Are students overpaying for tuition fees?

Sean Coughlan

How much does it really cost for a university to teach a student?

If universities in England really need to have tuition fees of £9,250, how can they offer taught postgraduate courses for as little as £5,100?

Since it was revealed a government-commissioned review was considering cutting fees to £6,500, universities have been in overdrive with dire warnings about how this would wreck their finances.

They've warned that not being able to charge some of the highest fees in the world would mean they could not afford to help the most disadvantaged applicants.

While students have complained about graduating with £50,000 in debt, universities are now warning about their own financial pressures.

But it raises the question about how much a university degree really costs to deliver.

Mind the gap

For undergraduate courses in England, fees have kept rising to the maximum permissible level - currently £9,250 per year.

But postgraduate fees have not had the same type of regulation - and this shows how much variety is possible.

If you study history at Bristol University at undergraduate level, it costs £9,250 - but a taught one-year MA at the same university is £8,300.

At other Russell Group universities, an MA degree in history at Leeds costs £8,500 and in Newcastle it's £7,400.

The fee gap gets even wider in some other universities.

A postgraduate history degree in York St John is £6,000 - and an MA in English literature at Liverpool John Moores is £5,100.

At University College London it costs £10,440 for an MA in history, and at King's College London it's £9,900.

So while almost every undergraduate course costs the same £9,250 - there is competition in postgraduate degrees, which in theory should cost more.

Different subject costs

According to a 2014 funding council study, postgraduate courses in England, with smaller classes and higher teaching costs, were on average 47% more expensive to deliver for each student.

This was based on each full-time undergraduate student on average costing a university £7,694.

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But is there really a meaningful average? Subjects such as science and medicine require more expensive equipment and longer teaching hours than arts and humanities.

The current system of flat fees for all subjects replaced a funding system shaped around such differences.

Before fees were raised to £9,000 in 2012, the level of government support per student was four times higher for a high-cost subject such as medicine than a low-cost subject such as history.

This was on top of the tuition fee of about £3,400.

For the most expensive courses, there is still an extra teaching grant - but for the majority of subjects, most or all of the funding comes from the tuition fee.

According to Universities UK, the cheapest, classroom-based subjects, such as history, currently cost more than £7,000 to deliver.

Top-up funding

If the "post-18 review" cuts the tuition fee to £6,500, it will still need a further top-up.

This could either mean students paying higher fees for subjects such as science or medicine or else the government will have to provide extra funding.

Science courses cost much more to deliver than arts and humanities

So how much above £6,500 should universities receive?

The last major review of university funding, in 2010, assumed universities on average would charge about £7,500 per year in tuition fees.

Instead, universities raced to the upper limit of £9,000 and the current review into the future of fees, headed by the financier Philip Augar, seems to be looking at ways to bring that level back down.

But universities argue that it's a misunderstanding to see tuition fees in terms of paying for teaching.

Not fees for teaching

The Million Plus group of new universities, in its evidence to the Augar review, says tuition fees are "not directly tied to an individual course of study" and would be "better described as a university fee".

It says the fee covers outreach work for disadvantaged students and all the central services of a university, in terms of facilities, administration, marketing, admissions, and welfare support such as mental health services.

Universities say that some courses are run at a loss even with £9,250 fees

The Russell Group has quantified this - saying that for a course such as history, about £1,100 will be spent on widening access and about £8,100 will be spent on teaching and university services.

It estimates a surplus of about £60 per history student per year - but argues that a university might have a shortfall of £1,000 on each science student.

"Lots of people will be surprised to hear that many universities teach undergraduates at a loss," said Russell Group chief executive Tim Bradshaw.

"If the government really does consider reducing tuition fees, it will have to make up the lost funding in full through teaching grants."

A spokeswoman for the University of Bristol explained their lower fee for a postgraduate year.

"The cost of delivering the programme is only one of many factors which influence how we set tuition fees," she said.

"Our reputation for a certain course, as well as the level at which fees have historically been set, need to be assessed holistically every year to ensure the financial sustainability of the university."

Postgraduate fees also don't have to cover costs for widening access.

Liverpool John Moores said it charged £5,100 for a postgraduate degree because the priority was "not the recovery of our costs but the provision of opportunities for students from all backgrounds".

A spokeswoman said the decision to "price our postgraduate courses competitively and attractively" ensured courses could be kept accessible.

The Department for Education said it would not pre-empt the findings of the fee review, which is expected to report early next year.

More transparency

Nick Hillman, director of the Higher Education Policy Institute, said students wanted more transparency about how fees were divided between teaching and other services.

"Many universities are worried it will lead to demands for much lower fees, leaving universities worse off. I don't agree," he said.

"We know students are sceptical about spending on marketing and recruitment, but they strongly support high spending on teaching and student services, like support for mental health."

But if universities are making a loss at £9,250 per year, how can they charge less for postgraduate degrees?

When the review examines the level of fees, how do universities avoid the impression that they expand or shrink to fill any available funding on offer?/Agencies