Wednesday, 5 June 2013

I argue in a new Centreforum report that university endowments can make a contribution to postgraduate funding.

Sutton Trust research has highlighted the growing importance of postgraduate degrees in today’s labour market. Stephen Machin and Joanne Lindley have shown that 11% of 26-60 year-olds in the workforce now holds a postgraduate qualification, up from 4% in 1996.[1]

They also showed that somebody with a Master’s can on average expect to earn over £200,000 more over a 40 year working life than someone only holding a Bachelor’s degree.[2] The Sutton Trust report highlighted how the recent growth in UK postgraduates, dominated by international students, poses a threat to social mobility.

This makes it all the more important that postgraduate courses are affordable to the brightest graduates, regardless of financial circumstances. Universities and government need to think imaginatively about how to fund them. Without action to enable bright students from all backgrounds to access postgraduate qualifications based on their ability rather than their ability to pay, this could become yet another barrier for those from low and middle income homes.

The Trust supports targeted state-backed loans for postgraduates. But Government is concerned about affordability, given the growing cost of the current student loan scheme. One way to keep costs lower would be develop income-related bursaries funded by universities through their alumni alongside means-tested loans for postgraduates.

Tim Leunig’s earlier research for Centreforum has shown that while there is some funding available through university bursaries, research councils and other sources, fewer than 4% of students on taught master’s programmes receive sufficient funding to cover their fees in full.[3] Most universities offer some partial bursaries, but these are often a fraction of the costs of fees and living costs, which can be £18-£20,000 a year, depending on the course.[4] This is an expensive proposition for graduates with debts already set to exceed £40,000 from their undergraduate studies.

In the United States, many universities, including the Ivy Leagues, fund undergraduates from low and middle income homes fully through their endowment funds. Many also use their endowments to provide targeted support for postgraduates (as well as to develop new buildings and facilities, often their primary purpose in the UK.)

With a state regulated system of undergraduate fees and loans in the UK, and substantial mandated access funds linked to the new fees regime, there is a strong case for focusing a growing endowment pot on postgraduate studies and research. For this to happen, UK universities need to grow their endowments. Only Oxford and Cambridge currently have endowment funds comparable in size to the top 20 US universities, with the next largest, Edinburgh, significantly smaller at £248m.[5]

The 2004 Thomas report led the Labour Government to introduce a match-funding scheme designed to stimulate greater fundraising by English universities from alumni, and the development of larger endowment funds.[6] That scheme, which ran from 2008-11, had some success: annual fundraising by UK universities rose from £513 million to £694 million.[7]

But the potential is much greater. While US Ivy Leagues have always had large endowments, much American alumni fundraising is relatively new. Many state-funded universities have only developed their funds in the last 50 years: for example, the University of Florida increased its annual donations from $2m in 1976 to produce an endowment fund now worth $1.3 billion.[8]

Only 1.2% of UK graduates donate to their universities regularly, compared with 9% of US alumni. A Higher Education Funding Council for England report in 2012 proposed a target of 5% for the UK within the next 10 years, with some universities achieving double digit rates, to put the UK onto the US track.[9]

Explicitly linking some of those funds to support for postgraduates could make giving more attractive to some donors. Some universities already do this. Sheffield has alumni fund scholarships, funded by donations from 1500 alumni each year, worth £2000 each, and targeted at bright students who might not otherwise be able to study there.[10] However, such scholarships remain small scale: in 2013, they plan to provide them to 15 students, but only provided 6 in 2012.[11] Others with larger endowments say they are relatively generous. Oxford, with £3.7 billion in university and college endowment funds, says that 62% of its research students and 17% of its students on taught Master’s courses receive full scholarships covering fees and living expenses.[12]  

Such endowments may not cover all postgraduate costs, but they could make a significant contribution, when coupled with targeted student loans for those of modest means. Sheffield targets its scholarships to those who received maintenance grants as undergraduates. A similar approach more widely applied to those able enough to study as postgraduates would help ensure such support was well targeted where it was needed most.

Government may not want to cover the full cost of postgraduate studies and living costs, given the prevailing climate. While wealthier UK and overseas graduates may be able to turn to family funds, those for whom a postgraduate degree is the final rung on the social mobility ladder are unlikely to have access to such resources. Such students should have access to more means-tested bursaries, funded by universities through alumni fundraising. For that to happen, universities will need to improve their fundraising capacity. Government should make it easier for them to do so: the tax system needs to be simpler for large donations, and more pump priming should be available to enhance fundraising capacity.

Postgraduate studies are the next social mobility frontier. It is now widely accepted that we need to do more through nursery education, schools and undergraduate access to enable bright young people from low and middle income homes to fulfil their potential. They must not encounter a brick wall when it comes to postgraduate study. A new partnership between alumni, universities and government could help ensure they don’t.

The Centreforum report Postgraduate Education: better funding and better access is edited by Tom Frostrick and Tom Gault and available at the Centreforum website.

[1] Stephen Machin and Joanne Lindley, ‘The Postgraduate Premium’, Sutton Trust 2012
[2] This is a gross figure, so it doesn’t allow for lost earnings, fee costs, extra taxes due or inflation, as some other analyses showing smaller premiums have done.
[3] Tim Leunig, ‘Mastering Postgraduate Funding’, Centreforum 2011
[4] Cambridge suggests these figures for most courses at . Taught course fees for home or European students at Sheffield and Newcastle universities are typically £5000-£6000 a year, with research fees starting at around £4000 a year, but often much higher depending on the course.
[5], drawing on data from ‘Caritas Higher Education Yearbook’ data in the UK and the US ‘Chonicle of Higher Education’.
[6] ‘Increased Voluntary Giving to Higher Education’, DfES, 2004,
[8] ‘Increased Voluntary Giving’, p.25 and University of Florida website for latest data
[9] ‘Review of Philanthropy’
[11] Information supplied by University of Sheffield. The University also uses alumni funding to provide £3000 scholarships for undergraduates.

Tuesday, 4 June 2013

Opening up our comprehensives

My latest Sutton Trust post looks at the drive to encourage more schools to use ballots in their admissions policies.

This week, the Sutton Trust revived the argument for school ballots as a way of admitting a significant proportion of places to popular urban schools. Of course, it is not an uncontroversial idea, but it seems the best and easiest way to introduce some fairness into a system where our highest performing comprehensive schools and academies are more socially segregated than other schools in their area.

After all, the evidence suggests that low and middle income students do better academically and socially if there is a mix of students from different income backgrounds in a school.

When I was Tony Blair’s education adviser, in 2005, I still remember the Times front page when they picked up our plans to allow ballots – random allocation of places where a school is oversubscribed – and fair banding across all abilities to achieve a comprehensive intake. The Times chose to illustrate banding, a move designed to achieve a comprehensive intake, with an 11-plus exam paper. The Deputy Prime Minister, John Prescott, became convinced that we were planning a return to grammar schools and took some dissuasion on the point.

I tell this story because ballots, a simpler measure without any tests, have their own perception difficulties. Most newspapers prefer the term ‘lotteries’ which has obviously negative connotations. But it has also been confused by the Brighton system, which allied some very tightly defined catchment areas with ballots to assist some families losing out under a traditional neighbourhood system. The losers were unhappy, and the winners stayed silent, and the way the catchment areas were drawn meant little change to social segregation.

Yet, less arbitrary catchments can work. Some academies have been quietly getting on with it. After I did the Today programme on Monday, Liz Sidwell, the former schools commissioner and a dynamic former head of the Haberdashers’ Hatcham Academy in South London, tweeted to remind us that her school uses a mix of neighbourhood admissions and a ballot, splitting the two components 50:50. With huge local popularity for the school, this clearly makes sense. It’s the sort of model that the Trust would like to see more widely.

On Monday, we also highlighted another South London academy, Platanos College in Stockwell, a ‘converter academy’ where nearly 60 per cent of its pupils receive free school meals, yet 80 per cent of all its pupils gained five good GCSEs including English and Maths in 2012, including 77 per cent of those on free school meals. Platanos uses banding, whereby a proportion of places are allocated to pupils of low, medium and high abilities to ensure that it takes a good mix of students.

And although the Department for Education keeps quiet about it, academies and other schools that are their own admissions authorities – around two thirds of all secondary schools are in that category with a surge in converter academies – are allowed to use fair banding or ‘random allocation’ within the statutory admissions code, though the code bans local authorities from using ballots (Code, pages 13-14). Some academies may also give preference to pupils entitled to free school meals, just as all schools are required to do for children in care. (Code, page 10, note 22).

Balloting is neither as unpopular with parents nor as rare as some suggest. Earlier polling by the Sutton Trust showed that almost as many parents backed ballots as a fair oversubscription criterion as proximity to the school, when given those two options for popular schools, with a majority making it the better option for faith schools. Moreover, research by RAND Europe for the Trust showed they are used in other countries, including for admissions to US Charter Schools and Swedish free schools and universities.

Yet the reality is that the vast majority of comprehensives still admit on the basis of proximity to school, or an often ill-defined definition of religiosity in the case of faith schools, where ballots among members of a faith would be less arbitrary.

Doing nothing should not be an option. Our research shows that the proportion of pupils from low income families, as measured by free school meal take-up, which is a measure of the social mix of the school, at our top 500 comprehensives is less than half the national average.

More significantly, 95 per cent of the top 500 schools take fewer pupils on free school meals than their local average.  Of the 16.5 per cent of pupils eligible for free school meals, just 36 per cent of them gained five good GCSEs last year, compared with 63 per cent of other pupils.

With higher house prices close to good comprehensives and academies, the bottom line in England is, as Sir Peter Lampl put it on Monday, how good a school you go to depends on your parental income. This applies from independent boarding school fees to inner city school catchments. A significant number of comprehensives and academies are not academically selective, but are socially selective because of the neighbourhoods or faith communities they serve.

Covert selection needs more than covert permissiveness in the Code. Ministers should actively encourage popular schools, particularly in urban areas, to consider ballots or banding. That way we could have a fairer – and more comprehensive – school system. Unless our best schools are open to all, we will never improve our low levels of social mobility.