HEFCE's funding policy on student completion

1. What do we mean by completion?

We calculate our teaching grants for institutions based (among other things) on the numbers of students they have.

To make sure we are fair to all institutions, we need to make sure we count their student numbers in the same way. Our policy has been to count only students who complete, according to our definition, all their studies in the year.

In general, students are only counted if they complete all their intended year of study. In order to complete, a student has to undergo the final assessment for each module that they intended to complete in the year; if this includes examinations, then these must be taken on the first possible occasion unless prior permission to defer them has been given. Alternatively, if they miss the final assessment, but nevertheless still pass the module, this also constitutes completion. From 2009-10, we have also included a weighting factor in our funding calculations which takes account of the amount of study completed by those students who have nevertheless not completed everything that they intended.

The full definition of completion is given in our annual student number surveys that institutions complete: the Higher Education Students Early Statistics (HESES) survey (HEFCE 2009/36) for higher education institutions (HEIs) and the Higher Education in Further Education: Students (HEIFES) survey (HEFCE 2009/37) for further education colleges (FECs) - see Annex E paragraphs 28 to 37 of HESES09 and Annex E paragraphs 23 to 31 of HEIFES09.

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2. Does that mean that a student who does not complete every module is not funded?

No it does not. We fund institutions – or more precisely the activity of institutions. Our grants support the activities of institutions as a whole, including, for example, their libraries and central administration, as well as the teaching and related activity that goes on in their academic departments. This means that there is a distinction between what we fund and what we count for funding purposes.

We have a fixed budget provided to us by Government and this does not change just because we choose to count students in one way rather than another for our funding purposes. This is where HEFCE grant differs from, say, tuition fee income. With tuition fees, the size of the overall budget is determined by institutions’ own and the national regulations about what and when tuition fees are payable by students. With HEFCE grant, our rules on how and which students we count do not in themselves change our overall budget. If we limit which students we count, then the rate of grant per student counted increases; if we count more activity, then the rate of grant reduces. But the grant is still there to support institutions' teaching and related activities as a whole (irrespective of how it has been calculated).

Our concern is to ensure that institutions receive an appropriate, fair share of that fixed budget, and we want to do so in a way which supports accountability, but which avoids an excessive burden or unwelcome effects, such as a pressure on academic standards.

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3. So why only count student completions?

There are a number of reasons why we believe student completion is important. Firstly, we are concerned to protect the interests of students. If students complete less than they initially intend, this will not generally be in their interests: such students will often have paid a disproportionately high tuition fee in relation to what they have completed, and they may not have the qualifications at the end that they were aiming for. There is also evidence that, for some students, those who enter higher education but fail to complete, are disadvantaged compared with equivalent students who could have entered but chose not to .

Our measure of student completion also avoids a link with academic success. Higher education institutions themselves are responsible for awarding their own qualifications. If their funding depended on the academic success of their students, then this could put pressure on academic standards. An accusation, however ill-founded, that students were passed in order to attract HEFCE funding would undermine the reputation of higher education.

We also believe that counting students according to completion keeps the accountability burden to a minimum. The crux of the definition – did the student undergo their final assessment(s)? – is conceptually straightforward as a means of determining the level of student activity and avoids, for example, more complex monitoring of attendance throughout the year.

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4. But isn't this unfair to those institutions that do most to widen participation?

No. It is true that institutions that do most to widen participation often have higher rates of student non-completion, but we allocate substantial additional funding to them to recognise their recruitment pattern and to help them support their students to complete. Our overall funding policy is not unfair to them.

There is a significant loss to both the student and the tax payer when a student fails to complete. In order to help institutions to support their students through to completion, we provide additional funding for improving retention. This is targeted at those institutions that recruit more students at higher risk of not completing their studies.

We have found that the two main factors that affect whether or not a student completes their studies are their entry qualifications and age – those with lower entry qualifications and mature students are more likely not to complete than those that are highly qualified on entry or are young. We therefore provide additional funding to institutions for improving retention that is based on these risk factors. We also provide substantial funds for widening access.

In 2009-10 we are providing £142 million for widening access and £225 million for improving retention and these allocations are targeted significantly towards those institutions that do most to widen participation. At the same time, we do not want tax payers' money to provide an incentive to recruit students who are unlikely to complete their studies. This applies to all students, regardless of background. The risks relating to widening participation do not just apply to institutions – they apply significantly to students themselves because of the costs involved and the possible effects of failure.

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5. The definition of completion is not consistent with our academic regulations. If students progress into the next year, even without having completed one of their modules, isn't it unfair not to count them towards funding?

No. Decisions about student progression are rightly ones for individual institutions to make, but they should be made for academic reasons, and not be influenced by funding considerations. We do not have a link between student progression and our funding allocations because:

• Academic regulations on progression vary between institutions. They are therefore not a suitable way of ensuring a fair distribution of grant between them.
• Linking academic success with funding could put pressure on academic standards.

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6. The definition of completion appears to be based on a traditional concept of full-time study. Isn’t this unfair?

Our definition is designed to be neutral to institutions' own academic regulations and how they structure their provision. It applies equally to part-time and distance learning provision as well as full-time: indeed, this is the reason why it is expressed in terms of module completion. It makes no difference, for example, whether institutions structure their provision in terms of 'short fat' modules (through a succession of intensive modules studied in series) or 'long thin' ones (less intensive modules studied in parallel throughout the year), or indeed do not perceive their provision to be modular at all. The definition is able to accommodate all ways in which provision is delivered, while favouring none. A full-time student is one so declared for student finance and funding purposes and who will therefore be intending to take a full year’s worth of education.

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7. Part of the completion definition requires students to attend their final exams at the first sitting, unless it is agreed in advance that they will take them at a later opportunity. Why is this?

Institutions academic regulations vary: some allow students freedom to decide which sitting of an exam they take; others take a different approach. We wish to avoid a situation where some institutions might argue that, even though their students have not turned up for their exams and thus not completed their modules according to our funding definition, their academic regulations mean that (at least theoretically) they still might. Going through a process retrospectively, which condones or allows their non-attendance, should not be led by funding considerations, but rather by academic ones. Equally, the completion status of students cannot be deferred indefinitely, as this would make accountability for funding much more difficult and onerous. Some rules, therefore, are necessary so that completion status can be determined in a timely and auditable way.

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8. But this is very unfair – sometimes students are unable to get agreement in advance: if for example they are ill on the morning of the exam. Why don't you allow for such mitigating circumstances?

We need to remember that we are not funding the students themselves. Rather, we are working out a fair way of distributing a fixed budget between institutions. There is no reason to believe that students falling ill on the morning of an exam are any more likely to be found at one institution than another. Whether or not we count them should not therefore affect institutions' share of our grant.

The acceptance or otherwise of mitigating circumstances should be governed by academic, not funding, considerations. Just as academic regulations vary, so there is likely to be variation in what one institution accepts as mitigating circumstances compared to another. Institutions’ diverse academic decisions are not a fair way of distributing grant between them.

If we took the alternative approach of counting such students, then, to apply definitions consistently, we would need to define what were acceptable mitigating circumstances for our funding purposes (as opposed to institutions’ definitions for academic purposes). We might even need to assess the extent to which they applied in individual circumstances in our audit visits to avoid claims that some institutions took a more lenient approach than others. We have no reason to believe that this would change institutions' share of our grant, but it would increase the accountability burden on institutions and would doubtless not end arguments about fairness.

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9. The rules have changed from 2009-10 so that you are now counting the activity of students that have been reported as non-completions. Why then are you still pursuing data audits and funding adjustments under the old rules?

Our definition of completion has not changed. What has changed is an aspect of the funding method: we have introduced a weighting factor in our calculations, which serves to take account of what non-completing students did finish in the year. However, this does not change how institutions should report data in HESES and HEIFES and for the large majority of institutions has not actually changed their grant. Our audits therefore still need to test that institutions are reporting completion status correctly and if they are not, we will calculate any funding consequences using the method that applied for the relevant years. To do anything else would be unfair to institutions that report their data correctly.

For our funding to be fair, we need to ensure that, for each year, all institutions are reporting data in the same consistent way and that they are all subject to the same funding method. While we have developed the method from 2009-10 to take account of 'partially completed' activity, following consultation with the sector, it would be unfair to apply this method retrospectively to individual institutions in isolation.

As already explained, we have a fixed budget provided to us by Government and this does not change just because we choose to count students in one way rather than another. When we introduced the weighting factor relating to 'partial completions' for 2009-10, we had no more money to allocate and it did not lead to a significant redistribution of grant. In fact only four institutions received additional funding as a result. We do not, therefore, see this as a reason to disregard cases where institutions have been allocated too much funding because they did not report student completions correctly.

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10. HEFCE has not identified a problem with our data before. Surely it shares some of the responsibility if data errors are now coming to light?

The responsibility for the quality of institutions' data rests solely with them. We have a number of processes to check their data, including our audits and reconciliations with individualised student records that institutions complete at the end of each year. We do this to ensure accountability and fairness in our allocations. However, we never 'sign off' institutions' data as being correct – only institutions themselves do that.

Our audit activity looks at a very broad range of institutions' student data – it is not confined solely to the issue of student completion. Our processes for checking data have improved over time, and we have enhanced our techniques in identifying under-reporting of non-completions. As these techniques have improved, we have been able to look more closely at the underlying data in institutions' student record systems. At the same time, we have provided more guidance to institutions, so that they better understand the definition and how it applies in particular circumstances. We are now looking more closely at completion data in our audits, as we recognise this as a risk to institutions returning accurate data.

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11. It appears large numbers of institutions have not been identifying their completions accurately. Surely if so many are getting it wrong, there must be a problem with the definition?

The definition is fit for purpose – that purpose being to fund institutions in a fair and equitable way. Its purpose is not to inform or be aligned with academic decisions about students. The definition is also very clear. The guidance on it has expanded over the years in response to institutions' questions and issues that have come up at previous audits. We do not, therefore, accept that, just because some have not been applying the rule correctly, it means there is a problem with the rule. We need to be fair to those institutions which have been applying the rule correctly and not give an unfair advantage to those which have not.

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