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Tuition fee refunds would benefit government, not students, says IFS

Out-Law News | 24 Nov 2020 | 2:15 pm | 3 min. read

The Institute for Fiscal Studies (IFS) has released a report which suggests there is “no compelling case” for reimbursing student tuition fees in England in the wake of the Covid-19 crisis.

The report suggested the main beneficiary of any tuition fee refunds would be government and not the affected students themselves.

The IFS was responding to four online petitions calling for tuition fee refunds and a debate in parliament on the topic. Its data shows that the potential cost of refunding all student fees for 2019/20 to all full-time English-domiciled undergraduates would be approximately £10 billion of a total annual income across the university sector of £41 billion.

Higher education expert Julian Sladdin of Pinsent Masons, the law firm behind Out-Law, said the IFS report showed that there was no rationale for providing tuition fee refunds to students and any reimbursement not met or underwritten by the government would potentially create an insolvency risk for some providers, particularly those with a higher reliance on domestic undergraduate fees, whilst benefitting the Exchequer.

The IFS said the reimbursement of tuition fees would only directly benefit students from high-earning families who paid fees directly without funding from the Student Loans Company (SLC). This accounted for around 10% of students.

The remaining 90% of students, who are funded through SLC loans, would not receive any actual repayment but receive a balance reduction in their loan. The refund would only benefit the government, which underwrites the loans by discounting its potential future liability for any amounts which may not become eligible for payment if a student does not earn enough to meet the required repayment thresholds or does not repay in full within 30 year maximum term set by the SLC.

“In fact, where a repayment is made to the SLC, it is only likely that the highest-earning graduates will benefit from a their loan balance being reduced as student loans are written off 30 years after a student has started to pay and payments only become due after the student's earnings have exceeded a threshold. Low-earning graduates may never meet the threshold and will see their loans written off after 30 years, without making any payment,” Sladdin said.

The IFS calculated that the government would see the benefit of providers reimbursing tuition fees from around two-thirds of all refunded cases.

The IFS have suggested that the only way to create a tangible benefit for all students in higher education, would be for the government to pay all students a fixed compensatory amount directly.

“However, as the IFS has noted, this would be unfair to other young people in the UK of university age but who are not presently in higher education. They have probably suffered worse than undergraduates in terms of hardship, loss of prospects and wellbeing. It also seems that there is no rationale for higher education providers to make blanket payments of this type to their students, particularly given the cost to the sector of meeting the likely sums involved,” Sladdin said.

“Although UK students have had and are likely to have significant further disruption to their studies due to restrictions imposed as a result of the Covid-19 pandemic it would be unreasonable and unfair to suggest that this is the fault of the providers or that they should be liable for compensating their students where there is no evidence that the move to predominantly online learning creates an unsatisfactory teaching and assessment opportunities or that providers have failed to take reasonable steps to deliver the best experience it can in all the circumstances,” Sladdin said.

Sladdin said that, while guidance from the Office for Students and the Office of the Independent Adjudicator for Higher Education suggested they would not be slow to challenge universities where they place heavy reliance on public health regulations and guidance to the expense of taking reasonable endeavours to minimise disruption and mitigate any loss of educational opportunities and outcomes, it was unlikely that in most cases a claim would be justified.

“There is a clear acceptance that if an institution does act reasonably to minimise the impact of disruption caused by matters beyond its control then students dissatisfied with a move to predominantly online delivery of their course would not have grounds to claim for a refund or reduction in tuition fees, or compensation there would need to be tangible evidence that the content or delivery of online courses was unsatisfactory for students to be able to claim successfully,” Sladdin said.