The White Paper, 'Higher education: students at the heart of the system', sets out the Government's intention to change the ways in which teaching is funded and student numbers managed, with the aim of increasing student choice and supporting greater diversity in higher education (Note 2).
Today's consultation sets out HEFCE's proposals for implementing changes to funding methods and student numbers for 2012-13. A second stage of consultation, in winter 2011-2012, will seek views on proposals for more fundamental changes to HEFCE’s approach to distributing funding for teaching and controlling student numbers from 2013-14 onwards.
HEFCE allocates money to universities and colleges rather than directly to individual students, so the consultation is about the allocation of funding to institutions. It does not affect the arrangements for student loans or other aspects of student finance.
From 2012-13, HEFCE's teaching grant – the funding the Council distributes to universities and colleges to support their teaching activity – will be substantially reduced as more money begins to flow to institutions through publicly funded tuition fee loans to students (Note 3).
In 2012-13, most students will have entered higher education under the old fees regime. They will continue to be subject to this regime. Today’s consultation proposes a proportionate phasing-out of the mainstream funding associated with these students in a way that reflects student numbers and historic grant levels for each institution.
The Government has made it clear that HEFCE should continue to provide some funding for higher-cost subjects. So, for those students who enter higher education in 2012-13 and therefore come under the new fees regime, the consultation proposes an interim system of funding to support teaching in subjects falling within HEFCE’s two highest price groups, A and B, at a reduced rate relative to that which is currently in place. HEFCE will not provide any funding related to new-regime students who are studying subjects in price groups C and D. However, these students will continue to be included in calculations for targeted allocations such as those for widening participation (Note 4).
The White Paper sets out the Government’s intention to free up student number controls within the need to control the overall cost of higher education to the taxpayer. The aim is to encourage a more dynamic and competitive sector which is more responsive to student choice and which has a clear focus on delivering a better student experience.
The Government has asked HEFCE to consult on implementing two elements in this new approach for 2012-13. The first is the unrestrained recruitment by institutions of students who have achieved grades of AAB or above at A-level, or equivalent qualifications. The second is the reallocation of up to 20,000 places to institutions that have an average, net, full-time fee of £7,500 or less, and who can demonstrate clearly the quality of their provision (Note 5).
HEFCE's Chief Executive, Sir Alan Langlands, said:
'Learning and teaching are core activities for all universities and colleges. From 2012, the teaching block grant which HEFCE currently distributes to institutions will be progressively replaced by publicly funded tuition fee loans for students, paid through the Student Loans Company. It will be vital to ensure a smooth transition to the new arrangements.
'We are keen to hear the views of the sector and of others with an interest in this area. Our aim for 2012-13 is to make only those changes which are absolutely necessary. We want to minimise the administrative burden on institutions, and provide as much certainty as possible, at a time of significant change for the sector and for students.
'The consultation also sets out options for implementing the Government's proposals to introduce greater competition and dynamism in the distribution of student numbers in 2012-13. Again, we are keen to hear views on how this policy is best implemented to achieve the Government’s policy goals.
'In the longer term, we will need to re-examine HEFCE's approach to funding teaching to ensure that we are using our much more limited funds as effectively as possible, and to respond to the Government’s ambition to free up student number controls. The detail for 2013-14 onwards is for the second stage of our consultation, but we are already clear about our broader aims: a focus on funding activities with a demonstrable public benefit, and a commitment to improving student choice.'
At present, the majority of the public funding for higher education teaching received by universities and colleges comes via the 'block grant' administered by HEFCE (for full details of HEFCE's current funding method see 'Guide to funding: how HEFCE allocates its funds', HEFCE 2010/24). Institutions use this grant to fund a wide range of higher education courses. From 2012-13 onwards, HEFCE's teaching grant will be substantially reduced as more money is received by institutions through tuition fee loans for students than from HEFCE. HEFCE funding levels for teaching have not been finalised beyond 2011-12, but the broad pattern is set out in our December 2010 Grant Letter from the Secretary of State and the White Paper.
From 2012, students entering higher education will pay graduate contributions to higher education providers at higher regulated levels. The standard maximum fee level has been set at £6,000 per year for a full-time undergraduate student (although institutions may choose to charge below this level), although a higher rate of up to £9,000 will be permitted in institutions that have an access agreement with the Office for Fair Access (OFFA). Students will be able to access loans which they will not need to start repaying until they are earning more than £21,000 a year.
Under the current system for funding teaching, each subject is assigned to one of four price groups. These are:
For full details see HEFCE's current funding method.