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.

Endowments

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.

Time to tackle teenagers’ fears of fees

Sir Peter Lampl says that a new Sutton Trust/Ipsos Mori poll highlights cost concerns among the next generation of university students.

Earlier this year, the Government breathed an audible sigh of relief as university applications appeared to rise again after falling off in the first year of higher fees, although they are still not at 2010 levels.

But a new Ipsos Mori poll for the Sutton Trust suggests that ministers may have been a little premature in taking too much comfort from the latest UCAS data. The poll shows that two thirds of school children worry about the cost of going to university. Only 7 per cent of the 2600 11-16 year-olds polled said they had no concern about the cost.

At the same time, aspirations remain as high as ever. More than four in five young people say they are likely to go to university, even though in reality the proportion of 18-30 year-olds who do so is still less than half. 38% of young people say they are very likely to go to university when they are older, and 43% say they are fairly likely to do so. This is the same proportion as last year when the same question was asked.

Two thirds – 65% – of all the young people polled had significant concerns about university finance which break down as follows:  28% were concerned about tuition fees; 19% were concerned about student living costs and 18% were concerned about lack of earnings while studying.

And although 67% of young people said the most important consideration when deciding whether or not to go to university would be their exam grades, 17% said it would be the cost of going to university, with students from the least affluent families (23%) more likely to cite cost as the biggest consideration than those from the most affluent families (14%).

So, despite high aspirations – and a realistic sense of what they might need to do to realise them – nobody can argue that most young people aren’t still worried about the cost of higher education.

It’s hardly surprising that they are worried when graduates face debts of over £40,000 with fees of £9000 a year for most courses. The truth is that young people are caught between a rock and a hard place.

They know that they still need a university education to get on in life and get a good job. For all the talk of falling graduate premiums, a degree – especially one from a good university – still brings a substantial income bonus. And as Sutton Trust research showed earlier this year, a postgraduate degree is increasingly important, and brings with it an additional substantial premium.

And even if graduates may be finding it harder to gain an immediate job after university, their long term prospects remain brighter than for non-graduates.

But the canny teenager knows something else too. He or she knows that a degree comes with a much higher price tag than ever. Where this year’s graduates might be paying off their student loans into their thirties, those graduating from 2015 onwards will be paying back right into their fifties.

There may be some lower up-front costs, but a £40,000-plus debt with interest rates of up to 3% over inflation a year means that those repayments could impact on whether or when to buy a house or have a family. We’ve asked the Institute for Fiscal Studies to look into the implications of these debt repayments and to model the likely impact on important life decisions. They will report later this year.

But I think there is something else the Government could do now to ease the burden on low and middle income graduates in the future. They should means-test the tuition fee – as happened from 1998-2006 when fees were first levied on undergraduates – in the same way that the maintenance grant is already means-tested. As I noted in an earlier post, this is already commonplace in the United States.

Given that the Government already expects to write off a third of its loans – and some observers think they will have to write off much more – this need not be a particularly costly option. But it could start to allay the fears of debt that face all too many of those who should become tomorrow’s students. That would be a real investment in the future.

Are boys the losers with tuition fees?

Conor Ryan considers the lessons from this week’s report by the Independent Commission on Fees.

Students are well into the first year of higher tuition fees. While 54,000 fewer young people started university in 2012 than in 2011, the Government has been congratulating itself that the dip was not much greater.

And the water has been muddied by the changes in student controls that took effect just as the £9000 fee cap was introduced. Moreover, this year’s applications suggest that there is some improvement on last year’s dip.

So is all well in the world of higher fees?

The truth is it is too early to tell. And a new report this week from the Independent Commission on Fees highlights a number of areas where there is some cause for concern.

The first is what’s happening to boys, particularly working class boys. The Commission’s study of UCAS acceptance data has shown not only that the gender gap continues to widen, but that it appears even more pronounced in the lower participation neighbourhoods.

Women are now a third more likely to enter higher education than men and the gender gap seems to have widened as a result of the new fees regime. Among UK residents, 143,600 women aged 19 and under were accepted to English universities in 2012 compared with 118,952 young men.

This represents a decline since 2010 of 2.6% for girls and 4.0% for boys, and a 5.9% decline for girls and a 7.5% decline for boys since 2011.

But in the 40% of English neighbourhoods where university participation is lowest, there were 1700 fewer boys aged 19 and under who were accepted for places in 2012 than in 2011. This represents a decline of 5.4% in the number of young men from these areas going to university this year. By contrast, the fall in the number of young women from these neighbourhoods going to university was smaller, at just 3.7%.

Perhaps of more interest, since it discounts any surge into 2011 to avoid the higher fees, when compared with 2010, the number of young male acceptances fell by 1.4%, while young female acceptances increased by 0.9%. By contrast, between 2009 and 2010, male and female acceptances rose.

In England, while the overall change in the gender gap in the less disadvantaged neighbourhoods was 1.6 percentage points between 2010 and 2012, the overall change in the gender gap in more disadvantaged neighbourhoods was greater, at 2.3 percentage points.

Although the decline in male participation in the most advantaged neighbourhoods was even larger, 20,000 more boys go to university each year from the two top fifth neighbourhoods than from the two bottom fifth neighbourhoods.

It means that the female: male ratio is now nearly 57:43 in the less advantaged neighbourhoods whereas it is closer to 53:47 in the more advantaged neighbourhoods.

With 2013 applications, UCAS has suggested that this gap is persisting. Its January applications report noted that 18 year women remain a third more likely in England to apply to university than men, but this rises to 50 per cent in disadvantaged areas.

If this is the case, it suggests that the information about the new loan repayments may be proving more attractive to young women than to young men, or that young men from disadvantaged areas are less likely to believe that the cost of a degree is worth it. Either way, there is a challenge here for policymakers to meet.

The Commission’s new report has two other important findings that should cause policymakers to take pause. The first is the familiar data on mature students – those aged 20 and over – who had 7.6% fewer acceptances in 2012 than in 2010, more than twice the 3.3% decline for younger students as a whole.

The decision to allow part-timers to have access to student loans hasn’t seen full-timers move to part-time courses either. HEFCE has shown a dramatic drop in part-time numbers, with 105,000 fewer students since 2010, or a 40% drop.

This is important for access, as studying later is an important route to social mobility for those from less advantaged backgrounds, and it is vital that the impact of fees on this group is not neglected just because the reductions among young people are smaller.

As the new President of Birkbeck College, Baroness Bakewell, put it at the weekend:

“Part-time study is crucial for our society. It improves skills and kick-starts new careers – exactly what we need for the economy, employers and individuals during these difficult economic times. In response to the dramatic downturn in part-time students nationwide, unprecedented support is needed now to ensure part-time study thrives in future.”

And the other key finding is perhaps a warning shot at this stage, but one that will need closer scrutiny as the university-level data becomes clear.

While there has been an increase in the numbers of young people from the most disadvantaged areas going to the least selective universities, there has been minimal improvement in the numbers going to the Sutton Trust’s list of the 30 more selective universities (which includes the 24 Russell Group members) and a small dip in the numbers going to the Sutton Trust 13 most selective group.

While the only rises to the Sutton Trust 30 were in the lower participation neighbourhoods, the only quintile showing a dip in acceptances to the Sutton Trust 13 was the lowest participation group. This means that there is a widening gap between this group and other more advantaged areas, and those from the richest fifth of neighbourhoods are ten times more likely to attend these universities than those in the poorest fifth of neighbourhoods.

Closer scrutiny of patterns among individual selective universities will be important here. Already, there is some evidence from HESA data that in 2011, the proportion of new undergraduates from state schools and colleges at the 13 top universities slipped for the fourth year in succession.

There is clearly an important issue for the most selective universities and their recruitment from the poorest neighbourhoods – and it is one that the Sutton Trust will return to shortly. The Trust has also commissioned the Institute of Fiscal Studies to examine the potential impact of students leaving university with debts likely to exceed £40,000 on their ability to afford graduate study, buying a house, and having children. Their findings will be published later this year.

So, the truth is that the jury is still out on fees. We need to see whether these findings for 2012 become clearer trends in the next few years. It is vital, meanwhile, that Government, universities and schools do all they can to reach young people with the ability and potential to benefit from university, particularly in areas where university participation is already low.

The Trouble With Boys

Conor Ryan reflects on David Willetts’ latest initiative to persuade more white working class boys to study at university.

Universities minister David Willetts was quick off the blocks for 2013 with his ideas on how to encourage white working class boys to go to university.

Young women are now a third more likely than young men to go to university, and there is a three-fold gap in applications between the poorest and richest neighbourhoods. In an article and interview for The Independent, Mr Willetts said that the education system “seems to make it harder for boys and men to face down the obstacles in the way of learning.

He told the paper that the Office for Fair Access  “look at a range of disadvantaged groups – social class and ethnicity, for instance – when it comes to access agreements, so I don’t see why they couldn’t look at white, working-class boys.”

The Minister has a point. Growing research in recent years suggests that white working class boys perform less well than many minority ethnic communities in their test and exam results.

Stephen Machin and Sandra McNally, in a 2006 LSE study, identified a stronger gender gap in secondary than primary schools. They argued that “the importance of coursework in the GCSE examination is likely to be a key explanation for the emergence of the gender gap at age 16.” They also identified differences in teaching and learning styles, and modes of assessment.

In 2007, Joseph Rowntree Foundation research, conducted by Robert Cassen and Geeta Kingdon, with some Sutton Trust input, found that nearly half of all students defined as low achievers were White British males. White British students on average – boys and girls – were more likely than other ethnic groups to persist in low achievement.

National College research by Denis Mongon and Christopher Chapman from Manchester University with the National Union of Teachers in 2008 suggested that some school leaders were better than others at narrowing this gap. They suggested a focus on clear strategies including relentless application of the highest standards in teaching and attention to data detail were key where the gap was lower.

They rightly pointed out that the social class gap is much wider than any gender gap, yet the data suggest that white working class boys are at an even greater disadvantage than white working class girls. This lower attainment can translate into lower ambitions, as reflected in applications to Sutton Trust summer schools – an important route for many low and middle income young people into leading universities.

Sutton Trust summer schools target the first child in families who might go to university. In 2012, there were 5,295 applicants from girls and 2,712 from boys, a ratio of 2:1. Even with a slightly higher acceptance rate among boys than girls, 62% of attendees were girls and just 38% boys.

Recent exam data bears out both the gender and socio-economic gaps. The 2012 Key Stage Test data suggests that 60% of White British boys eligible for free school meals reach level 2 in English and Maths, compared with 67% of White British FSM girls. This is larger than the three point gender gap among all other pupils. However, there is a six-point gender gap across all FSM pupils. The big difference is in English, where the gender gap among FSM pupils is 12 points.

On the main 5 GCSE indicator (including English and Maths), 2011  data (2012 data is due later this month). shows that 26% of White British FSM boys reached this standard compared with 32% of girls, a slightly smaller gender gap than exists for all other pupils, but one consistent with the gap at age eleven. On overall performance, only traveller boys perform worse now at GCSE. 33% of Black Caribbean boys, for example, now reach the 5 GCSE standard (though overall White British students perform ten points better than Black Caribbean students)

So what can we do? David Willetts is surely right to want universities to provide concerted help through summer schools over several years to lift aspirations. The Trust is planning to use this approach through programmes with Kent academies and working with University College London to support highly able pupils from Year 8 onwards over five years.

Of course, Michael Gove’s changes to the exam system and curriculum – more facts, more end-of-course testing – may reduce the overall gender gap, as girls are believed to perform better in coursework.

But, in addition to OFFA looking more closely at the data, a more concerted focus on white working class boys could also be productive. When the Labour government targeted Afro-Caribbean achievement in the late 1990s, after the Stephen Lawrence murder, it set clear goals and a strong focus that has particularly benefited FSM pupils.  The London Challenge will have been of particular benefit, with its strong focus on leadership, teaching and data.

Today, our sister charity, the Education Endowment Foundation is testing the most effective ways to lifting achievement for pupils in receipt of free school meals, and has the potential to make a real difference in narrowing attainment gaps. 70% of its target group is White British.

The experience of minority ethnic communities suggests cultural change is also important. Bangladeshi students used to perform relatively poorly in schools. Now they out-perform White British students overall, and 56% of Bangladeshi students eligible for free school meals – including 53% of FSM boys – reach the five GCSE benchmark. That change owes a lot to a community’s desire to learn, backed by parents and teachers working to meet that desire.

Harnessing a similar will to learn in white working class communities must be a part of the solution to the low attainment of too many of their boys – and girls.