Your future is on the money

It’s all change for new students heading off to university next year, not least on the financial front with tuition fees due to rise for the first time since 2012.

All universities are taking part in the first wave of the government’s new Teaching Excellence Framework (TEF), which will allow them to charge an inflation-linked new upper limit of £9,250, representing a 2.8% increase, subject to parliamentary approval this autumn. The hike will apply to the new intake of 2017 and also existing students unless their university opts to make an exemption for them or the terms of their contracts preclude them from being affected. New assessment criteria will be tied to an English university’s ability to continue to raise its fees under proposals in the Higher Education and Research Bill currently going through parliament.

The TEF, not dissimilar to league tables, will measure graduate employment, student satisfaction and retention, and other factors as it is refined.

Devolved administrations have given permission for institutions in Wales, Northern Ireland and Scotland to participate in the first year of the TEF.

The plan is that from 2019, after two years of piloting, English institutions that “meet expectations” would be allowed to increase fees by half the rate of inflation, while those deemed “excellent” or “outstanding” would be eligible for a full inflationary rise. Those failing to make the cut, or who choose to opt out of the scheme, would not be able to increase fees.

Despite some concerns about the core metrics being used to assess teaching quality, universities want and need the money. Nicola Dandridge, chief executive of Universities UK, says: “In this academic year, the £9,000 tuition fee is worth about £8,200 in real terms, compared with its 2012 value, and this is falling in real terms each year. This inflation catch-up is essential to allow universities to continue to deliver a high-quality learning experience for students.”

Based on current inflation rates, tuition fees will reach almost £12,000 a year in the next decade and exceed £10,000 in just four years. The question for students is: where does it stop?

“I am really concerned about it and how sustainable funding higher education through student fees is,” says Sorana Vieru, vice-president for higher education at the National Union of Students. “When does too much become too much?” asks Vieru, who is not convinced that the government won’t raise the fee cap further down the line.

In addition to higher fees, maintenance grants for students in England and Wales have disappeared, with loans to cover living costs as high as £11,002 a year for those studying in London. Under the planned system of inflationary rises, an undergraduate starting a three-year course next year who takes out the maximum maintenance loan will accumulate debt of more than £60,000, plus ongoing interest.

According to the Sutton Trust, a social mobility charity, English students who graduated last year owed an average of £44,500, higher than their American counterparts, and those in Canada, Australia and New Zealand. The trust has warned of the impact of these debt levels on “major life decisions” such as getting a mortgage or having children.

While graduates are worried about how their finances will be affected by loans that most will be repaying until they are in their fifties, current students are angry about being forced deeper into debt. A national demonstration will be held in London in November to protest against rising fees and the marketisation of higher education.

So with tuition fees going up in the UK, what are the options for studying elsewhere?


UNITED STATES OF AMERICA
A relatively small but growing number of students are looking to the US, attracted by the flexibility of the liberal arts curriculum and the availability of funding. In the 2014-15 academic year, 5,207 young Brits were studying undergraduate courses across the pond, a 23% increase over the previous five years. Tuition fees can be astronomically high depending on the type of institution and your family income. The annual cost of attending Harvard, for example, is $47,074 (£36,260) for tuition and $63,025(£48,547) if you add room and board, although 70% of students receive some form of financial aid.

According to figures from the College Board, which administers the SAT admission test, the average tuition fee for a four-year bachelor’s degree in the US ranges from $23,893 (£18,404) a year at public universities to $32,405 (£24,960) at private institutions.

However, as the Fulbright Commission, the official online source of US study information in the UK points out, means-tested support, and sport and academic scholarships, can significantly reduce the sticker price. Every year more than 600 universities award international student scholarships of at least $20,000 while 250 offer a “full ride”, it says.

Costs, though, can start before students even apply to universities in America with some parents forking out thousands on specialist tuition to help their child prepare for the challenging admissions tests, paying anything up to £290 an hour in London. However, about 60 UK students from schools including Westminster and St Paul’s Girls’ have benefited from a peer support programme run by American charity Project Rousseau that requires friendship and teamwork rather than money.

Among those now studying Stateside as a result is Masha Galay, who is in her second year at Yale (see panel). Project Rousseau is setting up an exchange programme with boys at the City of London School and is holding its first UK SAT boot camp next summer.


EUROPE
High tuition fees have encouraged students to look to continental Europe, where courses are generally much cheaper and can even be free, though the latter tend to be limited to programmes taught in the native language.

In Holland, which offers a wealth of courses taught in English, UK students pay €1,984 a year (about £1,703). However, Brexit could mean they pay significantly more in future and lose access to Dutch loans. Maastricht University has assured British students that they will continue to benefit from the current low statutory fees for at least the next two years but it has warned that, depending on the outcome of negotiations, fees could rise to more than £8,000 for many courses.

In the Republic of Ireland, EU students pay a student contribution of €3,000 while course fees for non-EU students, excluding medicine, range from €9,750 to €23,000.

Mark Huntington, director of A Star Future, which provides British schools and students with information about university education overseas, says: “When Brexit first happened, people who were thinking about taking a gap year before going to Europe wanted to go immediately.”

Huntington advises students not to be put off investigating their options. “I would say it is still a fantastic opportunity but there is this uncertainty that no one can take away. England is so far out of step with the EU that, even if fees go up, it would still probably be cheap and, in the case of the Netherlands, around the same.” But he warns that tuition fees are generally paid upfront.

“The message has got across to a lot of people that it is cheaper to study abroad but the reality is that student loans don’t travel,” he says. “It is not a straightforward a decision. The experience is still very much worthwhile. The reason people go abroad is not because of the money but for the international experience you are likely to need in your career.”


UNIVERSITY OF LIFE
Those keen to avoid debt and start making money may decide not to go to university at all, opting instead to take up one of the growing number of school-leaver programmes and apprenticeships on offer.

Government figures for the first three quarters of the 2015-16 academic year show a 2.8% rise in the number of new apprenticeships, to 384,500.

Financial services firm EY is currently recruiting 200 school-leavers for its new Ofsted-accredited apprenticeship scheme. Benefits include a salary of up to £21,500, a pension scheme and flexible perks including bikes for work and subsidised gym membership.

School-leavers get the same professional qualification as a graduate and could qualify sooner. Since EY launched its programme in 2011, applications have increased by 263%. Maggie Stilwell, EY’s managing partner for talent in the UK and Ireland, says: “We are seeing impressive school-leavers who are hungry for work and keen to start a career in business. They are pace-setters, incredibly enthusiastic, eager to learn and bring a fresh view point to an organisation.”

While university is not for everyone, it is the choice of the majority who are qualified to go. This month well over 500,000 freshers will start their new degree course, all looking forward to three or four years of intellectual and personal growth. While the overseas options are attractive, and potentially affordable, the reality is that most students choose to study in Britain. That’s because like the NHS, higher education in this country is free at the point of delivery, and a student loan is the only loan you will take out that you won’t pay back if you can’t afford it.

Even then, you pay only 9% of anything you earn over £21,000 (£17,495 in Scotland and Northern Ireland). Martin Lewis, founder of MoneySavingExpert.com and former head of the Independent Taskforce on Student Finance Information, says fee rises won’t affect most graduates as they won’t earn enough for the increase to make any difference.

“I would say for the average student this is irrelevant,” says Lewis. “The only number that counts is what you repay, not what you borrow. Unless you are a high earner it is just a bit of paper. Go and do your reading. Ignore the flannel, rumour and myths out there and understand how it works.”

CHARITY HELPS STUDENTS GET SATISFACTION

Navigating the admissions system for US universities can be a challenging business for UK students, but Masha Galay, pictured, was fortunate to prepare for her SAT test alongside students going through the admissions process in the United States.

The former pupil at St Paul’s Girls’ School in London took part in a peer support programme run by US charity Project Rousseau that helps American high-school pupils from the poorest and most disadvantaged backgrounds get into universities there, including Harvard, Tufts and Stanford.

The organisation brings its students to the UK for a home stay and cultural experience with participating British students, who in return work with their partners on practice tests and Skype into Project Rousseau’s programme in the US.

Galay hosted a student at her home in Hampstead, which became a popular place for others on the trip to hang out. “It put a lot of things into perspective for me, coming from a very privileged background and having a great education,” says Galay, who won a place at Yale on the back of her very impressive SAT scores.

“It was being able to realise that Project Rousseau for them was the difference between finishing high school or not finishing and going to university or not going to university. It was very motivational. It put pressure on me to succeed.”

Galay, who had already taken the test once with no extra tuition, gained valuable insight into how the US system works. “In a lot of ways the application to America and the SAT is a game, almost,” says the 19-year-old. “You have to figure out the rules.”

Through Project Rousseau she learnt how to structure the essay and answer multiple-choice questions, and other useful tips. As a result, Galay improved her SAT results by 220 points, leaving her just 30 points shy of a perfect maximum score. “I did not think they would have improved to the extent they did,” says Galay. “It was meeting the students that helped me focus for a certain period of time on that one exam.”

Galay is thriving in America. “I am so glad I made the decision,” she says. “There is so much freedom to study what you want. I study with people from all over the world. Already, I can see my world view has broadened.

“I think people very much rule out America for financial reasons and because it is a hassle. It is not as difficult as people think and it can be very worthwhile.”

THE VARIABLE COST OF HIGHER EDUCATION
English universities
■ Fees: expected to rise to up to £9,250 in 2017 for all UK-domiciled students
■ Means-tested maintenance loans from £7,097 up to £11,002 (2017-18)
■ Repayment threshold: £21,000
■ Loan cancelled after 30 years 

Scottish universities
■ Scottish and EU students: fees of £1,820 paid by Scottish government
■ English, Welsh and Northern Irish students: fees expected to rise to up to £9,250
■ Scottish students elsewhere in UK: fees expected to rise to up to £9,250
■ Means-tested bursaries from £500 to £1,875 depending on income (2016-17)
■ Means-tested maintenance loansfrom £4,750 to £5,750 (2016-17) 
■ Repayment threshold: £17,495 
■ Loan cancelled after 35 years 

Welsh universities
■ Welsh students currently receive a portable fee grant of up to £5,100, paying tuition fees of just £3,900 wherever they go in the UK
■ English, Scottish, Northern Irish students: fees expected to rise to up to £9,250
■ Means tested Welsh Government Learning Grant of up to £5,161, depending on income (2016-17) 
■ Means-tested loans from £4,786 up to £8,662 (2016-17)
■ Non-means tested loans from £3,590 up to £6,497 (2016-17)
■ Repayment threshold: £21,000
■ Loan cancelled after 30 years

Northern Irish universities
■ NI and EU students: fees of £3,925 (2016-17)
■ Northern Irish students studying elsewhere in the UK: fees expected to rise to up to £9,250
■ English, Scottish and Welsh students: fees expected to rise to up to £9,250
■ Maintenance grant of up to £3,475 if household income is less than £19,203; then a partial grant for students from families on under £41,065 (2016-17) 
■ Maintenance loan from £3,750 up to £6,780 (2016-17)
■ Repayment threshold: £17,495 
■ Loan cancelled after 25 years