From education to employment

The rise and demise of the National Scholarship Programme

The implications for university students

There has been heated debate over the increase in tuition fees to £9,000 a year for many students that occurred in 2012.

But another major change to the support for disadvantaged students was introduced at the same time: not only were universities required to provide details of their proposed financial support schemes and access programmes before they were allowed to charge fees above £6,000, but also the government introduced a National Scholarship Programme (NSP), designed to offer additional financial support to students via their universities.

In new work funded by the Nuffield Foundation and the ESRC, IFS researchers provide an in-depth analysis of the financial support that universities have been offering their students since 2012, what role the NSP played in this provision and what are the likely consequences now that the government has announced that the NSP will, from 2015, no longer provide support for undergraduate students.

The National Scholarship Programme: introduction and demise

Before 2012, universities had to offer a bursary of at least 10% of the (then £3,375) tuition fee to every student from a household with income of less than £25,000 per year. Students received this money in addition to any grant or maintenance loan they were entitled to from central government.

In 2012, a National Scholarship Programme was introduced with the promise of £50m government funding in 2012, £100m in 2013 and £150m in 2014. Universities had to at least match the government allocated funding in order to receive it. While NSP funding can only go to students from households earning below £25,000, students from this group are no longer guaranteed an award, as they were under the previous system of bursaries.

In late 2013, the government unexpectedly cut NSP funding in 2014 from £150m to £50m and from 2015 will provide no further funding. For the 2014 intake, universities are obliged to maintain their previously-planned match funding, thus providing at least three times as much funding as provided by government. This observation looks at what financial support has been available from universities for low-income students each year since 2012, how this varies across different groups of institutions, and how levels of support are likely to change, and for whom, now that the NSP has been abolished.

Financial support for students: 2012 to 2014

Overall, we estimate that students starting university in 2014 will receive, on average, £635 per year in financial support direct from universities. Of this, £100 was in the form of fee waivers and £535 in the form of cash support (such as discounts for accommodation). Those with lower parental incomes (of less than £25,000 per year) will get rather more than this overall average – about £1,466 per year (of which 16% – around £240 – is in the form of fee waivers). This represents a small drop from the £1,604 that was available, on average, to poorer students in the 2013 intake – most likely as a result of the unexpected reduction in NSP funding from the government. This is shown in the figure below.

Figure: Average financial support per year by cohort

Research-intensive universities (such as members of the Russell Group) tend to have more generous financial support schemes than less research-intensive ones (such as members of the Million+ or University Alliance groups). For example, we estimate that students going to Russell Group universities in 2014 will, on average, receive around £1,250 per year from their university, of which around £130 is a fee waiver, while those in Million+ universities will receive around £320 per year, of which £100 is in the form of a fee waiver. Amongst those whose parental household income is no more than £25,000 per year, the respective average amounts of support are around £2,860 in the Russell Group and £720 in Million+ institutions.

As well as supporting students from poorer backgrounds, universities are also increasingly using financial support as a means of attracting high-achieving students, particularly since the relaxation of student number controls: for example, when student number controls were removed for students scoring at least ABB in 2013 (down from AAB the previous year), 18 out of the 23 universities that had AAB scholarships in 2012 changed their eligibility threshold to ABB. On average, we estimate that students with ABB or above who enrol in 2014 will receive around £1,060 financial support per year, compared with £386 for those without at least ABB.

The current system of university bursaries and fee waivers is unnecessarily complex and opaque. In around one-third of the 90 large universities we looked at, there is no transparent scheme that guarantees low-income students any financial support. The schemes also vary hugely across universities, with the most generous packages available at Russell Group institutions. It is also worth noting that a not insignificant proportion of the support available comes in the form of fee waivers, which – for many students – are of little benefit, since they are unlikely to pay off their student loans within the 30-year repayment period, with or without the fee waiver.

What is likely to happen to financial support for students in future?

With the abolition of the National Scholarship Programme from 2015, the level and distribution of direct university financial support are likely to change again. NSP spending constitutes a small part of total financial support in research-intensive universities, but a very large part for other universities. For example, we estimate that the government funding of NSP constitutes more than 20% of all financial support for low-income students at Million+ universities for the 2014 intake, while nearly 70% is the match funding that universities are obliged to provide under the NSP (according to their commitments before the unexpected cut to NSP government funding). By contrast, the respective proportions for the Russell Group are around 5% and 13%. As the NSP is to be abolished from 2015 onwards, the ability and obligation of less research-intensive universities to provide financial support will be diminished. The most likely outcome is therefore that financial support will become even more focused on highly-qualified entrants who study at research-intensive universities.

Early indications from OFFA access agreements for 2015/16 suggest that highly-selective institutions are planning to redirect money from bursaries/fee-waivers to more long-term outreach work such as summer schools and mentoring, while universities with more diverse student bodies are planning to redirect money towards helping disadvantaged students engage with their studies and settle into university life, rather than on old-style bursaries.

It therefore looks likely that bursaries for disadvantaged students will fall across all types of institutions. This may mean that disadvantaged students are worse off in the short run. However, the overall impact of these changes will depend on whether focusing on outreach activities and/or engagement activities once in university is more effective at improving access and retention for disadvantaged students in the long run.

Lorraine Dearden and Wenchao (Michelle) Jin

This briefing note and accompanying observation are based on an earlier paper on the National Scholarship Programme and Bursaries, part of a project funded by the Nuffield Foundation. Our most recent analysis, taking into account the 2013 and 2014 Office for Fair Access (OFFA) agreements was funded by the ESRC.

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