs who have gone over to the States for good money than academics. Looking at Invisible Adjunct’s site, I’m not at all sure that labour market competition other than at the very high end is something that favours US over UK.”
Chris, at this point you are rejecting a market-based model for (at least one category of) businesses, but using it for academia. How do you justify this?
After all, the performance of an advertising executive is (potentially, of course) far more measurable in a year or two than that of a researcher.
Chris Bertram 01.28.04 at 12:13 pm
Simon Kinahan They’re so massively inefficient (as are most of the rest of the Russell Group) than a bit more money is going to make very little difference to the way they work.
I suppose you have some evidence for this claim?
dsquared 01.28.04 at 12:21 pm
Barry: UK junior lecurers do have a union (NATFHE when my dad was in it, presumably now part of some mega-union called Consilience or something), so the situation might be a bit different.
Chris: I think SK is pushing it a bit far on the Russell Group, but the lower input-output efficiency of the tutorial system is enshrined in current funding patterns.
Chris Bertram 01.28.04 at 12:25 pm
I was thinking about being concessive (since D2’s latest points, like all his points, have a lot of merit), but I might as well quibble instead ….
I’m not at all sure that labour market competition other than at the very high end is something that favours US over UK.
If “very high end” refers to institutions then we agree since my point was that it is the University of Oxbridge rather than Popleton that is competing for the labour concerned.
But what about individuals? Of course our resident academics are all “very high end” in terms of quality. But they aren’t Jeremy Waldron, Martha Nussbaum or Edward Said yet. So how would the salary differential affect how Brian, Harry, Jon, Eszter, Kieran or Henry would think about taking a job in the UK? Perhaps there are non-salary reasons for some of them (in fact I know there are), but if that was all it came down to?
dsquared 01.28.04 at 12:35 pm
I think that Bristol, Durham, York and Edinburgh lose out on this criterion. Based on the small sample of high-flying young academics who I know socially, both of them have been offered and turned down US jobs. As far as I can tell, Oxbridge fellowships are pretty thick on the non-salary compensation; there’s a lot of sweeteners and benefits that they can provide, so the differential in total comp is actually not so big. London University gets you close to government, so politically obsessed types will put a high value on it relative to opposing salary offers.
One other thing I’d throw into the mix is that AFAICT, UK universities are distinctly less rapacious in laying claim to the intellectual property of their employees, something that we perhaps ought to make more of.
martin 01.28.04 at 1:28 pm
Just to clarify ahem, student loan repayments kick in at earnings over £10,000 PA. I earn substantially less than £16,000 (in London no less) and I am repaying my loan. Oh, and housing ladder? Don’t make me laugh/cry.
dsquared 01.28.04 at 3:41 pm
I heard today that the average age of a first time buyer in the UK during 2003 was 34!
Barry 01.28.04 at 7:48 pm
Matthew:
“But you have to love last saturday’s Guardian take on that vote:
“We have to be on Blair’s side for this regressive policy, and forget his other regrettable non-progressive decisions of the past years, or this will be the end of progressive politics.—
Matthew, speaking as an American living under the Bush administration, it doesn’t sound that ridiculous to me. It is the sort of statement that would leave a slimy taste in my mouth if I’d made it.
However, Blair would be a breath of liberal fresh air and sanity compared to what we have now.
Barry 01.28.04 at 7:53 pm
dsquared:
“One other thing I’d throw into the mix is that AFAICT, UK universities are distinctly less rapacious in laying claim to the intellectual property of their employees, something that we perhaps ought to make more of.”
IIRC, this really started in the US in the mid 1980’s, when a federal law allowed publicly funded universities to own patents and draw revenues from them. Assuming that any partial privatization of the universities would eventually allow things like this (it fits the ideology), and that the university administrations will more business-like, and that their appetite for money will be inexhaustable, then this is another US feature which will soon be installed in the ‘upgraded’ UK system.
Barry 01.28.04 at 8:18 pm
dsquared:
“Barry: UK junior lecurers do have a union (NATFHE when my dad was in it, presumably now part of some mega-union called Consilience or something), so the situation might be a bit different.”
Thanks, Daniel. In which case (IMHO, of course), that’s how the junior lecturers will get any scraps from this deal. Of course (continuing my theme), one of the more prominent features of the US/neoliberal system is that unions are to be destroyed…
ahem 01.29.04 at 8:08 am
Just to clarify ahem, student loan repayments kick in at earnings over £10,000 PA
After tax, you mean? The deferment threshold is £1780 gross per month (£21k p.a.), so if you’re only getting £16k before tax, you should really be getting the SLC to defer your repayments.
I heard today that the average age of a first time buyer in the UK during 2003 was 34!
Mean or median? But anyway, I suspect it’s because parents are now buying houses with/for their kids. And it’s always nice to see a list of university towns where parents can make a killing by buring up a house for little Crispin, thus further escalating property prices and making it harder for first-time buyers who actually come from those towns.
Nasi Lemak 01.29.04 at 12:08 pm
dsquared –
I’d seriously doubt that the non-salary compensation of Oxbridge fellowships does more than partially (slightly) outweigh the high cost of living – except in the handful of colleges which still rent out properties for a pittance to fellows. The other stuff (a couple of hundred free lunches a year etc) really isn’t that big a deal, and certainly doesn’t make the jobs competitive with junior tenure-track posts in the US.
Of course my mum gets utility from telling her friends that her son teaches at Oxford. I’m not sure if that counts as non-salary compensation.
martin 01.29.04 at 1:05 pm
ahem: Before tax. I dunno where your figures are from but that’s not what the SLC says:
“Under the new student support scheme, you are liable to start repaying your loan from the April after you graduate or otherwise leave your course, and when your gross income exceeds £833.33 per month (£192.99 per week or £10,000 per annum).”
http://www.slc.co.uk/
nnyhav 01.29.04 at 8:14 pm
One cannot but be amused/bemused that the WashPost online autolinks this story to the services of blair.com (at bottom of page).
kuan im 01.30.04 at 8:34 pm
Nasi lemak, one shouldn’t discount the living allowances/mortgage help that many colleges give to their lecturers. I know of at least one case (and not even professorial) in which interest free housing loans of 250k have been offered.
Nasi Lemak 01.31.04 at 12:41 pm
I have yet to see a college giving any housing assistance to a lecturer.
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