Issues in Higher Education Funding Market Assessment 2006

Released on = April 16, 2007, 1:57 am

Press Release Author = Bharat Book Bureau

Industry = Marketing

Press Release Summary = Students in the UK have the choice of 171 universities,
higher-education colleges and other institutions offering qualifications above `A\'
level standard. Universities have charitable status, but this remains an
under-exploited advantage, that could be used to generate larger funding streams.

Press Release Body = Issues in Higher Education Funding Market Assessment 2006

Students in the UK have the choice of 171 universities, higher-education colleges
and other institutions offering qualifications above `A\' level standard.
Universities have charitable status, but this remains an under-exploited advantage,
that could be used to generate larger funding streams.

In 2003/2004, one person in every 22 aged 18 or over was a higher-education student,
so the economics of the sector are of direct importance to a wide swathe of the
population. The total number of undergraduates rose by nearly three-and-a-half times
between 1970/1971 and 2003/2004, to more than 1.9 million. The most startling
escalation was in the number of female part-time students, up from 19,000 in
1970/1971 to 445,000 in 2003/2004. The numerical dominance of women in higher
education is one of the most significant changes in the sector since 1970/1971. By
2000/2001, women outnumbered men in higher education, and by 2003/2004 there were
around four women for every three men in higher education. Women gain more degrees
than men at every level except Doctor of Philosophy (PhD).

The huge rise in the number of female students poses difficulties for families in
the future, because the need to repay student loans and finance housing will force
large numbers of female graduates to work when they may well prefer to stay at home
and look after children.

Universities are increasingly dependent on income from foreign students, who in
2003/2004 numbered 304,400 (including both full-time and part-time students), around
one in eight of the total full-time and part-time student population. Foreign
students account for 48.3% of full-time postgraduates. This has implications for the
UK economy. In addition, innovative research into topics that fire the curiosity of
individual researchers, and which could lead to new industries, is rare because
research funding is tied to priorities that the Government and large employers have
already identified.

Higher education accounted for 11.9% of all public spending on education in
2003/2004, down from 13% in 1999/2000. The basic sources of income - funding-council
grants and tuition fees and grants - represented 62.8% of the total in 2004/2005,
the same proportion as in the previous year. Endowment and investment income rose,
but in 2004/2005 still accounted for only 1.7% of total income. The margin between
income and expenditure narrowed to 1.2% in 2004/2005, from 1.4% the previous year.

The total input from public funds, around £8.26bn, was just under 60% of the total.
The £5.62bn from private sources was indispensable to the functioning of higher
education. The potential for fluctuations in these revenue streams creates
difficulties for forward planning.

Just six universities, headed by Cambridge, Oxford and Imperial College, London,
received more than £100m in research grants and contracts for 2003/2004. Huge
savings in public expenditure on student support, £817.5m less in 2003/2004 than in
1999/2000, reflect the near-disappearance of grants and their replacement with
loans.

Student-loan debt amounted to just over £13.36bn by the end of the 2004/2005
financial year. Student loans have taken over from the previous regime of
non-repayable grants. Students starting courses in England and Wales in 1997/1998
were the last to receive maintenance grants until 2004/2005, when small grants were
reintroduced for the poorest students. Means-tested maintenance grants increase
again from 2006/2007, with full grants of £2,700 available for students from
households with annual incomes below £17,500, and partial grants available on a
sliding scale for those whose household incomes are between £17,500 and £37,425.

Means testing also exempted students who came from low-income families from
contributing to tuition fees. Therefore the Government opted to increase, from
September 2006, the amount of loan available to each student, to enable them all to
pay `top-up\' tuition fees of up to £3,000 a year.

Students from independent schools still have a better chance of starting (and
finishing) courses in elite subjects at elite universities, leading to future high
incomes, than young people from comprehensive schools.

The financial support that the NHS and other public-sector bodies provide to the
students they sponsor distorts the market for higher education by favouring specific
employment-related subjects, such as nursing, over non-vocational subjects such as
philosophy and music.

In the 3 years from 2000/2001 to 2003/2004, the number of full-time foreign students
in UK universities shot up by 25.2% overall, and by 63.1% for postgraduate students.
By 2003/2004, China was the most important foreign buyer of UK higher education,
with 42,600 full-time students enrolled, more than half of them postgraduates. Two
in every ten overseas full-time postgraduate students in the UK were Chinese
nationals. Even more Chinese students came to study in the UK in 2004/2005, but the
overall annual rate of increase in foreign students dropped from 9% to 6.1%.

The UK is not a big spender on higher education in relation to other countries\'
expenditure per student on higher-education institutions. The UK is also rather
parsimonious about handing out public money to support students, and relies on
repayable loans to a greater extent than most other developed economies.

A quarter of all marketable wealth held by UK residents is in the hands of just 1%
of adults, and in 2003/2004 around 19,000 individuals each had an income of more
than £500,000. These individuals could help establish a culture of charitable giving
to universities.

Adult children are increasingly dependent on their parents for financial support.
This restricts the parents\' saving for retirement. The Government\'s rising reliance
on repayable loans for student support will result in larger debts for graduates.
This, combined with still-rising property prices leading to larger mortgages, could
significantly restrict future parents\' capacity to aid their own children
financially.


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