As part of the programme to mark 20 years since the creation of the Scottish Parliament, SPICe has been publishing twenty “20 year” blog posts on SPICe Spotlight throughout 2019. Previous posts can be found at the 20th anniversary tag on SPICe Spotlight.
This blog reflects on the debate about tuition fees in Scotland in the period since devolution.
Free tuition: a political priority
Since coming to power in May 2007, the SNP has consistently supported a policy of free tuition for Scottish resident full time degree students. Scotland is now the only country in the UK that offers fee-free tuition. Asking students to contribute to the costs of university education has always been a highly political issue. The policy decision to offer fee-free university education has many supporters. There are, however, debates about the impact of this policy on students and on Scottish universities. Before considering those, the next section briefly sets out policy changes in the period 1998 to 2007, leading up to the introduction of free tuition in Scotland.
Tuition fees in Scotland: 1998 to 2007
There was a period of upheaval in tuition fee policy in Scotland between 1998 and 2007, which in large part was framed by the preceding UK policy developments emerging from the work of the National Committee of Inquiry into Higher Education. Chaired by Sir Ron Dearing, this work was commissioned by the UK government in 1996 with the results reported in July 1997. The “Dearing report” highlighted that the sector needed significant additional funding over the next twenty years if it was to meet future demands relating to increases in student enrolment, the need for infrastructure investment, etc.
The Dearing Committee proposed that student should make a financial contribution toward the cost of higher education; an issue that created significant public controversy at the time. Different approaches were considered including paying annual tuition fees or alternatively making a one-off graduate payment.
In 1998 across the UK, the Labour government introduced tuition fees. At that point the maximum tuition fee was £1,000 per academic year, with fee levels intended to rise each year in line with inflation. A means-test was applied, which meant that the amount paid by students from lower income households was reduced; and those with a household income below £23,000 were not required to pay at all.
The Graduate Endowment Scheme
In 1999, after Scottish devolution, the Scottish Labour / Liberal Democrat coalition government revisited the question of whether tuition fees should be charged in Scotland. The Liberal Democrats at the time opposed charging for tuition, while the UK Labour party had only the year before introduced tuition fees across the UK.
In July 1999, a commission, led by Andrew Cubie, was established to consider the approach to funding of higher education in Scotland. The Cubie report recommended replacing tuition fees in Scotland with a graduate endowment scheme. The scheme proposed that graduates make a one-off financial contribution toward the cost of higher education, with loans to be made available to assist with making this payment.
The Graduate Endowment Scheme introduced from academic year 2001-02 set the endowment payment at £2,000 payable the April after graduation. With the introduction of the graduate endowment payment, Scottish students studying at Scottish universities were no longer required to pay a tuition fee, while people in other parts of the UK continued to do so. As with the previous tuition fee arrangement, only certain categories of student were required to pay the graduate endowment (listed in this SPICe briefing).
The SNP 2007 manifesto set out an intention to scrap the graduate endowment scheme while also replacing “the expensive and discredited Student Loans system with means-tested student grants” to meet everyday living costs while studying. The emphasis was on students “ability to learn, not ability to pay”. On coming to power, the SNP did scrap the graduate endowment scheme, with those who graduated from April 2007 onward not required to pay. The party in power did not, however, replace student loans for living costs, instead continuing to offer living cost support in the form of student loans, with only students from lower income households gaining access to student grants (referred to as bursaries in Scotland).
Free higher education?
Debates on free tuition in Scotland tend to simplify the landscape to one that focuses on the absence of a fee to access higher education. However, there are only certain categories of student that can access free tuition. Generally speaking, the following criteria require to be met in order to be eligible:
- The student has to be living in Scotland (not just here for the purposes of accessing education).
- The course has to be at the appropriate qualification level and lead to a recognised qualification.
- The course has to be delivered by a publicly funded institution in Scotland.
- The student cannot have previously been funded to take part in a course at the same or a higher level.
- The student has to be studying full time at undergraduate level – students on students on part-time programmes and pursuing postgraduate qualifications have different tuition fee arrangements.
Given these criteria, there are students who may not gain access to a free place at university. This includes the majority of postgraduate students, and Scottish resident students who wish to pursue a full-time degree programme at a university in another part of the UK. Such students would be charged a tuition fee by the institution, with some access to student loans to assist with tuition fee costs.
It is also worth noting that tuition fees are not the only cost associated with taking part in full time degree level study. There has been criticism of Scottish policy for the approach to the living cost component of student finance, particularly given the 2007 manifesto commitment to replace student loans with living cost grants. Lucy Hunter-Blackburn’s blog Adventures in Evidence has consistently highlighted the issue of student borrowing for living costs, with particular concern about the impact of loan borrowing on students from lower income households. Access to higher education in Scotland among students from lower income households was also discussed in a Sutton Trust report published in May 2016.
How is university tuition funded?
The funding that supports the free tuition policy comes mainly from the Scottish Government through a dual funding mechanism.
Scottish Funding Council block grant
The first source is the block teaching grant issued each year by the Scottish Government to the Scottish Funding Council (SFC) for onward distribution to each university. This funding is issued to meet specific policy priorities that are set out in the annual letter of guidance from the Scottish Government to the SFC. The SFC uses this letter of guidance to work with individual institutions to agree their outcomes for the upcoming academic year(s). In 2018-19 the Audit Scotland noted that the teaching grant allocated by the SFC to Scottish universities was in the region of £627 million. Universities Scotland has argued recently that universities have seen a real-terms cut in SFC resource funding of 12 per cent since 2014-15.
Student Awards Agency Scotland tuition fee
The second source is the tuition fee payment that the Student Awards Agency Scotland (SAAS) pays directly to universities for each eligible funded student. This funding comes from Scottish Government and is referred to as a tuition fee payment as it directly follows each eligible student. The current tuition fee for a degree programme is £1,820 per academic year. This fee has not changed since 2009-10. It is not clear why the fee has remain unchanged (in cash terms) for such a long time.
The recent reports by Audit Scotland exploring the finances of universities – first the audit published in July 2016 and then the financial update published in September 2019 – indicate that total SAAS funding for tuition has risen in recent years (see Exhibit 16 in the 2016 publication) and was cited in the September 2019 report as being over £213 million in 2017-18.
Dual funding approach
This dual funding model is a legacy from when tuition was free across the UK. The Dearing report explained its rationale as meaning the two sources work together but have different intents. The block grant is provided direct to institutions to recognise the costs associated with offering a teaching infrastructure. The tuition fee element follows each individual student, meaning it is more flexible and demand led with students thought to be able to exercise an element of choice in where they study.
The Dearing report noted that governments from time to time adjust the balance between the block grant and tuition fees to achieve specific policy objectives. It noted that increasing the tuition fee contribution can offer institutions the opportunity to take in more students and potentially allow them to spend this income with greater flexibility. In contrast, increasing the block grant gives greater central control over public expenditure and over the distribution of funding between institutions.
Capping student numbers
Given the role of public funding in higher education teaching in Scotland, there is an annual cap on the number of funded places that can be offered to eligible students. There is, however, no cap on the number of fee-paying students from the rest of the UK or from outside the EU.
Impact on Scottish applicants
In terms of the impact on Scottish students, this means that Scottish universities can only offer an agreed number of places to eligible students on eligible programmes. Each institution has to be able to roughly match the number of places it offers with the funded places that are available that year. This can mean applicants who meet the entry requirements may not be offered a place. This is particularly problematic when students are attempting to gain access to a place on a high demand programme (e.g. medicine or law) at a selective institution (e.g. Edinburgh or Glasgow).
An issue not typically highlighted in debates on free tuition in Scotland is the restrictions that the cap on funded places causes for Scottish residents seeking to study at Scottish institutions. First, we don’t know how many Scottish applicants are being turned away from Scottish universities as a result of higher numbers of qualified applicants than places available; on indeed which students are more or less at risk of being turned away. Where this might be happening, we don’t know the impact. For example, do they go to another institution, opt for a different degree programme, delay entry to try again the following year, or perhaps choose to study in another part of the UK where places may be available on a fee-paying basis?
Unintended consequences?
Second, little attention is given to a very specific unintended consequence of the free tuition policy. Where a student meets the entry requirements but is not offered a place (due to limits on funded places) there is no option for Scottish residents to pay the UK regulated tuition fee (up to £9,250 per academic year) to attend a Scottish institution.
There are situations where Scottish applicants are turned away while applicants from the rest of the UK continue to be offered places (as there is no cap on places for rest of UK applicants). This can cause confusion for Scottish residents who perceive this as a barrier to participation. In policy terms, this restriction is understandable; doing otherwise would undermine the free tuition policy commitment. However, as fee loans are available to allow Scottish residents to take up a place on a regulated fee-paying basis at a university in another part of the UK, from an applicants’ point of view, this distinction may seem inconsistent or confusing.
Funding gap at Scottish universities
Since the introduction of higher rate variable fees in England in 2012-13 – at that point set at a maximum of £9,000 per academic year and now a maximum of £9,250 – the university sector in Scotland has been concerned about the potential for a funding gap to open up between Scottish and English universities.
The “funding gap” refers to the difference in teaching income from Scottish Government (via the SFC block grant and SAAS tuition fee) relative to higher variable rate tuition fee income available to English institutions. When higher rate variable fees were introduced in 2012-13, estimates suggested that the funding gap affecting Scottish institutions could be between £97 million and £263 million by 2014-15. Options were put forward for how to fill this gap, with tuition fee income paid by rest of UK students expected to keep the funding gap to around £93 million.
Full Economic Costs
Since that time, Universities Scotland has continued to lobby on the level of funding issued by the Scottish Government to Scottish universities to support teaching. No update has been provided on the funding gap. However, there has been work done to explore the full economic cost of providing teaching. To that end, the Scottish Funding Council reported in 2016-17 on a Transparent Approach to Costing. It estimated that income from Scottish Government funds and tuition fee income from rest of UK students met approximately 92 per cent of full economic costs of teaching.
These figures have not been updated. However, Audit Scotland reported in September 2019 that the SFC revenue budget (for teaching and research) to universities has seen real terms cuts. On that basis, Universities Scotland has continued to highlight concern about funding shortfalls if the SFC budget does not increase annually in line with inflation.
The future of tuition fee policy in Scotland
At present Scotland is the only country in the UK that does not charge tuition to its full-time degree students when they study at home. Political parties both within Scotland and across the UK continue to debate and campaign on different ways of funding university teaching. Charging students for access to higher education is a subject that divides opinion. In the past, when tuition fees were introduced at UK level and then the graduate endowment was introduced in Scotland, there were means tests that were intended to limit, to some extent at least, the financial impact on lower earning households.
In Scotland, the commitment to fee-free tuition to eligible students is likely to continue as long as the SNP remains in power. At the point that the political landscape changes, the question of students contributing to the cost of higher education will again be open for consideration. It is not at all a foregone conclusion that the current policy would remain in place under a new political administration. And while many would argue that it should continue, there are some across the political landscape that would see such a change as positive.
Suzi Macpherson, Senior Researcher, Education