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Last Updated: Monday, 24 November, 2003, 22:02 GMT
Effects of higher student fees
Is England moving towards a US-style market in higher education? This week's Queen's Speech will outline the government plan to let universities in England vary undergraduate tuition fees to up to 3,000 a year.

By Mike Baker
BBC education correspondent, in Virginia, USA

"Bang for your buck, this is one of the best around," is the verdict of Bradley Barr, a commerce student at the University of Virginia, on his $6,150-a-year education (3,600).

Virginia University cheerleaders
Higher fees give US universities something to cheer about
The University of Virginia at Charlottesville, founded by Thomas Jefferson in 1819, is an elite institution.

But unlike Yale or Harvard it is a public university. So, by American standards, Virginia is relatively cheap.

However, like most American universities, there are different levels of fees depending on whether students come from within the state or from elsewhere in the USA.

At Virginia, out-of-state undergraduates pay much more: $22,169 a year (13,075).

Rising fast

Digging deep for university tuition is simply a fact of life in the USA.

Student Bradley Barr
Bradley Barr: Happy to pay "bargain" fees
The steadily rising level of fees certainly causes anguish to many students and their parents. But, in general, it is not the principle they object to, just the fast-rising costs.

For Bradley a total of $24,000 (14,155) in tuition fees for the four years of his commerce degree is "one of the best investments" he - or rather his parents - think they could make.

Indeed, for in-state students Virginia is seen as such a good deal - even at $6,000 a year - that many parents buy their children a car as a reward for getting in there, thus saving them much higher fees elsewhere.

This highlights one effect of differential fee levels. Out-of-state students might have to think twice about Virginia even if it offers just the right course for them.


It is a market system which will apply in England if universities use the proposed freedom to set their fees at different levels.

Virginia's David Breneman
Virginia's David Breneman relies on fee income
For university management in the USA, rising tuition fees are also an increasingly significant fact of life. Cash from tuition fees provides about a quarter of the University of Virginia's total income.

While top universities such as Virginia also have big incomes from charitable endowments, their fee income plays a major part in funding the superb academic, sporting and social facilities which make them world-beaters.

"Without fees we would lose our competitiveness," said David Breneman, dean of education at Virginia.

Professor Breneman is an expert on the economics of higher education. He says universities today are operating in a global market, competing for the best staff and the best students.

If they lost their fee income, he argues, their academic staff would be "decimated", with star professors "picked off in a minute" by rival universities.

Public funding cut

These views will strike a chord with many vice-chancellors in England who believe the extra income from fees is the only way they will be able to compete with wealthier universities like Virginia.

As fees have risen in recent years, the states have increasingly felt able to reduce their public funding for universities
But the American system also offers a warning.

As fees have risen in recent years, the states have increasingly felt able to reduce their public funding for universities.

The income the University of Virginia receives from the state of Virginia has fallen considerably in real terms (in the USA it is the state, rather than the federal government, which is responsible for core funding of higher education).

State funds now amount to only 10% of the university's income.

As David Breneman sees it, this is the political risk of reliance on fees.

Student Sam Pulsford
Bath student Sam Pulsford worries about the impact of higher fees
"When the states get into short-term financial difficulty they tend to hit higher education harder than other public services because we have alternative sources of income to turn to," he said.

The risk is that raising fees in England might not mean more money overall for universities but simply a displacement of public funding.

While fees bring benefits and some risks for university managers, the same is true for students.

For them the balance is between the advantages of better university facilities and smaller classes on the one hand, and the restrictions that high fee levels impose on university choice on the other.

One group of English students has been getting a preview of this dilemma during an exchange visit to Virginia from the University of Bath in England.

All of them have been impressed by the facilities in Charlottesville but, of the five I spoke to, only one thought they would be worth the price of higher fees.

VIRGINIA/BATH (all costs as )
Undergraduates: 12,700 / 8,600
Fees for domestic students: 3,600-13,075 / 1,125
Income: 528m / 101m
Income from fees: 123.3m (23.4%) / 14.7m (14.6%)
Library spending per lecturer: 10,215 / 2,400
Books in Library: 4.9 million / 0.54 million
More typical was Jo Douglas. She admits her anti-fees views have "changed slightly" since coming here but her opposition to the government's plans remains.

"Three thousand pounds a year is very high and it would soon go up to the levels that Americans are now used to ... and that would put a lot of people off," she said.

Sam Pulsford, another Bath student, agreed. She believes the maximum 3,000 would "become the norm and would soon go higher".

She added: "I do not think you should differentiate between universities by price."

English vice-chancellors, though, may take a different view, especially when they see the differences in income between the University of Virginia and the University of Bath.

Although Virginia is slightly the larger of the two, both are prestigious public-sector universities with good reputations for teaching and research.

Bath's Glynis Breakwell
Bath's Glynis Breakwell is eager to get more in fees
But when it comes to the financial bottom-line, the similarities end.

Bath University's vice chancellor, Professor Glynis Breakwell, is well aware of what she called the "major funding gap" between leading British and American universities.

She said it was now essential for a research-based university like Bath to close that gap.

Her university council has already agreed to charge higher fees if, or when, the government's legislation goes through.

She said fees were "a major new resource for universities which are needed in order to compete effectively in a global market".

The political battle over university fees will start in earnest after the Queen's Speech.

While the American system may not offer a perfect parallel, it certainly offers fascinating insights into what a market in variable tuition fees might mean for both students and universities.

The BBC's Mike Baker
"Top American universities have benefited from the fees market"

Top universities' warning on fees
24 Nov 03  |  Education

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