The issue of how to fairly compensate students has recently moved from heated discussions within the sector to the front pages of national newspapers. There seems a broad consensus now amongst the general public that the massive disruption to students’ learning due to the pandemic should result in some form of compensation of tuition fees. In short, it just doesn’t seem right that students should have to pay the same amount as they would in a ‘normal year’ with full access to university facilities and face-to-face tuition.

So whose responsibility is it to provide compensation, and what type of compensation is fair to students?

With regards to a refund on tuition fees, the Department for Education were keen to underline the autonomy of the universities in this matter stating: “HE providers are autonomous and responsible for setting their own fees under this level” in response to various petitions for the government to partially or fully refund student fees that have garnered over 600,000 signatures.

Equally, universities have often been clear to demonstrate that there has not been a ‘loss of learning,’ in the big move to online delivery and that there is an expectation that learning outcomes set for courses at the beginning of the year will be achieved in the majority of cases.  If universities do not feel there has been a ‘learning loss’ then it begs the question as to whether any tuition fee compensation is justified.

Clearly then there is some tension with regards to who the responsibility for compensation sits with. The other issue is a logistical one. What is the best way to do it? Let’s look at some the main options currently on the table….

Scrapping interest on student loans

This week, a group of 14 university vice-chancellors called for the interest rates on student loans to be scrapped for 15 months to ease the mounting financial pressure of graduates of ‘the Covid class’. However, the government has argued that, in real terms, this proposal would only provide financial support for the highest earning graduates. The Universities Minister Michelle Donelan suggests that as “at least half of students don’t actually pay back their student loan”, the priority should be on supporting vulnerable students now. This proposal, alongside any proposal that resulted in a reduction in the amount of student loan repayment, also would not compensate students who have paid for their tuition fees upfront. All international students would of course fall into this category.

The egalitarian payout

In order to account for students who pay tuition fees upfront, another option would be to grant all students an equal reduction in tuition fees based on the scheme of payment they are involved in. Students paying upfront would receive a cash refund now under consumer protection law, underwritten by the government. Those involved in the student loan scheme would receive a refund of fees of the same value, which would be administered via a reduction to their monthly loan repayments. For students with student loans, this proposal in effect would be very similar to scrapping interest rates (whether it is better or worse for them would depend on whether the agreed amount of reduction in tuition fees is more or less than the amount saved by removing loan interest rates for the last 15 months). They would however have the added benefit of knowing that all students, regardless of how they pay tuition fees, will be getting the same compensation.

Whilst this proposal at first glance might be considered a fairer option, it is not without its drawbacks. It may be asked how fair is it really? Students who pay fees upfront would receive a cash payment now (or soon at least), whilst those with student loans will receive ‘drip-feed’ compensation over time, via very slightly reduced monthly repayments (for most we are talking pounds and pennies!). Equally, as with the proposal to scrap loan interest rates, students who will go on to have salaries lower than the threshold for loan repayments will, in effect, never receive compensation for their disrupted learning during Covid.

Immediate payout for all

The third option, and no doubt the most popular amongst students, would be to provide immediate cash compensation to all – student loaners and pay upfronters. This proposal would address the urgent financial need that many students have right now, and will continue to have throughout the pandemic. In some cases, it may also be the difference between a student dropping out and continuing with their course. The problem here of course is who is going to make this payment?

The government has recently provided an additional £50 million to the student hardship fund (on top of the £20 million provided in December) to support students facing loss of employment, additional costs for alternative accommodation, or to support access to remote teaching. Whilst this was welcomed by the sector the jump from this to providing a cash refund to all students would be a large one.

Equally, whilst many universities have their own hardship funds that are currently being used to support students, they would not have the financial capacity to provide mass refunds for student tuition fees. And critically, if any cash repayment was to be made to compensate tuition fees, again there would need to be an acknowledgement that there has been a genuine ‘loss of learning’ for students of the ‘covid class’. Currently we seem quite far away from this stance.

Given the complex nature of this debate, and the financial and political impact of pushing forward with any of the above options, it may be quite some time before students actually see cash in their pockets….and we haven’t even discussed rent compensation!

Written by Dan Salamons, Senior Research Manager in IFF’s Higher Education team.