Debt the biggest block to 50 per cent target

Public funding must remain the mainstay of higher education, argues Diana Green

Are current student finance arrangements a barrier to participation in higher education?

Delivery of the government's 50 per cent target critically depends on the answer. Recent decisions to simplify the current "dog's breakfast" of support arrangements, although welcome, do not get to the heart of the matter.

A second question further complicates the issue: should students pay more to help solve the funding crisis facing universities? A key feature of the 1998 model introduced in England after the Dearing review was the use of upfront student contributions to offset the shortfall in public funding of an under-resourced higher education system.

Since then, things have grown worse. Ministers now concede that the sector is facing financial crisis. Underfunded expansion has a price. In 2000-01, for the first time, the sector recorded a deficit of £50.6 million.

The status quo is clearly not an option. So, what is to be done? Ministers are still reluctant to fund the gap via general taxation. They have spent a year looking for a politically acceptable alternative. Rumours suggest they have examined more than 200 options and costed 40.

Neither of the two leading contenders appears a real runner. A graduate tax would take 20 years to bridge the gap, while top-up fees have united (some) vice-chancellors, an eclectic selection of politicians, the National Union of Students and the middle classes in virulent opposition. Allowing "top" universities to charge high premiums - leaving the rest to publicly funded poverty - would not solve the funding gap and would recreate a two-tier system in which access was governed by ability to pay.

Apart from the moral and political objections, such a solution would potentially scupper the participation target. Will asking students to pay more deter access? Early results of a study into perceptions of debt among prospective and current students show that the present system does deter some young people. Fear of debt has a significant impact, especially for those from the lower socioeconomic groups.

Concerns about finances were widespread: 84 per cent of prospective students believed debt deterred entry, 83 per cent thought students worried about building up debts, especially those from the lowest social class (91 per cent) and lone parents (89 per cent).

This is confirmed by existing students: 86 per cent of final-year students believe debt is a deterrent. Many are struggling to meet their financial commitments and almost 75 per cent have serious concerns about accruing debts and paying them off. Less than 25 per cent were not worried about debt, confident in their ability to get a well-paid job on graduation.

Social class was the most significant factor in influencing decisions about entering higher education and strategies for coping with the costs. Choice is constrained by social class, financial and family circumstances and ethnicity. Independent school students were more likely to see higher education as a worthwhile investment and were 20 times more likely than those in further education to decide to attend university.

Sixty-three per cent of those deciding against higher education did so because of reluctance to build up debt, and 51 per cent thought the costs outweighed the benefits. Respondents from the poorest families were more likely to consider applying to universities nearer home (63 per cent compared with 39 per cent from the highest social classes) and taking a shorter course (23 per cent compared with 4 per cent).

Current student funding policies potentially deter groups that are the focus of efforts to widen participation. More needs to be done to convince such students of the benefits of entry - research suggests that grants rather than loans would attract more students from underrepresented groups.

So how can we advise ministers? Getting consensus from vice-chancellors on these emotive issues is notoriously difficult. Universities UK maintains that public funding must remain at the core of the financial health of the sector. Any new scheme to generate private funds must ensure that they are genuinely additional. Any changes must not negatively impact on poorer students and hinder delivery of the widening participation agenda.

As ministers contemplate the search for the Holy Grail over their mince pies, perhaps we should be pleased that this task falls in their court.

Diana Green is vice-chancellor of Sheffield Hallam University and chairwoman of the UUK/Hefce Student Debt Project steering group.