The Royal Society of Edinburgh (RSE) is pleased to respond to the Independent Committee of Inquiry into Student Finance. As Scotland's premier learned society, whose aim since 1783 has been the advancement of learning and useful knowledge, the RSE is well placed to offer an independent view on the issue of student finance and the importance of higher education. The Society's Fellowship includes distinguished individuals drawn from Science, Medicine, Arts & Letters, Engineering & Technology, the Professions, Industry and Commerce.

All considerations of systems of student finance for education face the problems of reconciling strongly held, and often divergent, public attitudes on education funding with the needs for the continued development and socio-economic success of society. There is no unique ‘correct solution’ to the problem of student finance. Rather, it is a matter of devising a system which is acceptable to the community as being sensible, reasonable and fair, and which is effective in achieving national economic and social objectives.

The Society also believes that the need to preserve and enhance the quality of Scottish higher and further education is the key consideration. Whatever changes to student finance are introduced, it is vital that they should not negatively impact upon the ability of these sectors to provide high quality student education.

The specific issues identified in the consultation document are addressed below. While the Society’s comments are directed mainly to higher education, the Society believes that, generally speaking, the same principles should apply to both higher education and further education.

Question 1: Do students need more support towards living costs? And if so, in what way?

The Society believes that the current level of living cost support is not adequate for certain groups of students, and that the maximum level of support should be increased, through means- tested grants and means tested long-term student loans.

While the student population is not uniform it is recognised that the present level of loans, even at themaximum level, is not adequate to support full-time study for a degree at a Scottish University without "substantial parental" contribution or student earnings from part-time or vacation work. This creates particularly serious problems for mature students, lone parents and students from low-income families.

It is also recognised that while there are certain benefits from an element of work experience, the present higher education system is not geared to students working part-time during term. There is also strong evidence that in some subjects this work impinges upon the quality of students’ performance and causes some students to fail to reach their full potential. Many students also experience stress both during and after their courses as a result of their relatively high level of financial indebtedness. This is likely to have a significant adverse impact on the graduate community and is already affecting attitudes to employment and remuneration. For example, the question needs to be asked whether the level of debt adversely affects recruitment to jobs or professions with high academic requirements but often below average financial rewards e.g. the caring professions and certain areas of teaching. Accordingly, some of the most academically able graduates may therefore be discouraged from entering these nationally important jobs by high levels of debt incurred as students

The Society believes that the best solution would be to take up the Dearing Committee proposal of a combination of means tested grants together with long-term loans for maintenance expenses. The Society, however, believes that any long-term loans for maintenance expenses should also be means-tested. The introduction of means testing of student loans could result in some offset, but any extra funds required should definitely not come out of the existing higher education budget. Although those from the lowest income groups are exempt from fees, the current scheme, with the abolition of maintenance grants has resulted in living costs deterring some individuals from registering for further or higher education, particularly potential students from low income backgrounds.

The Society considers that the availability of loans should depend on a means test, but that the family income level above which loans are not available should be high enough to ensure that those who need them can obtain them. Repayment of the loan should, as now, only begin once earnings reach a sufficient threshold, and it should be possible to spread the repayments over a longer number of years.

Question 2: Should students contribute financially towards their tuition?

The Society believes that students should contribute towards part of their tuition when they can afford it

The Royal Society of Edinburgh believes Scottish society benefits from the graduates produced through higher education, not only in terms of technological and professional skills but also in having a well informed and critical population. In the modern competitive world a large graduate population is essential for economic survival.

Whatever student finance system is chosen, the Society believes it should not undermine the funding of the Scottish higher education sector and must not deter students with potential from going into higher education. The present fee system, which exempts the poorer members of society, is not the primary reason for low access rates and its removal would primarily benefit middle and higher income families. If there are strong ideological reasons for abolishing fees, the replacement funds should not come from the existing higher education budget.

In one way or another, the expansion of the higher education sector needs to be paid for, and a possible solution would be making tuition free at the point of delivery through the Dearing Committee’s recommendation of the use of long-term loans repayable once income reaches a certain threshold. The Society has considered the option of a graduate tax but for the reasons given by the Dearing Committee does not favour such a method.

There is a case for making students contribute financially towards their higher education, principally because it is an investment from which they can expect to benefit financially in future. It is worth noting that in many countries such as the USA, students do depend on large loans to finance their education. However, in these countries, at least on average, the pay differential for having a good qualification is normally very significant and more than compensates for the loan.

Question 3: What student finance system will help to ensure high quality further and higher education?

The Society believes that the student finance system implemented must not result in a reduction in funding for further and higher education institutions if high quality education is to be ensured.

The Society endorses the Dearing Committee’s findings that inadequate higher education funding levels put quality under threat. The Society recognises that financial stress and pressures from part-time work during term time impinge upon students’ learning. As a consequence of part-time employment, the very bright students can spend no extra time to ''go the extra mile'' in their honours projects, while the less successful students are not available for extra remedial tuition - and many have already been pushed down by lack of time for study and revision.

While consumer pressures are generally held to result in improving quality, the current tuition fee does not represent the true cost of tuition and is only paid by a minority of students. The role of student fees in driving quality control is therefore likely to be minimal.

There is, however, a very clear link between the total resources available to an institution and the quality of its teaching and research. Throughout the 1990s, higher education expansion without a commensurate increase in funding has driven down the unit of teaching resource per student. This combined with the Bett Committee’s evidence suggesting that a greater investment will be required to recruit and retain the calibre of staff required to deliver a high standard of education, as well as the enormous costs of IT, has produced a very fragile HE system. Whatever changes in student financial support are implemented, they must not result in a reduction in funding for higher education institutions if quality and standards are to be maintained.

Question 4: What student finance system would best promote access to further and higher education?

The Society believes that while student finance is only one issue affecting access, the primary financial deterrent relates to the inadequacy of the total public support of both maintenance and fees in the absence of additional income sources.

Student finance is only one issue in promoting access to further and higher education and many other factors need to be taken into account. Current social factors may lead to a low evaluation of the importance of higher education and economic circumstances may make it necessary to take a full-time job after leaving school, rather than incur debts in the hope of greater income later. In addition, for many reasons, during primary and secondary education those from disadvantaged backgrounds do not gain the necessary qualifications. Although these current attitudes may change over time, at present there is a clear need to target and convince the non-participants who could benefit from higher education that there is a case for their seeking access.

While it is still too early to determine accurately what the impact of student fees has been on student access, given the short time scale since its introduction, it is believed that the abolition of student fees would primarily benefit the middle and higher income families, whose members would be largelyattending higher education even with fees. The primary financial deterrent relates to the inadequacy of the total public support of both maintenance and fees in the absence of additional income sources, and that this is particularly a problem for mature students, lone parents, students from low-income families and those social groups with a cultural resistance to debt. One solution to removing this deterrent is the adoption of means tested grants and long-term student loans, as suggested above, and the raising of the maximal level of support.

The target participation level of 45%, recommended by the Dearing Committee, has already been reached in Scotland. A greater priority now is widening access in terms of under-represented groups, recognising that this carries with it additional costs. Access would also be improved through expanding support and provision for part-time students, and for mature students of any age.

Question 5: How should the Scottish student finance system relate to the systems elsewhere in the UK?

The Society believes that care should be taken not to disrupt important UK relationships and benefits, and to avoid the adoption of a parochial focus.

Serious discrepancies in student funding between Scotland and the rest of the UK could have implications for wider funding systems across the UK. Changes whose purpose is to widen access to higher and further education would, however, both be within the powers of the Scottish Parliament and be relatively easy to justify to the rest of the UK.

The Scottish university sector is very successful at national and international levels, and there are many benefits from the cross-border flow of Scottish, English, Welsh and N.Ireland students and graduates, and in the UK character of Scottish higher education institutions. It should also be recognised that as part of the European Union, European students would need to be treated similarly to Scottish students. This would not, however, apply to English students, as England is not separately recognised by the Treaty of Rome, and therefore such separate treatment could lead to a perception that English students were being unfairly disadvantaged. If changes are introduced to the Scottish student finance system, care will therefore be required to ensure that these UK relationships and benefits are not disrupted, or a parochial focus taken.

Question 6: Do you think there are wider questions that the Committee should be examining?

The Society believes that given the tight time-scale, it would not be advisable to include too many other items for consideration, however, the Society would recommend that an inquiry into the whole of Scottish postgraduate education be undertaken in the near future.

There are many issues that need to be examined, monitored and actioned to ensure that the Scottish higher education system does serve us well, but given the tight time-scale, it would not be advisable to include too many other items for consideration.

It is understood that the Miller Committee is examining issues related to the Scottish Postgraduate Student Award Scheme. Consideration should, however, be given to the knock-on effect for recruitment to postgraduate courses (Masters and Ph.D.) of the financial arrangements for undergraduates, irrespective of means. It is important to ensure that continuing to postgraduate work is an attractive possibility for the ablest of our undergraduates. The current undergraduate funding regime and resulting levels of debt mean that this is increasingly not the case. Coming after four years of relative poverty, the attraction of earning an income in many cases outweighs the prospect of further years of poverty. The Society would therefore recommend that an inquiry into the whole of Scottish postgraduate education be undertaken in the near future.

Summary

The Society believes that the current level of living cost support is not adequate for certain groups of students and that the maximum level of support should be increased, through means tested grants and means tested long-term student loans. The Society also believes that students should contribute towards part of their tuition when they can afford it.

However, the Society believes that the student finance system implemented must not result in a reduction in funding for further and higher education institutions if high quality education is to be ensured. In addition, while student finance is only one issue affecting access, the primary financial deterrent relates to the inadequacy of the total public support of both maintenance and fees in the absence of additional income sources.

If changes are introduced to the Scottish student finance system, the Society believes that care should be taken not to disrupt important UK relationships and benefits, and to avoid the adoption of a parochial focus. In addition, given the tight time-scale, the Independent Committee of Inquiry would not be advised to include too many other items for consideration at this stage.

Additional Information

In responding to this inquiry the Society would like to draw attention to the following Royal Society of Edinburgh responses which are of relevance to this subject:

• National Committee of Inquiry into Higher Education (October 1996)
• Raising the Standard – White Paper on Education and Skills Development in Scotland (February 1997);
• Comments on the Recommendations of the National Committee of Inquiry into Higher Education (September 1997);
• Review of Postgraduate Education (February 1999);
• Funding for the Future: A Consultation on the Funding of Teaching (March 1999).

Further information is available from the Research Officer, Dr Marc Rands