Education: Never mind the fees, feel the quality

As we British get used to paying tuition fees for university, experts are asking how long the flat-rate fee can last. This year students are paying pounds 1,000 a head, irrespective of whether they are on an expensive course, such as medicine, or a cheap one, such as English, and irrespective of whether they're attending highly regarded Oxford University or less highly regarded Luton.

Virtually nobody thinks the current situation can hold. This autumn the flat rate fee is being raised to pounds 1,025 a head, in line with inflation. Next year it will increase again; the year after it may rise by more than the rate of inflation. The big question is: when will the system bust open and universities be allowed to charge different fees, depending, say, on the cost of the course, the sort of salaries students will be able to earn once they complete their course and the standing of the institution in the market?

"I think differentiated fees will come," says David Roberts, the chief executive of Heist, the university marketing and management organisation. "We have a very odd situation of a market where people are making choices and an artificial value is being placed on the opportunities open to them. You are paying the same for a course irrespective of its value in the market and where you took it."

The effect of the Government's policy on fees - which is enshrined in law and maintains the fiction that all degrees are of equal value - is to put a damper on excellence, many experts believe. Those institutions which are good cannot exploit that fact by raising the money to be better still. So we end up with mediocrity. Or as Roberts puts it: "Mediocrity is allowed to continue longer than it would in a more open environment."

An increasing number of people running universities think the same way, though they are unwilling to speak out for fear of rocking the boat. Such concerns do not bother Professor Robert Pearce, the pro-vice-chancellor at Buckingham - the UK's only private university - which charges students just under pounds 10,000 a year (degrees take two years to complete).

"If you've got institutions with very different missions, from the `pile 'em high, sell 'em cheap' to what Oxford and Cambridge and some of the other collegiate universities like Durham have tried to do, which is to provide a much higher level of personal attention, is it fair they be given the same amount of funding?" asks Pearce. "The Government says it's only prepared to put in the same amount of public funding to all of these universities. The only way of squaring the circle is to charge a top- up fee."

The Government has so far ruled out top-up fees, but that blanket proscription is not expected to survive when Education Secretary David Blunkett moves on. Universities are, of course, free to charge what fees they like to postgraduates and part-time students and for MBAs and continuing professional development (their freedom is limited only when it comes to undergraduates). "They don't actually use that freedom," says Giles Harvey, executive director of Heist. "There's little evidence that universities have woken up to market pricing."

In practice, therefore, a prestigious university charges roughly the same for a Masters degree or a PhD as a less prestigious institution. Overseas student fees also vary little between universities. The exception is MBAs, which range from pounds 26,000 at London Business School to the University of the West of England's pounds 4,950. Why aren't universities following business schools and charging prices the market will bear? The answer probably is that they're not used to thinking like that. But that is likely to change too.

David Roberts is the author of a report, Fees and Pricing in Education, to be published next month to coincide with a conference on the subject (see end of story). He has just visited New Zealand, which has a similar culture and higher education system to the UK's, to look at what effect fees have had on that country.

New Zealand is about five years ahead of the UK. Its universities are not only able to charge students a substantial amount - significantly more in real terms than here - but they have been given the right to charge different fees depending on the course. There has been a lot of noisy protest from student groups, but privately, according to Roberts, students accept the change.

Moreover, fees are not deterring the poorer and less well represented sections of society from getting a higher education. Far from it. Participation from these groups has increased in New Zealand. Roberts speculates that this enthusiasm for higher education may be explained by the fact that income-contingent loans are widely available, by young people's realisation that education is a passport to a better standard of living and by a work ethic that seems to be stronger among New Zealand youth than among the UK's.

In Australia, universities have also been able to introduce fees that vary according to the subject. Thus students on law and medicine courses pay more than those studying humanities and arts subjects. Again it has not resulted in fewer people attending university. Numbers going into higher education have risen by 6 per cent in the past 10 years - and that includes members of disadvantaged groups, according to Rhiannon Evans, the director of student and external relations at the higher education college Edge Hill, who has studied the subject.

In a controversial move, the Australian government also said last year that universities could recruit up to 25 per cent of students on full fees. Most universities shunned the scheme. But they may drop that opposition in the future. At the same time, the government has introduced performance indicators, and universities are rated against one another in official league tables, so competition is hotting up.

However, the change in the behaviour of universities has been slow. Universities are slow-moving beasts the world over. Higher education institutions in New Zealand are still not very sophisticated in their price setting, according to David Roberts, even though they have had the power to charge differential fees for some time. So there is still remarkably little differentiation in fees between courses, though experts believe that will not last and that competition will increase.

The expectation is that we will see a similar gradual movement towards flexible pricing in the UK. Charles Nixon, the chief executive of Cambridge Marketing College, a specialist private institution mainly for postgraduates, believes that change will come in five to 10 years.

Those universities belonging to the Russell group - the big civics and institutions with medical schools - will be able to charge a premium. And they will continue to recruit bright students from disadvantaged backgrounds by offering bursaries. That is what happens in America, where Ivy League universities charge more than $25,000 a year but help bright students who can't afford to pay.

"Because we're geared to a normal consumer marketplace for all our other goods, price is the biggest indicator of quality," says Nixon, who will also be speaking at the pricing conference. "Therefore people will make a judgement on the basis of price as well as other information. In that respect universities will have to compete in the way they promote themselves, the staff, the physical location, and that's where you're going to get a good deal of variety."

Initially, universities will begin to wake up to the fact that they can charge different amounts for postgraduate courses, part-timers and overseas students. At the same time pressure is likely to build up from some universities for the Government to relax the edict on a flat-rate undergraduate fee as they find it more and more difficult to make ends meet.

Nothing is expected to happen until early next century. It may transpire that Said Business School in Oxford (see box, left) leads the way. But there is no doubt the public is being softened up for a much more bracing future. There was only one serious protest this year to the pounds 1,000 fee - from a few Oxford students, who have now caved in. The principle of paying for higher education has become accepted.

The conference, `Pricing, Fees and their Implications', takes place on 16 March in Birmingham. Call Joanne Flear at Heist for further details (0113 226 5858)

E-mail: lucy@scribbl.demon.co.uk

THE FIRST STIRRINGS OF REBELLION OVER FEES

TWO UNIVERSITIES are already kicking against the chains imposed by the Government's compulsory pounds 1,000 flat-rate fee. The University of Central England last year decided to waive the charge for 300 students embarking on degrees in engineering and built environment as it feared a recruitment shortfall.

It did so before the higher education funding council published the regulations laying down a system which required every university to charge the pounds 1,000 tuition fee, no more and no less. That meant that UCE had to perform a quick conjuring trick for the students offered places on the basis of no fees. Instead, it gave them bursaries out of university income from parking, after assessing each of them financially. They still had to pay the fee, but they could use the bursary to cover a chunk of the cost. The average bursary was pounds 400, according to the vice-chancellor, Dr Peter Knight.

This autumn it is changing its policy. Bursaries will be available to all disadvantaged students. That is not because last year's scheme did not work. It did, says Dr Knight, particularly for engineering. But this autumn the student grant is being abolished and that will hit the worst- off students, so the bursaries are open to all.

Dr Knight favours a free market in fees, letting him charge more for some subjects than for others.

At the other end of the spectrum, the Said Business School in Oxford, funded by Wafic Said, the Arab businessman, is toying with the idea of launching an Oxford undergraduate degree in business and charging fees of pounds 12,000 to pounds 15,000 a year. The director, John Kay, says that is the kind of price charged for a tip-top degree course. "We are engaged in blue-sky planning for five to 10 years ahead," he explains. "Neither I nor anyone else knows what the funding of higher education will be then. One reasonable certainty is that it won't be like it is now."