There may be trouble ahead

Ministers have now made up their minds on student number controls for 2013 opting for an increase in contestable places with a shift from AAB to ABB and equivalents – further opening up the market at the top end. Core and margin will reduce significantly with just 5,000 places top sliced and opened up for lower cost bids but with some flexibilities for higher cost subjects and institutions. So the pace of reform continues as do the central themes of competition, diversity and student choice dictating the success and focus of universities.

Contrary to media comment, ABB does help to shift the competitive focus beyond the Russell Group though. There are plenty of institutions that won’t be interested in ABB and certainly not in equivalent qualifications – they weren’t that bothered by three distinctions at BTEC National Diploma level when they were pegged as equivalent to AAB – and certainly won’t be motivated to take huge numbers of these now. This also applies to A levels where we have seen a lengthy debate about the types required for Russell Group or 1994 universities and a distinction between so called ‘crunchy’ and ‘soft’ subjects.

There are also plenty of students who decide to specialise early and choose subjects and qualifications in subjects such as art and design or health that may be counted in a broad assessment of equivalence. So mixed A Level and other qualifications will open up competition to lots more institutions than commentators might suggest. HEFCE’s broad interpretation of equivalent qualifications makes this a much more meaningful and certainly more widespread competition than the AAB or ABB description suggests. Certainly there will be well over 100,000 students in this category and possibly as many as 120,000. On one level this is alarming because more institutions will see  more students counted as ABB and removed from their control number. However, if the assessment is right then many such applicants will still be very likely to enrol.

At the other end it looks as though government has abandoned its desire to force institutions significantly down from the £9k fee level. 5,000 places (even though manfully described as 45,000 places by BIS) may not provide much incentive to drop fees as very few places are on offer. If like this year the majority go to FE colleges then there won’t be many places available to HE institutions at all. So it’s likely that many more institutions will move more quickly to the £9k level with only a marginal disincentive. That’s probably good news for students on at least one front because universities will be less likely to offer fee waivers instead of bursaries.

But there will be overall loan book implications here – as those pricing below £9k for 2012 decide that it’s not worth their while doing so any longer. This could be significant in the medium and longer term because officials and politicians are worried enough about how demand matches up with departmental budgets and the estimated impact of the loan book. Significant demand for part time loans – available for the first time this year – will bring some extra pressure and the shift from full time to part time caused by the recession and weak labour market (and hinted at in UCAS stats) may create further additional pressure. And we know that the lack of the HE bill leaves the private sector able to tap into more loans than might be practical at this stage.

So a crunch may still be just around the corner on student numbers. Forecasts for departmental and HE budgets for the next CSR already look extremely challenging. Additional pressure from the first census point in the autumn may have knock on effects on this year’s spending – see the ongoing Treasury threats to manage it within the overall BIS budget – and on spending and numbers in the future. Ministers may need to intervene to manage overall cost pressures this year and if more institutions push up towards £9k in 2013 then the pressures will continue to intensify. There may be trouble ahead.

This post originally appeared on the GuildHE blog.