DEPARTMENT OF EDUCATION How much is a degree worth? Students perceptions of the financial implications of transitions into higher education HUBERT ERTL.

DEPARTMENT OF EDUCATION

How much is a degree worth?

Students’ perceptions of the financial implications of transitions into higher education

HUBERT ERTL

1. Background- financial transition factors - transition by numbers

2. The study- questions- design

3. Key findings- expectations of earnings and debt- decisions affecting transitions

4. Questions raised

Overview

Financial issues affecting students’ transition into higher education in England

cap on Home/EU UG fees raised to £9000 if fees charged >£6000, university must have

access agreement agreed by OFFA and participate in National Scholarship Programme- means-tested grant (£3250 when RHI <£25000, reducing to £0 at £42,875)

student loans repayable once salary >£21,000 with real rate of interest charged - p/t UGs eligible for student loans

UG fees and student funding in England

Fees State student funding

until1989

No student fee contribution

Means-tested grants

1990 – 1997

No student fee contribution

Loans and means-tested grants

1998 – 2005

Means-tested student contribution - max £1,000

Loans

2006 –2011

Deferred partial fee liability - max £3,000

Means-tested grants and loans (grant eligibility adjusted for 2008 & 2009)

2012 - Deferred (partial) fee liability - max £9,000

Means-tested grants, NSP and loans (revised loan repayment terms)

Transition numbers: Undergraduate applicants and acceptances (000s), 1994-2011

Source: UCAS

340,500 acceptances to English universities from UK/EU applicants, that is 51,000 less than in 2011(-13 per cent)

• NB: 2012 entry includes 9516 students who deferred, compared to 23,600 for 2011 entry (suggests underlying change of -10 per cent)

drop evenly distributed among students with AAB+ and lower levels of entry qualification

Figures for 2012 admissionsUCAS data – End of cycle report 2012

412,907 applications from English applicants, that is 8,416 more than in 2012 (+2.1 per cent)

-9.8% 2012 vs. 2011

Initial figures for 2013 application cycleUCAS data – 18 March 2013

The rhetoric of consumerism

“The force that is unleashed is consumerism…. I recognise that the very term ‘consumerism’ causes deep anxiety for some. But it is not a threat to the classic relationship between academic teacher and student – it is an opportunity to rebalance academia so that teaching gets its rightful place alongside research.” (D Willetts THE 26.5.11)

Individual economic benefit is cited by politicians as a rationale for higher private contributions to the cost of higher education:Assumption: Perceptions of potential applicants about expected costs and outcomes play a significant role in their decision regarding transition into higher educationQuestion 1: To what extent does the expectation of a ‘graduate premium’ influence the choices of potential applicants?Question 2: To what extent do differences in the expected cost of studying at different institutions influence applicants’ institutional choices?

The study – context and questions

Work with six secondary schools/colleges (five in Oxfordshire, one in Buckinghamshire)

Accessed mainly through network of PGCE partnership institutions

Questionnaire survey (online or paper) of all students in year 13, taking courses that would make them eligible to apply for higher education : 723 usable responses

Follow-up focus group interviews at five participating institutions: 43 respondents, all of whom had applied to higher education

The study - design

Likelihood of applying to higher education according to selected student characteristics

Key findings

All Female Male White Black Asian Mixed A levels

Other qualif.

1st in family

not 1st in

family

Applied 73.4% 78.6% 66.4% 71.5% 85.3% 88.5% 62.5% 77.8% 50.9% 70.5% 75.3%

Not Applied 26.6% 21.4% 33.6% 28.5% 14.7% 11.5% 37.5% 22.2% 49.1% 29.5% 24.7%

Significance - ** ref. ref. * ** ref. ** ref.

N 723 416 307 589 34 61 24 591 114 207 481

Key findings: expected earnings

Overall Female Male First in HENot first in HE

Don't know 149 28.6% 94 30.0% 55 27.1% 35 23.6% 112 31.4%

<21,000 148 28.4% 102 32.6% 43 21.2% 55 37.2% 89 24.9%

21,000-30,000

139 26.7% 77 24.6% 60 29.6% 41 27.7% 91 25.5%

>30,000 85 16.3% 40 12.8% 45 22.2% 17 11.5% 65 18.2%

Total 521 313 203 148 357

Expected debt by gender

Key findings

Views on graduate premium

Key findings

Note – attitude to graduate premium has an important influence on propensity to apply to HE

Key findings: decision to apply to HE

 Approval rate

Mean SD

1 I am interested in learning more about my subject 82.9% 3.51 .612 A further qualification will help me to get a better job 80.4% 3.46 .663 A future qualification is essential for my intended professional/career 69.5% 3.49 .724 A further qualification will help me to get a job with higher earnings 63.8% 3.28 .785 As jobs become scarcer, I’m more likely to find one if I have a higher

qualification44.3% 2.94 .87

6 I am doing well academically so it seems to make sense to continue my studies

37.0% 2.70 .82

7 The financial support I could get 23.5% 2.66 .968 The amount I have to pay 20.5% 2.53 .989 It’s what my family/friends/teachers expect me to do 14.9% 2.24 .9210 I don’t know what I want to do next, so I might as well go to

university 11.3% 2.26 1.01

11 There are no jobs available, so I might as well study for longer 9.0% 2.17 .9912 It’s what everyone in my family has done 7.0% 2.06 1.0313 It’s what all my friends are doing 4.7% 1.73 .89

73.6% of respondents applied to at least one pre-1992 university, of whom 75.3% applied to at least one Russell Group university.

Questionnaire: cost concerns have more of an impact on• men • applicants to to post-1992 universities • those concerned about the debt burden• Those who expect to earn above the repayment threshold

(£21,000) Focus groups: differences in fee levels between universities

are perceived as small – not central to institutional choice

Key findings: choosing where to apply

Key findings: reasons not to apply to HE Top ranked items (out of 13 items provided):

• I want to earn money• I don't want to get into debt• I want to find a job straight away• I want to do an apprenticeship

Factor analysis:• financial motives related to prospect of lost earnings

stronger for those who are the first in their family to go onto university and for those that don’t believe in graduate premium

• ability to find employment and set off on a career path

stronger for those that don’t believe in graduate premium Focus groups: Perceived lack of alternatives to HE plays an important role

at what point(s) do potential applicants consider cost when making decisions about HE?

do potential applicants have the information they need to compare the costs of different HE options?

impact of KIS on decision-making in subsequent years?

how is information used in decision making process? are potential applicants making choices that are

rational for them and, if so, how does/should this affect policy?

Higher education entry as a transition process?

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Thank you for your interest!