Half of university tuition fees spent on teaching

By Sean Coughlan
BBC News education and family correspondent

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Less than half of the tuition fee paid by students in England can be spent on the cost of teaching, says research from a university think tank.

The Higher Education Policy Institute says the rest is spent on buildings, IT and libraries, administration, or welfare such as mental health support.

It comes as a review is scrutinising the cost of student fees and loans.

A separate public spending watchdog report warns that the sale of student loans is providing poor value.

The Public Accounts Committee says that student loans with a face value of £3.5bn were sold last year to private investors for £1.7bn - with MPs unconvinced this was a good deal for taxpayers.

The review of post-18 education funding, commissioned by the prime minister, is examining how to redesign university fees and student loans.

Image source, PA

There have been suggestions that the review is looking at cutting fees to £6,500 - raising questions about the cost of delivering courses.

Both university reports from the Higher Education Policy Institute and the Public Accounts Committee examine whether students and taxpayers are getting value for money.

How is the tuition fee spent?

The think tank report says that universities might only spend 45% of tuition fee income on teaching - with the rest spent on other services or administration.

Students should be given much more information about how their fee is being used, says the study.

A breakdown from Nottingham Trent per student showed:

  • 39% spent on academic staff, course equipment and staff-related costs
  • 36% spent on buildings, libraries, IT, sports, careers, admissions, staff, administration and widening access to poorer applicants
  • 17% invested in "enhancing teaching, research infrastructure and the student experience"
  • 8% spent on professional services, including marketing, finance and the vice-chancellor's pay

The research also shows that universities can have very different levels of dependency on the current £9,250 annual tuition fees.

Tuition fees were only 15% of income for Cambridge, but at Falmouth it was 83% and Nottingham Trent was 81%.

This puts financial pressure on universities to recruit - and last week it was revealed that a university had to be bailed out with an emergency loan.

Image source, Alamy

"Tuition fees were introduced 20 years ago and they have been tripled twice. Ministers and regulators have repeatedly demanded information on where the fees go. Yet there is still little information available," says the institute's director, Nick Hillman.

The Office for Students said: "We can identify and will act when they are not transparent about value for money or are not delivering strong enough outcomes for students or taxpayers."

Who profits from selling the student loan book?

A report from the Public Accounts Committee warns that the taxpayer should be getting a better deal when the government sells off student loans to private investors.

Last year, it says the government only received a return of 48p in the pound - in the deal in which £3.5bn of student debt was sold for £1.7bn.

The MPs recognise that the full value will not be obtained, because so many students are unlikely to pay back all that they have borrowed.

"In this case, government received too little in return for what it gave up," says the committee.

The committee, which oversees government spending, says it is "not convinced" by explanations for the pricing of these public assets.

It also calls for more transparency about the investors profiting from the sale.

"The public deserves to know who stands to gain from the sale of public assets," says committee chair, Meg Hillier.

Labour's Angela Rayner described it as "ripping off the taxpayer".

But a spokeswoman for the Department for Education said: "We are confident that we achieved value for money for taxpayers from the first sale of student loans.

"As the National Audit Office has found, we received more for the loans than the value to government of retaining them, further strengthening the public finances."

But she said the system was designed on the basis that "many students will never fully pay back their loans".