The policy context

The growing importance of, and demand for, HE; the increasing costs of HE driven by its expansion and rising per-student costs, including student financial support; the inadequacy, to date, of cost-side solutions to solve these problems; and constraints on public expenditure have put considerable pressure on the ability and willingness of governments, both in England and abroad, to meet these costs. The challenge for the Coalition, as it was for the previous Labour administration, is to provide a viable student finance system and, in line with their wider HE policy objectives, to create a system of financial support which also encourages access, enhances student choice and increases competition among HE providers to establish a more diverse, efficient HE sector.

The policy response in England (and elsewhere) has been to reduce HE public expenditure and shift costs from government and taxpayers towards students and/or their parents. Underpinning this ‘cost-sharing’ agenda (Johnstone and Marcucci, Reference Johnstone and Marcucci2010) are the private returns to HE, and gradual transformations in beliefs about HE, its role in society, who benefits and so who should pay. All major HE student funding reforms in Britain since 1990 have sought to restructure this balance of private and public contributions.

A second driver of student funding reform, also ideological, is the quest to create a HE quasi-market. User choice and provider competition were central to Labour's modernisation agenda, and their public services reforms, including HE, placed the consumer centre-stage (Vindler and Clarke, Reference Vindler and Clarke2005; Clarke et al., Reference Clarke, Newman, Smith, Vindler and Westerland2007). These policy technologies (Ball, Reference Ball2008) steered Labour's HE policies, were crucial to their 2004 Higher Education Act, and are central to the Coalition's reforms.

The Labour government's 2004 Higher Education Act, which came into force in 2006, launched variable tuition fees for full-time undergraduate courses capped by the government at £3,000.Footnote ² All full-time students were eligible for income-contingent student loans to cover all their tuition fees, and loans for maintenance that pre-date the 2004 Act. The loans were repaid on graduation when earning above £15,000 per annum, and attracted a zero real interest rate. Simultaneously, a package of financial support was introduced for low-income students because of concerns about the impact of increased fees on participation. This included the re-introduction of government-funded means-tested maintenance grants, and the establishment of cash bursaries funded by universities. Consequently, low-income students qualified for grants, loans and bursaries towards their living costs while their more affluent peers were eligible just for loans.

Bursaries were seen by government as a policy device for: overcoming the financial barriers to HE participation, including minimising the impact of higher tuition fees; reducing student debt and promoting student choice; and safeguarding access (Callender, Reference Callender2010). Two types of bursaries were introduced in 2006. First, mandatory bursaries, worth £338 in 2011/12, and paid only to students in receipt of a full maintenance grant and attending an HEI charging the maximum tuition fees. These criteria and sums were universal and fixed, set centrally by government. Second, non-mandatory discretionary bursaries offered to these and other students, with HEIs determining eligibility and value.

Both types of bursaries funded by HEIs, mainly from additional tuition fees, were given in cash throughout the duration of a student's course. To facilitate their take-up and administration, the Higher Education Bursary and Scholarship Scheme (HEBSS) was established. HEBSS was run by the Student Loans Company (SLC), a UK public sector organisation which administers government funded student loans and maintenance grants; it automatically assessed students’ eligibility for bursaries at their chosen HEI when students applied for other government-funded financial support.

In 2010/11, HEIs spent on average 21.6 per cent of their additional tuition fee income on bursaries. This varied significantly by HEI ranging from 5 per cent to 36 per cent (OFFA, 2012a), and by type of HEI with post-1992 universities, less research intensive HEIs attracting the most low-income students, devoting the highest share (National Audit Office, 2008). In 2008–09, 79 per cent of HEIs providing mandatory bursaries offered bursaries above the statutory minimum, while 94 per cent provided discretionary bursaries with additional eligibility criteria (OFFA, 2010). Consequently, there were hundreds of different bursaries, with most HEIs having multiple schemes. By 2010/11, the average bursary for the poorest students was £877, but was three times larger for those attending research-intensive Russell Group universities (£1,576) compared with those attending Million+ universities (£584) – made up of post-1992 HEIs (OFFA, 2010).Footnote ³

The 2004 Higher Education Act aimed to promote a more market-orientated system of HE through both variable tuition fees and bursaries. Together they would establish price differentials among HEIs and generate more price competition which would influence student choice. However, by 2010/11, all universities were charging the maximum fees for bachelor degrees and this became a new flat rate fee. Any competitive advantage of charging lower fees was outweighed by the benefits of higher fee income. In contrast, there was significant variability in bursaries which reduced the net price of courses for students. HEIs were using these bursaries to meet their wide-ranging enrolment goals, as part of their widening participation strategy, and as a competitive recruitment tool to protect their market share (Callender, Reference Callender2010).

The 2004 reforms ended the principle of universalism: that all students, irrespective of where and what they studied, should be treated the same, pay the same tuition fees and receive the same types and amount of financial support if they met universal and fixed government-set national eligibility criteria. They also established the idea of institutional aid – whereby HEIs should provide students with financial support but HEIs, not the state, should select the beneficiaries and what they receive. Consequently, for the first time, discretionary rather than universal financial support became widespread, just like in the US (Baum, et al., Reference Baum, Lapovsky and Ma2010).

The Coalition's reforms, outlined in the 2011 White Paper, Higher Education: Students at the Heart of the System (Department for Business, Innovation and Skills (BIS), 2011), and introduced in 2012/13, aim to make HE financially sustainable, to improve the student experience and increase social mobility.Footnote ⁴ They are similarly motivated by a desire to reduce both student support costs and HE public expenditure, in line with their broader strategy to cut the fiscal deficit and stimulate economic growth in the context of a global recession. Their ideologically driven vision is of an HE sector defined by the market which they believe delivers high-quality services efficiently, equitably, and is responsive to consumer choice (BIS, 2011).

The government withdrew universities’ teaching grants for most undergraduate courses and HEIs’ lost income was replaced through higher tuition fees. The government-set cap on fees rose from a maximum of £3,290 to £9,000 for full-time undergraduate courses and to £6,750 for part-time courses. All students, as before, can repay their fees on graduation through income-contingent loans.Footnote ⁵ Consequently, there is no, or limited, taxpayer support for teaching with these costs being met by students paying higher fees. Government support for undergraduates, therefore, has shifted from teaching grants to student loans – from a block grant to private contributions from individual students in line with the idea of cost-sharing. Ultimately, these changes valorise the private benefits of HE at the expense of the public benefits, and do not question the private subsidy of public benefits, positioning HE as a private investment rather than as a public good (Reay, Reference Reay and Holmwood2012).

As before, all full-time students qualify for students loans towards their maintenance costs. To reduce government's costs of providing loans for maintenance and tuition and extending them to part-times students, the interest rate was increased and a sliding scale, up to a maximum of inflation plus 3 per cent when graduates’ earnings exceed £41,000 per year, was introduced. Students continue to pay 9 per cent of their income above £21,000 (up from £15,000) until they have repaid all their loans, with any outstanding debt written-off after thirty years, up from twenty-five.

In 20012/13, full-time students from low-income families still qualify for maintenance grants. Although means-tested mandatory bursaries funded by HEIs were abolished, the more valuable discretionary, non-mandatory bursaries are continuing for low-income and other students. In addition, some students in 2012/13 from households with incomes of £25,000 or less, attending institutions charging fees above £6,000, can get financial support under the new National Scholarship Programme (HEFCE, 2011). The NSP is co-funded by the government and HEIs. HEIs charging fees above £6,000 have been allocated a fixed number of Scholarships by the government. Each Scholarship is worth £3,000 and HEIs are required to match their allocation by 100 per cent. Students’ eligibility is determined by these government-set criteria plus additional ones set by individual HEIs, with each student receiving a minimum £3,000 benefit. The benefit, determined by each HEI, can be cash bursaries (capped at £1,000), fee waivers and/or aid in kind. The NSP aims to complement rather than replace existing bursaries and, as discussed, both attract considerable investment, with HEI's financial support absorbing 18.8 per cent of their tuition fee in 2013/14 (OFFA, 2012a). Consequently, under the new funding regime, bursaries will continue to play a significant role in student funding.

The Coalition, like their predecessors, are using differential tuition fees and institutional aid to increase competition among HE providers and by giving students loans, which in effect are like an educational voucher that students redeem at the institution of choice. In line with market principles, the bulk of universities’ money will follow students’ choices while, theoretically, consumer demand will determine what HEIs offer, students will be better informed through the provision of more information, while HEIs will compete on price to attract students, including discounts through fee waivers, bursaries and the NSP.

Detailed information on these government-funded student loans and grants is available on university websites or from the government's website gov.uk, which includes what help students can get, how much they will receive, who qualifies, and how to apply. In theory, with the aid of this website's ‘student finances calculator’ (https://www.gov.uk/student-finance-calculator), potential HE students can work out their eligibility to government-funded financial support and how much they will receive personally, well in advance of any HE decision-making. In other words, potential students can gain both predictive information on eligibility as well as specific personal information. However, neither this student finance calculator nor this website can provide such details or information for fee waivers, bursaries and the NSP because of their diversity and their varying discretionary eligibility criteria. The website tells would-be students that ‘Each university or college has their own rules about bursaries, scholarships and awards’ and instructs them to ‘Talk to your student support service to find out what's available’ (https://www.gov.uk/extra-money-pay-university). In reality, as we will see, most, but not all, students do not receive either predictive or personalised information directly about bursaries until after they have made their HE choices, and sometimes not until they start their course. And, as discussed, the information provided on individual university websites often lacks transparency. As will be argued, this represents a problem for the system of bursaries and financial aid as a whole, as well as a problem in disseminating information. But, above all, it means that such financial support cannot inform the potential students’ decisions about whether to enter higher education, and, if so, where to apply. It cannot incentivise participation among students from disadvantaged backgrounds.

The research context

There is a growing body of research examining the complex interaction of social, economic, and cultural factors and inequalities underpinning students’ educational ‘choices’, including whether to enter HE, their choice of HEI, subject and qualification (e.g. Bates et al., Reference Bates, Pollard, Usher and Oakley2009; Raey et al., Reference Reay, David and Ball2005; Burchardt, Reference Burchardt2005). Studies here and in the US suggest that financial concerns and material constraints affect student decision-making, especially among low-income and ‘non-traditional’ students (e.g. Usher et al., Reference Usher, Baldwin, Munro, Pollard and Sumption2010; Long, Reference Long2008, Baum et al., Reference Baum, McPherson and Steele2008).

The primary goal of all student financial support policies is to lower the cost of going to university, whether to address social externalities, credit constraints or information failures. A review of 156 international studies on the impact of tuition fees and student financial support on HE participation (London Economics, 2010) concludes that university tuition fees have a negative impact on participation, and fee increases tend to cause a decline in participation, particularly among students from lower socio-economic backgrounds, unless accompanied by equivalent increases in student support. Tuition fees and other education-related costs also influence students’ selection of HEI, their behaviour whilst at university and reduce the probability of completion, especially for students from Black and Minority Ethnic groups and lower socio-economic backgrounds. The provision of grants and bursaries, and increases in student support levels, do enhance both HE participation and the probability of students completing their studies. A review of US research (Mundel, Reference Mundel, Baum, McPherson and Steele2008) confirms the effectiveness of grants, bursaries and fee waivers in influencing both participation and university choice, and the greater the aid's value, the greater its potential impact.

When conducting our study, little research in England had investigated students’ attitudes towards bursaries or their perceived impact on student decision-making. The 2007/08 Student Income and Expenditure Survey (Johnson et al., Reference Johnson, Pollard, Hunt, Munro and Hillage2009) finds a third of full-time undergraduates receive bursaries but did not examine their effects. Davies et al.'s (Reference Davies, Slack, Hughes, Mangan and Vigurs2008) study of final year school pupils concludes most did not seek bursary information or consider bursaries when choosing their university and course. While this study provides useful insights on prospective HE students, the sample was not representative of that entire population. These gaps in the existing research prompted our study.

Subsequently, Corver (Reference Corver2010) investigated whether differential bursaries have changed eighteen- to nineteen-year olds’ HE choices. Using existing administrative data, he concludes that disadvantaged young people have not been influenced by the size of bursary available when making university choices and are not more likely to apply to HEIs offering higher bursaries. Nor has this group become more likely to choose an HEI offering a higher bursary when they are offered a place, and there has been no material increase in the take-up rate by them at HEIs offering higher bursaries.

Corver's conclusions vary somewhat from ours, which can be attributed to important differences in our respective studies. First, our analysis is based on survey data while Corver's relies on administrative data. This allowed us to explore students’ awareness, and knowledge of bursaries and attitudes towards them, unlike Corver's modelling. Second, our respective data relate to different time periods. Our study was undertaken when students were starting their HE course, while Corver's focused on when students were applying to HEIs, nearly a year earlier. Consequently, our students had had more time to familiarise themselves with bursaries. Thirdly, our data include undergraduates of all ages, not just those of eighteen and nineteen years. Finally, our study is about students’ perceptions, while Corver's charts their actual behaviour. Debates about the relationship between attitudes and behaviour have a long history in social science. Yet, the potentially powerful impact of misplaced perceptions of actuality on behaviour is well established (Kettley et al., Reference Kettley, Whitehead and Raffan2007).

The study

The study explored awareness of, and attitudes towards, bursaries in England (Callender, Reference Callender2009a) and their impact on students from students’ owns perspectives (Callender et al., Reference Callender, Wilkinson and Hopkin2009), and that of their parents’ (Callender and Hopkin, Reference Callender and Hopkin2009), HEIs’ (Callender, Reference Callender2009b) and HE advisors’ in schools and colleges (Callender, Reference Callender2009c). The remit of our study, therefore, was much broader than Corver's (Reference Corver2010). Here we focus on findings from our student survey.

The survey consisted of a stratified random sample of full-time undergraduates entering HE for the first time in 2008/09; two years after bursaries were first introduced. All students were attending English HEIs charging the maximum tuition fee of £3,145, and all were in receipt of government-funded maintenance grants because they are the key (but not the sole) beneficiaries of bursaries. The sample was drawn from the Student Loans Company records which is the only centralised sampling source containing data both on students’ household income and their contact details. It was structured so that two-thirds were students in receipt of a full grant (i.e. from households with residual incomes £25,000 or below) and a third were in receipt of a partial grant (i.e. from households with residual incomes between £25,001 and £60,005).

The survey was conducted in October 2008 as the students were about to start, or had just started, their HE courses. The data were collected using an online self-completion questionnaire. Out of the 20,000 questionnaires distributed, 5,152 were completed, yielding a 25.76 per cent response rate. From this sample, 304 respondents were removed, leaving 4,848 respondents. Demographic data on students collected by the SLC were linked to the responses. Final data were weighted to the national profile of students by gender, whether the student received a tuition fee loan and the date their student record was created by the SLC (Callender et al., Reference Callender, Wilkinson and Hopkin2009).

The sample

The majority of the students surveyed fell into the following categories: female (57%), under the age of twenty-five (87%), white (73%), single (94%) and childless (92%) (Table 1). Given the sample design, two-thirds came from families with an annual household residual income of £25,000 or less and were in receipt of a full state maintenance grant, while a third had residual household incomes between £25,000 and £60,005 and received a partial grant. Half had parents without a HE qualification. The majority had undertaken their HE entry qualification at a FE College (65%), were studying at a post-1992 university (59%), attended universities that subscribed to the full HEBSS service (78%) and were not studying a subject deemed by the Higher Education Funding Council (HEFCE), who distributes public money for HE, to be strategically important or vulnerable (SIV), such as science and foreign languages (84%) (Table 2).

TABLE 1.

Key socio-economic characteristics of sample

Base: All students who had heard of bursaries.

Source: Birkbeck Survey of Students, 2008.

TABLE 2.

Institutional characteristics of sample

Base: All students who had heard of bursaries.

Note: ¹ Pre-1992 universities do not include those who are members of the Russell Group or the 1994 Group.

Source: Birkbeck Survey of Students, 2008.

Findings

Awareness of bursaries

Knowledge of the existence of bursaries is fundamental to their effectiveness for promoting student choice, provider competition, and protecting access. As Dynarski and Scott-Clayton (Reference Dynarski and Scott-Clayton2006: 320) comment in relation to the US, ‘potential college students cannot respond to a price subsidy if they do not know it exists’. A quarter (24%) of students surveyed had not heard of bursaries, even though all were just about to enter HE, and most were eligible for them, given their household income. Students’ awareness of bursaries varied by their background. Multivariate analysis, which controlled for a broad range of socio-economic and institutional characteristics (Table 3), confirmed statistically significant associations between the probability that a student had not heard of bursaries and students’ household income, ethnicity, type of institution attended, and the HEBSS status of their HEI. High-income household students, those least likely to qualify for bursaries, are the least aware. Asian and Black students are more likely than White students to consider themselves unaware of bursaries. This matters because Asian and Black respondents come from some of the poorest households, and are more worried about the costs of going to university and about building up debt while at university than any other student group. This suggests that students with financial needs may be putting their HE access at risk.

TABLE 3.

The associations between key socio-economic characteristics and students’ likelihood to have not heard of bursaries from universities

Base: All students.

Notes: Marginal effect reports the discrete change in predicted probability associated with the presence of the stated characteristic, as opposed the base condition.

* indicates differences significant at 5 per cent level.

Source: Birkbeck Survey of Students, 2008.

Students at Russell Group universities judge themselves more aware than those studying at post-1992 and more-research intensive pre-1992 universities (incorporated before and after 1992), which cannot be explained by variations in the socio-economic composition of these HEIs because this was controlled for in our modelling. It suggests that either Russell Group universities are particularly good at providing potential students with information on bursaries and marketing them; or that students who are more likely to seek information on bursaries are more likely to attend Russell Group universities. Further, the type of HEBSS membership is significant. HEIs could subscribe to a full service which notified students and processed bursaries on an HEI's behalf, or a partial service, which only identified an HEI's eligible students. Students attending HEIs subscribing to the full HEBSS service report less bursary awareness than students at HEIs with a partial service, suggesting the former either may be complacent about disseminating bursary information and/or may have a false sense of security about bursary awareness because of their HEBSS membership. In turn, this implies that HEBSS is not doing a particularly good job in terms of informing students about bursaries.

Students’ understanding of bursaries

Another factor impacting the effectiveness of bursaries is students’ knowledge and understanding of bursaries. Students need to know what bursaries are, otherwise they are not useful for choice and competition, or access. We asked all students how well-informed they thought they were about the various sources of student financial support. The vast majority thought they were very or fairly well-informed about loans for tuition fees (88%) and maintenance (82%), and grants (80%) but only 47 per cent thought this about bursaries, mirroring earlier research findings (Davies et al., Reference Davies, Slack, Hughes, Mangan and Vigurs2008). This cannot be attributed to the fact that bursaries were new because loans for tuition fees were introduced at the same time, but rather suggests a serious information and marketing or dissemination gap in relation to institutional financial support in contrast to government-funded student financial support.

Furthermore, students who were aware of bursaries were asked if they understand what is meant by a bursary, the vast majority (84%) believed they did. Our multivariate analysis (Table 4) reveals particularly large correlations between students’ perceived understanding of bursaries and information-seeking behaviour. Students claiming they did not seek bursary information are 22 per cent less likely to think they understand what bursaries are than those saying they looked, while students who believe there is not enough bursary information are less likely to grasp what bursaries are than those thinking there is enough. Students’ information-seeking behaviour and the amount of information available seems associated with student perceptions of bursary knowledge.

TABLE 4.

The associations between key socio-economic characteristics and information search behaviour and whether students understood what is meant by a bursary

Base: Students who had heard of bursaries.

Note: * indicates differences significant at 5 per cent level.

Source: Birkbeck Survey of Students, 2008.

The type of HEI students attend also seems to matter. Again, Russell Group universities stand out. Students at these universities are more likely than those at post-1992 and 1994 universities to comprehend bursaries. Again, Black students are less likely than White students to say they understand what bursaries are.

Assessing the perceived impact of bursaries

We investigate two aspects of students’ perceptions of the impact of bursaries on their choice of HEI: the availability of bursaries and the amount of bursary offered. To gauge the perceived effects of bursaries, all students were asked the extent to which they agreed with the statement ‘Bursaries are not important in deciding where to go to university’ (Table 5, Columns 1 and 2, Model 1). Note the framing of the question – we consider disagreement as a positive statement. Additionally, students were asked ‘To what extent did the amount of bursary you could get influence which universities you applied to?’ Here we include only students who had both heard of bursaries and sought information about them, because only these respondents were asked this question (Table 5, Columns 3 and 4, Model 2).

TABLE 5.

Marginal effect estimates of student perceptions of the impact of bursaries on university choice

Base: All students who answered question whether bursaries were important in deciding where to go to university.

Notes: Marginal effect reports the discrete change in predicted probability associated with the presence of the stated characteristic, as opposed the base condition.

* indicates differences significant at 5 per cent level.

Source: Birkbeck Survey of Students, 2008.

Only a minority of students perceive bursaries as important in their HE decision-making with 28 per cent disagreeing with the statement ‘Bursaries are not important in deciding where to go to university’ and 72 per cent agreeing. Fewer students – 24 per cent – think the amount of a bursary they can get influences which universities they apply to ‘somewhat’ or ‘a lot’, whilst 76 per cent of students believe bursaries have no influence.

The findings from the multivariate analysis give deeper insights into the role of bursary information and students’ information-seeking behaviour, discussed above. Predictably, those who do not think they qualify for a bursary are less likely to believe their HE choices are affected (Table 5). Moreover, students who look for information, but do not find out which university would give the largest bursary and who report that the amount of bursary does not influence to which university they apply, all agree that bursaries are not important in deciding where to go to university (Table 5, Column 1). Of those who have both heard of bursaries and looked for information, the later in the application cycle they seek bursary information, the greater the likelihood of them thinking their HE decision-making is unaffected.

Over and above the finding that only a small proportion of students think bursaries and the amount available affect their choices, another important finding is the strong correlation between the amount of bursary expected and likelihood of thinking bursaries are important. Students who believe the amount influential are 37 per cent more likely to endorse the importance of bursaries than those who do not believe this. Further, students anticipating a bursary of £1,000 or more are 11 per cent more likely to think their HEI choice is affected than students who do not apply for a bursary. There is also a strong relationship between cost consciousness and likeliness to think bursaries important. Students who report that the costs of going to university influenced their decision to enter HE ‘a lot’ are up to 35 per cent more likely to believe bursaries affect their HE choice than students unconcerned about these costs. Finally, even after controlling for variations in the amount of bursary offered by different HEI types, for a given level of bursary, students of Russell Group universities are 5 per cent more likely than those at post-1992 institutions to agree that bursaries shaped their decision about which institution to attend.