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The number of private and alternative higher education providers is forecast to triple over the next 10 years according to an impact assessment report on the Higher Education and Research Bill by the Department for Business, Innovation and Skills.
Measures to reduce the barriers to entry in the Bill are expected to raise the number of alternative higher education providers from the current 110 to 311 by 2027/28 it says.
The new system will create three categories of provider types – “registered basic” that are officially recognised, but students will not be able to access student loans; “approved” that can set their fees at any level with students able to access fee loans of up to £6,000 a year; and “approved (fee cap)” with a higher cap of £9,000 that can be adjusted with inflation if the institution does well in the Teaching Excellence Framework. Approved (fee cap) institutions will also be eligible for teaching and research funding in the same way as the present Hefce-funded universities.
BIS predicts that the approved model will be attractive to the majority of alternative providers but that many will move to take advantage of the higher tuition fee loans and access to teaching grants.
Over the last decade the number of alternative providers designated for student support has gone up from 64 in 2006/07 to 110 this year, but only nine have degree awarding powers. BIS forecasts that the number of HEIs in the ”approved” category will rise steadily to 88 (of which 30 will have degree awarding powers) in 2018/19, to 149 (40 with degree awarding powers) in 2023/24 and 197 (54 with DAPs) by 2027/28.
The number of alternative providers in the “approved (fee cap)” category, treated similarly to the present HEFCE-funded universities, is predicted to double, from 57 in 2018/19 to 114 in 2027/28. The number with degree awarding powers is likely to rise from 21 to 64 over the same period.
BIS predicts that the number of HE institutions will remain stable at 129, but the number of further education colleges (FECs) providing HE will increase from 204 to 219.
“Evidence suggests that demand for higher education will continue to increase over the next 10 years,” it says. “Even without these reforms, we anticipate that there will be around 1.2 million full-time UK domiciled students at HEIs and FECs by 2025/26 compared to 900,000 in 2014/15.”
The increase in global demand is likely to be even greater, says BIS. “The OECD has projected that, with demographic changes, international student mobility is likely to reach eight million students per year by 2025. The UK is in a strong position to take advantage of this growth.
“If the UK is to maintain its market share of 10 per cent of the international student market over this period, we need a greater supply of student places from existing and new providers. New universities will serve the national economy by enabling us to continue to capture our share of international students who increasingly demand access to top quality education,’ it says.
A new single entry gateway will reduce costs for new providers and increase their ability to gain access to student support, improving competition in the sector and motivating all institutions to drive up their standards says BIS in its report Impact Assessment The Higher Education and Research Bill May 2016.
Universities will incur increased costs associated with applying to the Teaching Excellence Framework, and the TEF incentives are expected to stimulate greater investment in teaching facilities, training and rewards.
“With the costs, bureaucracy and timescales associated with entering and then growing within the HE system all reduced, we can expect to see greater entry of new providers to the Approved and Approved (Fee Cap) categories. This will include both brand new entrants to HE; those who have previously been put off from seeking regulatory approval and designation, and who have hence been outside the system; those seeking student support for postgraduate courses; and those fulfilling the requirements of their Tier 4 trusted sponsor status,” says the report.
It concludes that overall, the reforms, will provide a net benefit to small institutions and allow them to compete more easily for students, prosper and grow.
Impact on equality
In a further report on the equality impact of the Bill, BIS says the reforms will improve choice for students, provide them with more relevant information, and help ensure excellent teaching that will help them succeed in the labour market. It envisages that reducing the cost and administrative burden for new entrants could lead to better provision of higher education in economically disadvantaged areas.
“Overall, the policies should have a positive impact for students through an increase in the diversity across study modes, as well as a likely increase in reputation for those currently classed as alternative providers, which will ultimately add value to the qualifications attending students receive,” says the Equality Analysis.
Evidence suggests that students at alternative providers are more likely to receive full maintenance grants than those at public universities – 71 per cent of students at alternative providers compared with 41 per cent at HEFCE funded institutions. They are also more likely to be from black and ethnic minority backgrounds.
Furthermore, students at alternative providers are more likely to be from black and minority ethnic backgrounds.
“An increase in reputation for those currently classed as alternative providers will ultimately add value to the qualifications attending students receive,” it says.
The new student protection measures in the event of course closure is likely to particularly benefit less financially secure lower income students, the report adds. Reliable information on teaching quality through the Teaching Excellent Framework and better access may particularly benefit students from lower socio-economic and ethnic groups that can lack the family and social network to help them make choices.
For the first time responsibility for access agreements and the Student Opportunity Fund will be brought under a single regulatory body, the Office for Students, which will have access to wide ranging data, research programmes and analytical capabilities to maximise effectiveness and monitor closely the progress being made by institutions towards their widening participation commitments, says BIS.
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