What’s the alma matter?
Civitas, 14 October 2010
The rise in tutorial fees is now inevitable so the debate must move on to the next stage, which involves answering the question: how can universities charging upwards of £7,000 continue to attract the ablest students? If gaining a university degree is going to cost a similar amount as under the American system, then perhaps the same funding solution is also required – philanthropy and greater alumni responsibility.
Attending university has frequently been criticised as being a sign of ‘elite status’, but the new fee hike risks setting the country’s higher education establishments back a century, by making wealth rather than capability a major factor in determining who can study for a degree. The universities able to charge the most for the privilege of attendance will also paradoxically have to keep the costs down as far as possible to make sure that students from less advantaged backgrounds can still afford to undertake a degree. Oxbridge and other high flying universities will have to offset the cost of degrees or accept a decline in academic quality as students’ wallets rather than their brains get them in. Oxford already subsides a student’s education by up to £8,000 per year; the real cost of an MA Oxon is around £11,500 a year (and that’s ignoring living costs).
Passing this cost to the student may be attractive to universities, in the sense that money could then be allocation to research, the academic buttresses of higher education that is permanently underfunded. However, if these institutions want to retain accessibility for students of all socio-economic backgrounds, the price of a degree cannot rise too far beyond its current rate for.
One possible solution to this problem is to encourage a system similar to the American alumni networks, which have developed far more slowly in the UK because there was never a demand or rather a reliance on their donations to the same degree (no pun intended). Harvard’s endowment of $27.4 billion (£17bn) relies heavily on alumni donations, while Oxford’s equivalent is ‘just’ £3 billion while their student body sizes are roughly the same. These donations are used to give generous grants to students that would be otherwise unable to afford the huge costs of American higher education.
Harvard degree costs hover around the $35,000 per year mark (£21,800) but few students actually pay this. Even for households earning $180,000 a year, only 10% of the fees are paid and for those whose earnings are less than $60,000, all expenses, including the cost of housing, are covered. Universities like Harvard can therefore rightfully claim to be accessible, charging huge fees whilst also providing generous funding for all. The future cost of attending Britain’s universities will not be quite so dramatic, so while the same size of bursaries is not needed, an army of alumni backers is still required all the same.
The same culture of alumni ‘giving back’ needs to be developed in Britain, but this isn’t just a one way process. American universities earn their donations by fostering strong alumni relations, for example, inviting old members to return for networking events. Alumni-university relations are therefore mutually beneficial rather than purely philanthropic. This is being attempted by British institutions and the number of ‘development offices’ or permanent staff dealing with alumni is rising steadily. However, current rate of alumni relations expansion in the UK is not happening fast enough to offset the tuition fee increase – a sharp rise is needed to prevent bursaries being overwhelmed.
The crucial issue is for the Government to incentivise alumni donations through financially attractive measures. The original implementation of Gift Aid did a great deal to help universities (those with charitable status) but as the state removes itself from responsibility for paying tuition fees, it should allow further tax cuts for alumni who are filling the gap by donating to universities. What is really needed is for new incentives to benefit the individual donor and reward their philanthropy. Higher rate tax payers are already able to claim back 20% of their donation as a tax rebate so that giving £100 is worth £125 with Gift Aid, but the donor can then claim back £25, bringing the total cost to the donor to £75.
Lowering the threshold to include low rate tax payers would increase the number of people able to benefit from this tax rebate and therefore the quantity of donations universities are likely to receive. An alternative would be to raise the percentage of tax that can be reclaimed from donations. At present, high earners regain only half the 40% tax rate paid. If the rebate returned this 40%, the Government would be sending a clear message of support to the donors universities will be increasingly reliant on. Indeed, if the two proposals were used together, and tax rebates were maximised, alumni donations could skyrocket,
The alumni culture must develop from one that seeks to pay for books, to a system that funds building the library itself. The Americans have shown us how this can work, and with a kick-start from government, it’s time to starting utilising their model.