The thinktank CentreForum has published a report recommending that the government introduce a loan scheme for one-year taught Masters students worth up to £10,000.
The principles of the scheme
- Any UK-domiciled graduate holding a 2:1 or First in their undergraduate degree would be eligible for up to £10,000 in graduate loans from the government. Because the loan would be classified as a maintenance loan EU-domiciled graduates would not be eligible for it.
- This would be repayable at 9 per cent of income between £15-21,000 subsequent to graduation. If the repayment threshold was £21,000 as it will become for undergraduate loans from 2012 this would be too costly to government.
- The cost to government of failure to repay would be made up for by increased tax revenues from a better-qualified UK workforce.
Analysis
Overall, the fact that proposals are going forward to address the funding shortfall at postgraduate level is very welcome and we should applaud any effort to address this problem.
The proposal is progressive in that, like the undergraduate loan repayment system, repayments occur in proportion to income - unlike Professional Career Development Loans which are repayable one month from graduation whether the graduate is employed or not.
The proposal is also costed - albeit with imperfect data - and persuasive arguments are made for why public investment in postgraduate study is a sensible government strategy.
However, any proposal for a postgraduate loan system must address the fact that postgraduate fees are uncapped, which means that any influx of money into the market which has the potential to increase demand for postgraduate study may have the unintended effect of driving up postgraduate fees. It might also have the effect of prompting universities to make more postgraduate course places available, but some selective universities might avoid doing this in order to maintain quality standards.
The author of the report argues that fees are unlikely to increase because postgraduates are able to 'shop around' for courses, providing an incentive to institutions to keep fee prices competitive. He may be correct, but it is a significant risk, especially for the most popular, prestigious courses. It is highly likely that there is no such thing as a single 'postgraduate market'; instead there are a number of prospective students seeking postgraduate qualifications for different purposes. While there may be some level of competition on price, for example, within specific regions or subject areas, the most prestigious universities could name their price, thus continuing to exclude those from lower-income backgrounds without external sources of funding support from access to these types of postgraduate course.
The author also does not take account of the potential impact of undergraduate fee increases on taught postgraduate fee levels. In July 2011 the Times Higher Education reported that average UK postgraduate taught fees have increased by 24 per cent across the board for 2011-12 to £6,184. Whether postgraduate fees continue to increase for 2012 will depend on universities' assessment of whether they can sustain a market for postgraduate education at the higher fee rates. Certainly some universities will believe this is possible.