Universities as bouncers

It looks as if many universities will charge the maximum £9000 tuition fee, to the annoyance of David Willetts.
Let’s unbundle this.  For a humanities student, teaching comprises lectures, tutorials and reading. What should these cost?
The LSE library charges business users £180 a year (five cards cost £750 + VAT), albeit for limited access rights. It’s unlikely  to be subsidizing such users, but let’s err on the side of generosity and price a year’s library use at £300.
Let’s also assume that teachers charge £50 an hour for tutorials and lectures, so someone teaching 25 hours a week earns £37,500 a year. Then a student buying the equivalent of four hours of one-on-one time a week - say, two one-to-one tutorials plus a contribution to lecture fees - would spend £6000 a year.
Combine this with library charges and we have a £6300 fee.
So, where does £9000 come from? Clearly, there are overheads such as the maintenance of wine cellars buildings and the cost of support staff. And it’s possible that humanities students will subsidize more expensive science tuition. But it’s not obvious why a student would want to pay for such things - or, indeed, why he should want to deal with the universities, rather than contract with teachers directly.
I suspect instead that what’s going on is that universities aren’t charging for merely for education at all. They are also acting like nightclub bouncers, limiting access to a prestigious good.
Universities offer more than tuition. They offer credentials, signals. And it’s these that they are charging for.
But they might be mistaken. A lot of the credentials you get from Oxford come simply when you get the acceptance letter, so you don’t need to pay £9000 a year to signal to future employers that you’re good enough to get to Oxford. What’s more, the benefit of this signal is short-lived anyway. Evidence from the US (pdf) (pdf) and Israel (pdf) shows that able people end up earning much the same, whether they go to a prestigious university or not. As Alan Krueger says:

Your own motivation, ambition and talents will determine your success more than the college name on your diploma.

This raises an interesting possibility. If potential students believe this, then - having got their acceptance letter from a “top” university, they would (in a free market*) shop around for a cheaper one. “Top” universities will then no longer automatically get the best students, unless they drop their fees. Which raises the question, of whether they will remain “top” at all.
My point here is one that should have been learned from the experience of top-flight football over the last 20 years. When you start charging a high price for something, you change both the product and the customers. And not necessarily for the better.
* Which we don't have, as students are limited in the options of university they can express.  Students are only customers in the sense of handing over money - not in the sense of having free choices.  

Comments

[william]

By not putting a price on the extras, you have seriously reduced costs. Have you ever tried to hire a large scout hall or community centre for some function? It's not cheap, so I doubt if an equipped lecture hall is cheap enough to ignore in your estimate.

The 25 hours contact time doesn't include preparation, revision, or the setting & marking of exams either.

Why spoil a good conclusion to the post with such a wonky premise?

[mulliganandohare]

Somewhat ironically, the staff that work the longest teaching hours will be those in the Universities that probably charge less. I'd be shocked if a lecturer in a Russell Group institution actually taught for more than 7 hours a week, as most of the teaching will be done my postgraduate 'teaching assistants' or 'associate lecturers'. In this case some money probably will go in wine cellars!!

But, William is generally right, you're hugely underestimating the infrastructure in place at a lot of Universities.

Still, the overall point of the post is spot on. The complete cutting of funding for most of the Humanities and Social Sciences (remember the govt is not only removing all the funding for History, but for Psychology, for example) plus the increase in fees (and possible emergence of a two-tier system) will, without question, reconfigure the conception of what students 'get' for the money, for the worse. All subjects, particularly the 'Band D' subjects will have to justify their existence in terms of what job you can get.

In-fact, it is already happening. From next year (in preparation for 2012) I will have to re-design my undergraduate units allowing for one of the assessments in each being an 'employability' assessment. A colleague who teaches 18th Century philosophy has to do the same thing.

So, soon, for your 9k you'll be able to go to University to find out what David Hume tells us about writing CV's! China watch out!!

[plashing vole]

Interesting argument, but as the others say, you're significantly underestimating the costs. Staffing is, I suspect, higher at ex-polys such as the one I work at. We don't have lots of cheap exploitable PhD students. Instead, we have a lot of highly qualified staff teaching a lot of hours. Add to that the army of support workers needed because we don't just take 18 year-olds from private schools with 3 As. In all of my lectures there will be several note-takers for dyslexic and otherwise disabled students, two sign-language translators (1 person can't manage one of my 60 minute rants) and a technician. There are also academic skills tutors, highly qualified librarians, funding advisors etc. etc. We also provide hundreds of computers because even now many of our students genuinely can't afford them. They need upgrading and licences are pricy too, especially when using specialist software.

The library has to be bigger too. There's a general culture of not buying or reading books, but even setting that aside, academic books are hugely expensive and we have to try to keep up with the big boys in research terms. Journal subscriptions are enormous too. I tend to buy my own books and journals as 'refusal often offends'. We run campus transport linking the 4 towns in which we operate too…

It's an expensive business. Though it would be less expensive with fewer people on £100,000+ (10, none of them academics except the VC, on c.£240,000.

Inflation is another problem - at 4.1% on a declining budget, that's a big cut.

There is also the prestige problem: if everyone else charges at or near the maximum, potential students may regard us as the Aldi of education.

The students are going to get a worse education for 3x what their older siblings paid. Then there will be trouble. We've cut 160 staff and changed the system so that they do fewer modules with more students - solely to cut down on staff and rooming. They don't like it because they see the reduction in modules and workload as a cheat, and they're right.

[BenSix]

So, is it worth going to university at all?

[Jock]

I'm with you on this Chris - the new system is utterly bonkers. (http://jockcoats.me/fees_vote_leaves_students_universities_and_politicians_deep_browne_stuff) It does not create a market, but lots of perverse incentives.

A senior university head told a group of us that he thought that new private entrants to the market could make a profit at c. £5,500 (and on a three year equivalent measure Buckingham runs on £5,900 per head per year for comparison).

You over-estimate contact hours, basing it on four hours one-to-one. I reckon in many universities it is more like 12 hours one-to-100. If high performing private schools can deliver c. 30 contact hours a week to sixth formers in 15:1 class sizes for not a great deal more than £9,000 why should someone feel that the following year they should part with that kind of money for what appears to be much less.

Also, there are questions about how people will want to learn - why should someone go to Borchester University to sit in a lecture with a couple of hundred, when we can get an entire MIT lecture series online from a global academic "superstar". I suspect that in future there will be more deals where such resources provide the backbone and local university type institutions provide the between teaching tutorial support.

I'm currently taking an online module, admittedly not acredited for transfer credits or anything like that, but nonetheless from an institute attached to a US university and drawing its teaching staff from universities across the US, for $125 for a six week course and so far, four weeks in, we've had four hours every week in direct online contact plus an awful lot of time invested by the tutor in responding to forum enquiries and so on. There's over a hundred paid up for the course, amounting to $13k for officially 24 contact hours total plus probably the same again in set up, setting exams and marking (automatically in any case).

When Willetts came here to give his first big set piece speech in June last year, he said he reckoned that now over 50% of undergraduates were on "licence to practice" courses owing to the topsy growth of credentialisation and the externalising of training costs by many of the professions who once upon a time took people on articles and pupillage and put them through night school (like my old man did to become a Chartered Accountant).

But more importantly for the government and the taxpayer is that this new system is going to cost everyone a lot more. For the least well paid graduates who only pay minimal graduate contributions, £7k and £9k fees work out the same in Net Present Value terms (as they won't pay off the £7k before they are written off, so why not charge £9k and get it all from government up front to be written off later).

Open up the market properly - let our global star institutions charge what they want - you can bet that the top fifty institutions don't believe they are worth the same as the top five, and no way would they charge the same in open competition. And let new providers get into the market as fast as demand allows.

If I were an enterprising private school head, I'd be considering trying to do a deal with professional bodies to let me teach my 18 year olds HE grade stuff to get them into those professions with all the faciilities I can offer my 17 year old A level students (i.e not 200 seat smelly lectures and £5 a bang lunches).

The new system will not last long.

[chris]

Yes - chaps, I am ignoring many costs. But just because something costs the supplier money doesn't mean it is of value to the customer. Is it really the case that these extras are worth 50% of the fees I've mentioned?
For example, do we need lecture halls at all? Why not record lectures as DVDs or podcasts?
The appalling expense of textbooks/journals and cost of librarians is included in my estimate of library fees - and the former could be tackled by copyright reform or regulation.

[Nick]

Four hours of one-on-one teaching per week sounds a lot for a humanities course at a decent university.

My Cambridge history degree involved a one hour supervision per week (though excellent) and no lectures.

So, that would be £1500 pa.

[Keith]

Is this not all very silly?

If you only want wage slaves why have universities?

Just have job specific vocational courses delivered as cheaply as possible, rather than pretend you are interested in civalisation or Humane values.

Let profit making firms bid to provide training at the lowest possible price.

Abolish degrees.

Charge employers for employing people with given vocational certificates so no cost falls on the "trainee". Just stop calling it education as thats a misdescription.

[Jock]

Actually it's not very silly. If you are doing a "licence to practice" course you are not doing liberal arts or humanities, you are doing a work qualification.

And you are right, our post-5 year old school system is misdescribed as "education" :-)

[WestIndep]

I don't think you have had many dealings with cost accountants - for a start, the cost to an employer of someone on £37500pa is much greater than that. By way of a yardstick, the day school fees at the Royal High School, Bath (part of the GPDST and non-profit making) are £3209 per term in the sixth form: http://www.royalhighbath.co.uk/home/admissions_fees/sixth/fees/
I put together some data which might be of interest about participation rates and university league tables on my blog at http://bit.ly/gC9SCD

[redpesto]

You call it 'signalling'; I call it 'keeping up with the Professor Joneses' - either way it might mean a lot of the pre-1992./non-Russell group universities charging £9K in order to say 'we're not an ex-poly'. Whether it'll mean a lot of students shunning them for the post-1992 universities is another matter.

[plashing vole]

Chris, you ask:
For example, do we need lecture halls at all? Why not record lectures as DVDs or podcasts?

There's a simple pedagogical reason for this. If you see lectures as the education, then yes, record one and flog it to students. It's what my university wants to do.

But: surely the education is the interaction between the qualified and the curious. In my lectures, I ask students to think about ideas, and they stop me to ask questions. Then we go to seminars in which (ideally) we kick ideas around and examine different perspectives. To me, this is the educational element. I can see the point of a DVD maths lecture, but even there, it's testing a concept rather than being told about it that constitutes the educational experience.

As I say to my students, I'm not educating them: they're drawing on my resources to educate (or not) themselves.

[Chris Williams]

We are still a very long way from having a whole syllabus free-to-air. Even the Ivy League lectures online are often (a) technically very poor, (b) highly integrated into their own syllabi, such that in order to re-use them you would have to adopt an identical syllabus and structure and (c) culturally aimed at Americans. Shifting to OER put online by the Magic HE Fairy is not going to happen any time soon.

Chris Williams

[chris]

@Chris, Plashing Vole - the point is that charging £9000pa means moving from a student-teacher relationship to a customer-supplier one. This could change everything. Customer pressure should be a force for faster technical progress. And the function of the teacher as an aid to self-education - whatever its merits - might not survive this change.