Opinion piece by Dr Martin Raby. Issued 17/08/17

Early today roughly 200,000 or so English applicants for university entry in September whose place depends on A-level grades will be anxiously awaiting results, reviewing the Universities and Colleges Admissions Service (UCAS) website and considering their options. In anticipating results, some may have been concerned at reports in The Sunday Times last weekend that a revised approach to A-levels will bring a greater number of unexpected results. However, they should take comfort from the impact of competition and demography on universities’ willingness to offer places to students in the current higher education (HE) market. Last year UCAS reported that despite a fall in applications university acceptances were at a record level. Institutions are unlikely to have become more selective this year, as the number of English 18 year-olds has continued to fall, and EU and non-EU overseas applications have been hit by uncertainties over Brexit and visas respectively. A piece in The Daily Telegraph last weekend highlighted a rise in the level of unconditional offers, including by members of the prestigious Russell Group of UK universities, for entry in September 2017. So what is happening in HE?

Many people are aware of the increase in tuition fees to a maximum of £9,000 in 2012, when most public funding of teaching by revenue grants to universities was withdrawn. Since then institutions have invested heavily in their estates – the sector spent £2.4bn on construction in 2013, and the Higher Education Funding Council for England (HEFCE) expects capital expenditure to have risen to £5.3bn in the most recent year. As investment has often been funded by borrowing, institutions need to fund capital repayments and interest costs. Following removal of student number controls in 2015, universities plan to recruit more students – difficult if much of the sector adopts the same strategy at a time of declining domestic potential students and problems with overseas recruitment. There are signs – such as The Telegraph’s report – of competition intensifying, and that formerly selective institutions are now recruiting students as they seek to achieve their financial plans.

Reporting on 2016 entry, UCAS looked at the acceptance rate for 18 year olds achieving ABB or above at A-level. Unsurprisingly what UCAS judged to be higher tariff providers had the highest proportion of these students, but this has now fallen to just over 7 out of every 10 applicants, compared with almost 6 out of every 7 applicants in 2011, the last year before fees rose to £9,000. Medium tariff institutions have also seen a decline in the proportion of students achieving ABB or above at A-level, whilst accepting more holding A-levels equivalent to BBC and below. Generally, this means that it’s easier than it has been in recent years to get in to a ‘good’ university, and that lower tariff institutions may be finding life difficult. For those who have better than expected A-level results this may mean a realistic chance of ‘trading up’ in the UCAS adjustment process. For those unfortunate enough not to have just failed to meet offer conditions at their first choice university, there’s a good chance that they will be accepted anyway, or of finding a place in clearing. The longer-tem considerations are whether they will complete their course, with the personal and institutional reputational issues that this implies.

The level of spending and borrowing in the sector that has to some extent prompted this change has been criticised, but the position is complicated.  Many university buildings were in need of improvement, but there is suspicion that institutions invested in striking architecture to attract students. This is unsurprising; it’s very difficult to judge the quality of an intangible service to be delivered in the future, and so tangible attributes are often used to form judgements. This highlights flaws in successive governments’ HE reforms. The general logic has been to create a market, treating people as economic agents. Consumer ‘choice’ is sovereign, and the role of government is largely confined to ensuring that markets work. The limitation is that in the absence of reliable information, determining teaching quality is extremely difficult; fees were raised and controls relaxed before there was enough information about quality. There still isn’t, despite the recent introduction of the Teaching Excellence Framework (TEF), changes to the National Student Survey (NSS) and publication of more Longitudinal Education Outcomes (LEO) data showing graduate earnings by university and degree subject. It seems that government doesn’t know what it means by ‘teaching quality’, as it treats it as the equivalent or sum of a number of things that can be measured, but all these criteria could be satisfied without there being any reliable indication of the quality of teaching.

In these circumstances buyers will seek indirect indicators of quality.  Prestige is often substituted for effective quality information in the minds of consumers and employers. Historically UK higher education has been stratified based, partly, on differences in institutional longevity and, to a large extent, on differences in research performance. This is not helpful if you’re concerned with teaching quality. Marketisation tends to reduce value for money, as resources are diverted to increasing institutional prestige rather than improving student education. This contradicts the basic notion that competition leads to better use of resources. The reason is positional competition: competition for status. This is because a degree is a positional good. It derives part of its value from the fact that not everybody has it. Its value is not absolute but is determined by relative position in a hierarchy. As participation increases, the value of a “plain” Bachelor’s degree decreases, and degree-holders have to find ways to distinguish themselves. One way to do this is to focus less on the credential and more on where it was obtained.  The relative standing of universities has been said to change with glacial slowness. For employers, the most salient difference between universities is how difficult they are thought to be to get into. Setting aside the substantial effects of home background and social connections, the main determinants of a graduate’s employment prospects are first, the perceived standing of the university, second, their degree subject, and probably a distant third, their degree result. This can generate an unexpected challenge for new undergraduates, because the prestigious university that you want to get into in order to impress a future employer probably gained its reputation through educating an élite cohort of students a generation or two ago, who frankly could survive with less than excellent teaching, and by burnishing its research credentials, neither of which is a great indication of current teaching quality. So the dilemma for students seeking a university place is whether the teaching quality at the most prestigious university that they can get into will be good enough for them to survive for three years and enjoy the experience. Here the available data can help, as the NSS and TEF do provide a – very broad – indication of the experience at institutions. But those hoping to ‘trade up’ after good results should beware; data suggests that dropout rates are driven more by ranking amongst peers than by actual ability. A bottom quartile student at a more prestigious university is more likely to quit than a high ranking student at a lesser institution. Beyond the rational choice considerations of economic benefit, above all students should consider the life experience of three years at university, and whether they can be happy at their chosen institution.