by Martha Hampson
11th December 2007
From the constant news stories, public debates and government announcements over student loans, top-up fees and grants it’s easy, as a postgraduate, to get the impression that the national media just don’t know you exist. Despite the importance of attracting and retaining postgraduates in maintaining academic and research standards in universities, higher degrees are often viewed as an unnecessary luxury. Even the National Union of Students funnels a disproportionate amount of time and energy into undergraduate issues. However, with postgraduate course fees at LSE now up to seventeen times those of undergraduate counterparts, the need for a re-evaluation of postgraduate funding is now critical.
The current funding options available to postgraduates are a tangled mix of bank loans, research funding and grants. With no centralised organisational body to help, it’s up to individual students to research the options as best they can. This is despite a clear model of the sort of organisational structure needed; the undergraduate student loan scheme. Despite public criticism about the removal of state grants, this scheme has been hugely successful. The number of undergraduates receiving a student loan rose to 880,700 in the 2005-6 academic year, according to the latest figures available from the Student Loans Company. With an average loan of £3,000 each, this equates to a huge £2.9 billion a year, a figure that will only rise as the push to get more students into higher education increases.
Against this, the 78,000 postgraduates studying for a one- or two-year master’s degree and 12,950 PhD students are mere drops in the ocean (statistics from the Higher Education Statistics Agency). Given that the vast majority of these students are already in the student loan system, is there really any good argument for not extending it to cover them? I can think of only one – that it would cost too much. But this simply doesn’t stand up, not least because we’re dealing with loans, not grants – theoretically, in the long run they don’t cost the government anything at all. That’s why undergraduate funding was moved to fees and loans in the first place. Postgraduates also find employment faster and at a higher level than undergraduates. This means that they are far more likely to be able to pay off their loans, and to do so much more quickly. If the sheer numbers of students involved really was an issue, then surely this leads to an argument for capping the number of undergraduates, too – something that nobody is suggesting on financial grounds. One of the many hypocrisies of the current system is that first-degree students on four- or five-year courses (often resulting in a master’s equivalent) are eligible for a loan for their whole degree period – even when, as with many science degrees, this includes a year of paid industry work.
A major argument for the extension of the student loan scheme is the inadequacy of the current options available to postgraduates. Research funding bodies give out enormous amounts of money every year – the Economic and Social Research Council (ESRC), for example, gives out around £47 million to postgraduates annually. And yet competition is fierce – the Arts and Humanities Research Council (AHRC), the other main source of postgrad funding in the UK, awards funds to only one in four applicants. (If you’re feeling lucky, the application deadline for the AHRC and ESRC is May 1st.) As well as the numbers of students one is up against when applying, the research councils also have strict criteria. Some of these are evident simply from the councils’ names (the Medical Research Council, for example) but my course at the LSE fell through even the loopholes of the AHRC, which has the broadest remit. While the ESRC only funds PhDs or 1+3 programmes (where a research masters leads into a PhD), the AHRC has both a research and ‘professional preparation’ scheme. My course, being neither research-based nor representative of any clear career path, failed to qualify – my argument of “but I want to learn” just didn’t cut it.
Even if one’s run of the research council gauntlet has been successful, the amounts awarded aren’t much to celebrate. The AHRC’s 2007-08 rates are a fees award of up to £3,240, plus a possible maintenance grant of £10,200 (in London). Even if awarded the full amounts, this would barely cover the LSE fees for most courses. So, it’s likely you would need to top this up with another option.
The only other viable option presented by the various government websites claiming to provide comprehensive funding information are Career Development Loans (CDLs). The LSE student finance office itself recommends looking into CDLs. I did so – and was sadly disappointed. Heralded by the Government as a new way into higher education, CDLs’ premise is that students can take out a loan of up to £8,000 from one of three banks (Royal Bank of Scotland, Barclays, and the Co-op) and the Government will kindly pay the interest for the duration of the course. Sounds great? It’s not. Firstly, it’s very unclear which sorts of courses qualify. The Directgov website refers vaguely to ‘vocational work-related’ courses, which would seem to rule out PhDs altogether, and the nice but fundamentally unhelpful woman I talked to from the Co-op thought it unlikely that my fictitious MA in English Literature would make it through the application process – although I wouldn’t be able to find out for sure without making an application.
The major disadvantage of Career Development Loans, however, is simply that they don’t make financial sense. Martin Lewis, from moneysavingexpert.com, believes that the Annual Percentage Rates (APR) offered by the banks are misleading. The Co-op and Barclays offer 12.9% APR while RBS seem to give a more attractive 10%. But Lewis points out that the RBS figure includes the year when there’s no interest at all, and he estimates the actual APR you’ll end up paying could be closer to 20% (based on repayments over five years). This means that if you borrowed £5000 for four years (with the first interest-free), you’d end up paying £5,990 with Barclay’s and the Co-op, and somewhere in the region of £6,540 with RBS – a pretty substantial difference. Given that NatWest are currently offering a standard graduate loan of 8.4% over five years, so that £5,000 will be repaid for £6,096, it’s difficult to see any real advantages to a CDL.
Individual universities themselves are stepping up to the plate to help students in need. For example, the LSE has just announced twenty new PhD scholarships for 2008, defraying £13,000 living expenses a year for three years. But most of these awards are department-specific, and only become available once you’re already enrolled. They therefore fail to represent a viable funding option.
The major problem with all of the current schemes available is their unpredictability. Students are embarking on further study without knowing if they will be financially able to complete it. The PhD completion rate at LSE, for example, is 70% according to the latest Higher Education Funding Council for England figures, compared to around 96% for undergraduate degrees.
The question remains of how the government can claim to be investing in higher education when it makes it so difficult for students to enter into further academic study or an academic career? Our universities are in danger of suffering not just from a lack of funding, but also from a lack of intelligent students wishing to continue contributing to them – my friend Dan, for example, is considering a PhD in the United States for the sole reason that the funding options are more attractive. For the sake of our universities, a clear and comprehensive approach to postgraduate funding is urgently needed.