Endowments could help postgraduate students

Conor Ryan argues in a new Centreforum report that university endowments can make a contribution to postgraduate funding.

Sutton Trust research has highlighted the growing importance of postgraduate degrees in today’s labour market. Stephen Machin and Joanne Lindley have shown that 11% of 26-60 year-olds in the workforce now holds a postgraduate qualification, up from 4% in 1996.[1]

They also showed that somebody with a Master’s can on average expect to earn over £200,000 more over a 40 year working life than someone only holding a Bachelor’s degree.[2] The Sutton Trust report highlighted how the recent growth in UK postgraduates, dominated by international students, poses a threat to social mobility.

This makes it all the more important that postgraduate courses are affordable to the brightest graduates, regardless of financial circumstances. Universities and government need to think imaginatively about how to fund them. Without action to enable bright students from all backgrounds to access postgraduate qualifications based on their ability rather than their ability to pay, this could become yet another barrier for those from low and middle income homes.

The Trust supports targeted state-backed loans for postgraduates. But Government is concerned about affordability, given the growing cost of the current student loan scheme. One way to keep costs lower would be develop income-related bursaries funded by universities through their alumni alongside means-tested loans for postgraduates.

Funding today

Tim Leunig’s earlier research for Centreforum has shown that while there is some funding available through university bursaries, research councils and other sources, fewer than 4% of students on taught master’s programmes receive sufficient funding to cover their fees in full.[3] Most universities offer some partial bursaries, but these are often a fraction of the costs of fees and living costs, which can be £18-£20,000 a year, depending on the course.[4] This is an expensive proposition for graduates with debts already set to exceed £40,000 from their undergraduate studies.


In the United States, many universities, including the Ivy Leagues, fund undergraduates from low and middle income homes fully through their endowment funds. Many also use their endowments to provide targeted support for postgraduates (as well as to develop new buildings and facilities, often their primary purpose in the UK.)

With a state regulated system of undergraduate fees and loans in the UK, and substantial mandated access funds linked to the new fees regime, there is a strong case for focusing a growing endowment pot on postgraduate studies and research. For this to happen, UK universities need to grow their endowments. Only Oxford and Cambridge currently have endowment funds comparable in size to the top 20 US universities, with the next largest, Edinburgh, significantly smaller at £248m.[5]

The 2004 Thomas report led the Labour Government to introduce a match-funding scheme designed to stimulate greater fundraising by English universities from alumni, and the development of larger endowment funds.[6] That scheme, which ran from 2008-11, had some success: annual fundraising by UK universities rose from £513 million to £694 million.[7]

But the potential is much greater. While US Ivy Leagues have always had large endowments, much American alumni fundraising is relatively new. Many state-funded universities have only developed their funds in the last 50 years: for example, the University of Florida increased its annual donations from $2m in 1976 to produce an endowment fund now worth $1.3 billion.[8]

Only 1.2% of UK graduates donate to their universities regularly, compared with 9% of US alumni. A Higher Education Funding Council for England report in 2012 proposed a target of 5% for the UK within the next 10 years, with some universities achieving double digit rates, to put the UK onto the US track.[9]

Explicitly linking some of those funds to support for postgraduates could make giving more attractive to some donors. Some universities already do this. Sheffield has alumni fund scholarships, funded by donations from 1500 alumni each year, worth £2000 each, and targeted at bright students who might not otherwise be able to study there.[10] However, such scholarships remain small scale: in 2013, they plan to provide them to 15 students, but only provided 6 in 2012.[11] Others with larger endowments say they are relatively generous. Oxford, with £3.7 billion in university and college endowment funds, says that 62% of its research students and 17% of its students on taught Master’s courses receive full scholarships covering fees and living expenses.[12]  

Building endowments into wider postgraduate funding

Such endowments may not cover all postgraduate costs, but they could make a significant contribution, when coupled with targeted student loans for those of modest means. Sheffield targets its scholarships to those who received maintenance grants as undergraduates. A similar approach more widely applied to those able enough to study as postgraduates would help ensure such support was well targeted where it was needed most.

Government may not want to cover the full cost of postgraduate studies and living costs, given the prevailing climate. While wealthier UK and overseas graduates may be able to turn to family funds, those for whom a postgraduate degree is the final rung on the social mobility ladder are unlikely to have access to such resources. Such students should have access to more means-tested bursaries, funded by universities through alumni fundraising. For that to happen, universities will need to improve their fundraising capacity. Government should make it easier for them to do so: the tax system needs to be simpler for large donations, and more pump priming should be available to enhance fundraising capacity.

Postgraduate studies are the next social mobility frontier. It is now widely accepted that we need to do more through nursery education, schools and undergraduate access to enable bright young people from low and middle income homes to fulfil their potential. They must not encounter a brick wall when it comes to postgraduate study. A new partnership between alumni, universities and government could help ensure they don’t.

The Centreforum report Postgraduate Education: better funding and better access is edited by Tom Frostrick and Tom Gault and available at the Centreforum website.

[1] Stephen Machin and Joanne Lindley, ‘The Postgraduate Premium’, Sutton Trust 2012
[2] This is a gross figure, so it doesn’t allow for lost earnings, fee costs, extra taxes due or inflation, as some other analyses showing smaller premiums have done.
[3] Tim Leunig, ‘Mastering Postgraduate Funding’, Centreforum 2011
[4] Cambridge suggests these figures for most courses at http://www.admin.cam.ac.uk/students/studentregistry/fees/costs/coursecost/costs2013v9.pdf . Taught course fees for home or European students at Sheffield and Newcastle universities are typically £5000-£6000 a year, with research fees starting at around £4000 a year, but often much higher depending on the course.
[5] http://www.suttontrust.com/research/university-fundraising-an-update, drawing on data from ‘Caritas Higher Education Yearbook’ data in the UK and the US ‘Chonicle of Higher Education’.
[6] ‘Increased Voluntary Giving to Higher Education’, DfES, 2004,
[8] ‘Increased Voluntary Giving’, p.25 and University of Florida website for latest data http://www.uff.ufl.edu/AboutUFF/Endowment.asp
[9] ‘Review of Philanthropy’
[11] Information supplied by University of Sheffield. The University also uses alumni funding to provide £3000 scholarships for undergraduates.

We need the best postgrads, not just the richest

Sir Peter Lampl on a worrying divide in postgraduate studies

Today’s new Sutton Trust report on the Postgraduate Premium highlights what is becoming a new frontier in the battle to improve social mobility.

In the 15 years since I established the Sutton Trust, we have started to make inroads into the state/private school balance at Oxford and Cambridge, and there have been improvements in the numbers of poorer students going to university relative to their richer peers.

But the new report shows that as more young people from less privileged homes are going to university – and we have yet to see the full impact of undergraduate fees particularly on the numbers from middle income homes – the goalposts have been shifting.

Where just 4% or 600,000 people in the workforce had postgraduate degrees 16 years ago, 11% or over 2 million have such qualifications today. Of course, there are real economic benefits in having a better educated workforce in today’s global economy. And last year’s report from the Higher Education Commission highlighted a growing demand for expertise in science, technology, engineering, maths and design.

Yet, at below 10%, the UK has one of the lowest progression rates to Master’s studies of any European country, a rate matching Andorra and Kazakhstan, according to the 2012 Bologna Process Implementation Report. [from HE Commission report, p31]

So we need more postgraduates. A better educated workforce should be good for Britain. Brainpower is what adds value in today’s economy. But it is essential that this should not come at the expense of widening inequalities of access to these professions.

Yet, the truth is that postgraduate study is becoming increasingly the preserve of the better off student, both from home and abroad.

There has been a big rise in postgraduate enrolments over the last decade. There are now over 650,000 postgraduate students at our universities. But HEFCE analysis has shown that the numbers on taught postgraduate courses more than doubled between 2002 and 2010, yet the increase among domestic students has been just 16%. Nearly half of all postgraduate students in the UK are now from overseas. Amongst research students, growth by international students has been twice as fast as among UK students.

Our universities have benefited from this extra international income, and it is a real concern that the visa clampdown may be reducing the numbers from overseas. But with the impact of £9000 fees, where graduates will have £40-£50,000 of debt after their first degree, the growth gap between British and overseas postgraduates seems likely to widen rather than narrow. We are in danger of losing out real potential.

Unless we address the issue, there is a real danger that we are squandering the talent of a generation, and losing the chance to stretch our brightest minds, so that they develop the innovations and ideas that will be essential to our economy in the future. At the same time, the higher wage premium – around £5500 a year more on average, or £200,000 across a working lifetime, compared to a £100,000 premium for a first degree  – enjoyed by postgraduate degree holders threatens further to widen income inequalities, reducing social mobility.

It is not easy for Government at a time of public spending restraint to consider improved funding for access to postgraduate study. Yet few investments have the potential to create such significant economic gain.

The Higher Education Commission last year urged ministers to extend the student loan scheme in a targeted way to postgraduate study. That would be a good start. But we need to have a much more concerted effort by government, universities and the professions to ensure that postgraduate study is about stretching the brightest minds and not simply dipping into the deepest pockets.

That’s why we need Government, professional associations and universities to develop a coherent offer for postgraduate study, including bursaries, to enable good graduates from low and middle income backgrounds to continue their studies without incurring significant extra debts.

We must keep the impact of the undergraduate fees on the social mix in postgraduate education under careful review, so that appropriate action can be taken where it can be demonstrated that it is further reducing social mobility. The Office for Fair Access should look at universities’ postgraduate recruitment patterns as part of their annual assessment of access agreements, and consider what steps are being taken to ensure a broad social intake.

In the end, it is vital that the best postgraduates, from home and overseas, study in Britain and contribute their ideas and innovations to help power our economy and improve our society. But to maximise that contribution, we need them to be able to do so on merit rather than money.