The UK government is consulting on the introduction of minimum eligibility requirements for access to student loans. If such a reform is introduced, it is likely to prevent many who miss getting the required grades from going to university.
Several changes were proposed to the current system of student finance. Most concentrate on new borrowers, aiming to reduce student debt – by freezing the cap on tuition fees and capping the interest rate on loans at RPI+0% (retail price index) – and to increase loan repayments.
The repayment threshold – the amount an individual must earn before they start making repayments – was lowered from £27,295 to £25,000; and the repayment period extended for an additional decade, from 30 to 40 years.
But two less direct means of saving money were also included in the government proposals. One is the option of reintroducing caps on student numbers at sector, institution and/or subject level. The other is the possibility of removing access to loans for students who fail to meet certain minimum grade requirements, either in their GCSEs or at A-level. The Augar Review also considered these options.
In this article, we assess how closely the government’s proposals mirror the recommendations made by the Augar Review and consider the potential implications of the suggested reforms.
What did the Augar Review recommend?
The Augar Review, which was published in May 2019, suggested the use of caps on student numbers and minimum eligibility requirements as part of a package of reforms designed to ‘bear down on low value degrees’:
‘Unless the sector has moved to address the problem of recruitment to courses which have poor retention, poor graduate employability and poor long term earnings benefits by 2022/23, the government should intervene. This intervention should take the form of a contextualised minimum entry threshold, a selective numbers cap or a combination of both’ (Department for Education (DfE), 2019, p. 102).
There are a couple of things worth noting about this recommendation. First, the main recommendation that the Augar Review made to tackle the problem of ‘low value degrees’ – greater differentiation in the funding going to universities to deliver different subjects – was included in only a relatively limited fashion as part of the government’s response. (The Augar Review did not ‘name and shame’ the degrees they thought were low value, but they did emphasise that judgements on ‘value’ should consider both economic and social value.)
The Augar Review actually recommended that tuition fees be cut – from £9,250 a year at present to £7,500 – but that universities should be compensated for this loss of fee income through greater use of teaching grants. These could be designed in such a way as to achieve a better match with the cost of delivering different courses (or their economic or social value). In other words, universities would be paid relatively more to teach higher cost, typically more economically or socially valuable, subjects, and relatively less for teaching lower cost, typically less economically or socially valuable, subjects.
This would provide financial incentives to reorient provision towards courses that could be argued to align better with the skills needs of the country. The government is ‘looking at ways’ to offer financial incentives to tailor provision along these lines, but without making firm commitments at this stage.
Second, using minimum entry requirements to try to tackle the problem of ‘low value degrees’ is a much less direct approach than either the use of financial incentives or the use of controls on student numbers, both of which could be targeted explicitly towards ‘problem’ courses. A minimum entry requirement, by contrast, relies on ’low value’ courses attracting students with low prior attainment.
While there is a clear relationship between students’ prior attainment and their subsequent outcomes (and thus, we might expect there to be at least some relationship between the average prior attainment level of students on a course, and the average outcomes for students from that course), the relationship is not going to be perfect.
There will be at least some variation in the prior attainment of students on most courses – as there are many reasons other than GCSE and A-level grades why individuals may opt for a particular course. As a result, using individual characteristics (low prior attainment) as a proxy for course outcomes (‘low value degrees’) is clearly going to be approximate at best. (In fact, this is not the reason the government cited for wanting to introduce minimum eligibility requirements. We return to this issue below.)
Third, the Augar Review made clear that the use of a minimum entry threshold should be contextualised. Again, we return to this issue below.
What are the government’s proposals and whom would they affect?
The government is consulting on two different proposals for minimum entry requirements: students who fail to pass (achieve at least a grade 4) in GCSE English and maths; or, alternatively, those who fail to achieve the equivalent of at least two A-levels at grade E or above. In both cases, students who miss out on these grades would not be able to take out loans for tuition fees and maintenance should they wish to go to university – effectively excluding all but the very rich among them from accessing higher education.
The government’s own analysis, contained in an accompanying equality analysis, shows that these restrictions would affect around 25,000 of the current cohort of students (roughly 7-8% of 18-34 year old degree entrants).
Given the profile of students with low prior attainment, it is unsurprising that these restrictions would disproportionately affect those from poorer backgrounds and some ethnic minority groups, particularly black students. For example, among current students in higher education who fall below the minimum GCSE threshold, 23% are eligible for free school meals (roughly those whose parents receive low-income benefits). Comparably, among those above the threshold, only 9% are eligible.
Similarly, 27% of current students failing to meet the minimum GCSE criteria are black, compared with 8% of those who meet the requirements. It is worth noting that the requirements are less divisive at A-level, when attainment in any subject is considered, with 15% of those missing the A-level or equivalent requirements eligible for free school meals, and 14% from a black ethnic background, compared with 9% and 8% respectively among those meeting the A-level requirements.
What does the evidence tell us?
In contrast to the rationale set out in the Augar Review (that is, to address the issue of ‘low value’ courses), the reason given by the government for introducing restrictions on who can get loans seems to be that individuals who do not achieve these benchmarks are not equipped (or less likely to be equipped) to benefit from higher education.
The consultation says ‘we consider that a MER [minimum eligibility requirement] set at this level would ensure that students undertaking degree study have attained the baseline skills required to engage with and benefit from the course‘ (Higher education policy statement and reform consultation, DfE, 2022, p.41).
An obvious question, therefore, is whether prior attainment – measured either by GCSEs or A-levels – is a good signal of students’ likelihood to do well at university. It is clearly not a perfect signal: recent research shows that even predicting pupils’ A-level performance from their GCSE attainment is not straightforward.
Many of those with low attainment in their GCSEs actually went on to perform better than expected in their A-levels. This was more common among young people from lower socio-economic backgrounds and state schools, who tend to have more volatile trajectories than their better-off or privately educated counterparts (Anders et al, 2020).
If we were to exclude young people from university based on their GCSE results alone, therefore, there is a good chance that we would exclude individuals who might have gone on to do well in their A-levels, and therefore, presumably, have got into university.
Sensibly, therefore, the government has proposed an exemption from the minimum GCSE requirement for those who go on to achieve ‘good’ A-level grades, defined for these purposes as at least three C grades or equivalent. Curiously, this is considerably higher than the equivalent of two E grades with no restrictions on GCSE qualifications, which the government has put forward as an alternative to the GCSE minimums.
Mature students – those who start university at age 25 or above – are also excluded. This is on the basis that the skills and experience they gain after leaving formal education may provide a better indication of their capacity to benefit from higher education.
Slightly more puzzlingly, part-time students – even those under the age of 25 – would also be exempt, which suggests we might see a spike in demand for part-time rather than full-time study if the reforms are implemented in their proposed form.
The equality analysis suggests that these exemptions would allow access to the student loan system for around a fifth of the roughly 25,000 students who, on the basis of the GCSE threshold alone, might otherwise have missed out.
What about at and after university? Are those with low GCSE and A-level attainment disproportionately likely to experience poor outcomes?
It is certainly the case that prior attainment is a strong predictor of how well someone is likely to do at university, and indeed after they’ve graduated. For example, among those graduating from university in 2016-17, 95% of those entering with three A* grades at A-level achieved a first or a 2:1 compared with around two-thirds of those entering with grades of CCD or below (HEFCE, 2018).
Similarly, five years after graduation, median earnings among those entering university with four A grades at A-level or above are just under £40,000 per year, while median earnings among those entering with just one or two A-level passes (grade E) are £22,700 (DfE, 2018).
But prior attainment isn’t everything: there are substantial socio-economic and ethnic differences in degree achievement, even among those with the same prior attainment. For example, individuals from the 20% most deprived backgrounds are about 5 percentage points less likely to complete their degree and about 4 percentage points less likely to achieve a first or a 2:1 than those from the 20% least deprived backgrounds. This is the case even when they have the same prior attainment and attend the same course (Crawford, 2016). Other factors clearly affect an individual’s propensity to do well at university, such as motivation and interest in the course.
We also know from the GCSE and A-level exam fiascos of 2020 and 2021 that there are significant differences across schools in both average student performance and the way in which grades are awarded. Indeed, there is evidence that among students who enter university with the same grades to study on the same courses, those from better-performing schools – especially private schools – are likely to go on to do worse at university, on average, than their peers from worse-performing schools (see, for example, Crawford, 2014). This suggests that GCSE and A-level grades may in some cases be providing misleading signals of how well equipped students are for university.
It is also worth noting that having low earnings after graduation doesn’t necessarily mean that an individual did not derive any benefit from university. Aside from the fact that the benefits of going to university can be far wider than simply increased earnings, the estimated financial returns – which typically compare the earnings of those who went to university with those who didn’t – depend not only on earnings after graduation, but also on what someone is likely to have earned if they didn’t go to university.
Indeed, recent work on how returns vary by background characteristics suggests that some of the groups with the lowest graduate earnings actually have the largest returns, simply because their prospects in the absence of higher education are even worse (Britton et al, 2021).
The best evidence we have of how the returns to university vary by prior attainment is somewhat mixed. For women, average returns are very similar regardless of A-level subject choice and prior attainment. For men, on the other hand, the picture varies by A-level subject. For those with a STEM (science, technology, engineering or maths) A-level, low attainers (those scoring in the bottom third in GCSEs) seem to earn relatively higher returns than high attainers (those scoring in the top third), while the reverse is true for those without an A-level in a STEM subject (Belfield et al, 2018).
Levelling up or shutting out?
The minimum benchmarks being proposed by the government have been set substantially lower than the levels at which the existing evidence attempts to differentiate the returns to higher education. This means that there is a clear evidence gap in terms of whether or not students with these relatively low levels of prior attainment can engage with and benefit from the course, which we and others will doubtless try to fill in time to respond to the consultation.
In the absence of strong evidence that these students are not engaging with or benefitting from higher education, it is not clear why the government wants to introduce a minimum eligibility requirement at all. One reason could be that it saves the government money or hastens the closure of the kind of ‘low value degrees’ envisioned by the Augar Review. But setting the requirements so low undermines these potential benefits (although to be fair to the government, these do not seem to be its primary motivations for the reform).
And while low, any uniform barrier to entry based on grades is disproportionately likely to affect those from under-represented backgrounds. The Augar Review proposed a substantially higher minimum entry threshold – which may well have been more disadvantageous for widening access – but also that the threshold should be contextualised. Specifically, it stated that recognition should be given to the fact that students from poorer backgrounds are more likely to live in disadvantaged areas, attend lower quality schools and generally have fewer resources available to help them to succeed.
A single entry requirement – even a low one – does not recognise this principle. It is also somewhat at odds with some of the other proposals outlined in the consultation.
For example, the government is trying to reduce the fees for foundation years, which are used by some universities as a way of admitting students from under-represented backgrounds who would otherwise miss out on their entry criteria and help them to make the transition into standard university courses.
A disadvantage, which this proposal is trying to tackle, is that this increases the amount of debt with which students leave university, and hence potentially raises the cost of higher education for the poorest students. Given that prior attainment also varies across regions, it also seems to go against the government’s ‘levelling-up’ strategy.
If the government wants to reduce the number of students taking ‘low value degrees’, then a better place to start would be improving the attractiveness of alternative pathways. The government could also use its role as an employer to provide better rewards to workers in socially valuable occupations (such as teaching, childcare, social care or healthcare), or give universities greater financial incentives to reorient provision towards more economically or socially valuable courses.
If its goal is to ensure that all students can ‘engage with and benefit from’ higher education, then the government could put its money where its mouth is and provide funding to support reforms to raise attainment earlier in the education system – such as the recent pledge that 90% of 11 year olds would reach expected levels in reading, writing and maths by 2030. That would be a radical reform indeed.
Where can I find out more?
- Evidence on the implications of higher education finance reforms for individuals, universities and the Exchequer.
- Evidence on the role of prior attainment in predicting A-level performance, higher education access and outcomes.
- Evidence on the returns to university by course, gender and socio-economic background.
Who are economic experts on this issue?
- Jack Britton, University of York
- Claire Crawford, UCL Centre for Education Policy and Equalising Opportunities (CEPEO)
- Lorraine Dearden, UCL Social Research Institute
- Ben Waltmann, Institute for Fiscal Studies
- Gill Wyness, UCL CEPEO