The PM's speech to the Conservative Party's Spring Conference discussed the global race the country is running and stressed growth, social justice and balancing the books.
We could increase our international competitiveness, stimulate growth and enhance social justice without adding to the deficit if the government were to underwrite bank loans for UK-domiciled students undertaking strategically important taught postgraduate (i.e., Masters) degrees. This has been proposed by, among others, the Higher Education Commission, The Sutton Trust and the National Union of Students. Understandably, the Government has been hoping that banks would, as David Willetts said recently, 'step up to the plate' and offer more loans. However, that has not happened and the clock is ticking.
The arguments in favour of such loans are compelling. The UK's growth requires an ever-larger pool of highly skilled workers and fortunately we are one of the few countries that can quickly and effectively 'up-skill' our workforce. Along with the USA we produce the highest quality research in the world. It is conducted primarily in our universities and Masters degrees provide both an excellent education but also a vital bridge between this research and the skills of the workforce. Other Masters degrees that warrant support are in subjects such as journalism, computing, law and accounting that act as 'passports to the professions'.
Ten years ago around 70,000 students began Masters courses each year. Today that figure has more than doubled and half are from overseas. However, only three countries in greater Europe have fewer than 10% of graduates progressing to postgraduate study: Andorra, Kazakhstan and the UK. As this month's Higher Education Funding Council for England Educational Reform Report notes, even this proportion is now declining.
International demand shows that the UK offers some of the most attractive Masters courses in the world. The average lifetime earnings premium of a Masters degree is around £200,000 according to The Sutton Trust so why are UK-domiciled student numbers low and declining? There are three main reasons. First: a recent increase in Masters degree fees to align with the new undergraduate fee. The average fee for UK domiciled students was under £5,000 in 2010/11, rose to over £6,000 in 2011/12 and will probably be around £8,000 for entry this September. London universities with around a quarter of all Masters degree students in the country have seen average fee levels for UK-domiciled students increase by 46% in the past three years.
Second: the number of UK-domiciled students taking a part-time Masters course follows the economy, with entry falling some 15% last year. However, the third and most significant reason is access to funding. UK Research Councils have stopped funding Masters courses; sponsorship by employers has declined and Professional and Career Development Loans from banks are expensive (and only around 8,000 are available). We know little about the socio-economic profile of postgraduate students. However, as The Sutton Trust and media coverage of the recent 'Shannon' case at the University of Oxford have shown, limiting access to such funding is a remarkably effective way of limiting the country's access to talent.
Universities have been trying hard to support UK-domiciled Masters students. At City University London almost 40% of our students are undertaking Masters degrees and some of these are subsidised for strategic reasons. Our enlightened philanthropic supporters are starting to move their needs-based awards from undergraduates (well supported under the new fees regime) to Masters students. We also underwrite loans for some of our MBA students with funding primarily from MBA graduates rather than banks.
However, this is not enough to maintain (let alone increase) the number of Masters students this country so desperately needs.
Taught postgraduate students have been omitted from the recent higher education debate. Now is the time to place them centre-stage and decide if we wish to support UK-domiciled students on strategically important Masters degrees.