Higher Education in Crisis

British higher education is in a protracted financial crisis. For some years now, many universities in the country have struggled with expensive debt, rising operational costs, and fluctuating income from student fees, by far the sector’s largest source of income. In May 2024, the Office for Students, the official body tasked with regulating higher education providers, sounded the alarm bell, noting in a report that the sector’s dire financial outlook is unlikely to improve in the near future.

The main cause of the sector’s financial woes is its unusual funding structure. Over the past two decades, higher education in Britain (though not including Scotland, which has its own system) shifted from a publicly funded model to one based on student fees. The most recent large reform, following the 2010 Browne Review, saw the fees of domestic student raised to upwards of £9.000, while international student fees remain uncapped and can run into the many tens of thousands of pounds.

There is much wrong with this system, but one of its key shortcomings is its inherent vulnerability to exogenous shocks. Because income depends almost entirely on student fees, a dip in student numbers directly translates to a fiscal shortfall. Add to this other overlapping crises, like rising interest rates and energy costs, and the result is a sector-wide fiscal crisis. And because universities have little control over the demographic trends and migration policies that determine student numbers, the sector’s ability to adjust in the face of such a crisis is notably limited. As a result, its managerial class has responded by entering austerity mode, with large redundancy schemes, hiring freezes, workload hikes, and funding cuts crashing through the sector like a tidal wave. With no end in sight, it is by no means inconceivable that this crisis will culminate in university closures.

While its fiscal basis remains weak and vulnerable to external shocks, any piecemeal reforms to the sector will have limited effect. The only long-term solution to the sector’s yawning fiscal deficit is structural reform. This ambition faces steep obstacles, however. For one thing, there is very little political appetite for structural reform or public expenditure, as the Labour government has nailed itself to the mast of fiscal conservatism. For another, the policy debate remains yoked to a remarkable limited conception of what fairness means. Last month I got to experience this first-hand.

What Is Fairness?

Mid-January I was invited to speak at a symposium on the future of university financing in Britain. On the agenda was the question who should pay for higher education. Though the funding crisis loomed large over the event, it was not itself the topic of conversation. Instead, the focus was on the merits and demerits of a handful of alternative funding models.

One alternative model that was floated would see tuition costs split between graduates, their families, and the public purse, with means-tested parental contributions building a progressive element back into the current system. Another proposed model, which appeared to have more truck, pivots on having employers pay a large chunk of tuition fees. Here the idea is that companies and organisations that hire graduates would pay a percentage of their graduate employees’ salary either to the Treasury or directly to the employee’s former university. The theory is that this would ensure industry buy-in, improve the alignment between employer needs and graduate trends, and lower the debt burden on individual graduates.

Though I have concerns over the likely effects of these models, I was particularly struck that the terms in which the debate took place were highly circumscribed. The concept that sat at the heart of the discussion was that of fairness. Our funding model, everyone agreed, should above all be fair. Is it fairer, we wondered, to make employers pay or to insist on a parental contribution? Does fairness require a return to maintenance grants? And how fair is it that international students are being made to bear the cost of domestic fees sitting below market rates?

What struck me was that for much the debate nobody paused to asked what is actually meant by fairness. The tacit assumption informing most of the discussion was that fairness should be measured by individual material benefit; that fairness, in other words, is a simple actuarial concept. Whoever benefits from a given transaction should be asked to pay for it, at least in part. And since statistics show that, on average, university graduates earn higher wages than non-graduates fairness means that graduates should pay for their own education. As the old nostrum goes: the working-class butcher should not be made to subsidise the lawyer’s degree.

This approach has some intuitive appeal, which explains why it was among the chief justifications for the fees hikes in the early 2010s. However, the glaring problem with this reasoning is that it defines fairness solely in terms of individual economic benefit. It only registers the pecuniary effects of education, parsed as income or productivity gains. However, this effaces the non-pecuniary benefits of higher education. Students do not just go to university to receive vocational training but to learn critical thinking, to produce new and reproduce received knowledge, and to broaden their social and cultural horizons, amongst many other things. Universities, for their part, are where many new scientific, medical, and theoretical advances occur and where knowledge is curated, stored, and cared for. On the whole, everyone benefits from the work they do. These benefits are not just overlooked but actively eclipsed when graduate incomes are all the concept of fairness is permitted to mean.

This circumscribed conception of fairness suffers from what in social theory is known as ‘methodological individualism,’ the analytical precept that economic and social analysis should account only for the motives, logics, and outcomes of individual behaviour rather than those of collectives. It was, and remains, a formative element of neoliberal ideology, which has always staunchly refused to think in terms of collective behaviour. And while this model can and does account for the side-effects any given transaction may have, it parses these in individualist terms as ‘neighbourhood effects’ or ‘externalities,’ which is to say the pecuniary benefits gained or costs carried by third parties.

The problem with methodological individualism is that it flattens the social world into a crude and partial representation of reality. Anything that does not fit into this representation is simply ignored or brushed aside. But this is nothing short of an injustice: it pre-emptively and silently brackets any themes, concerns, and experiences that do not fit its modelling as irrelevant.

In the debate concerning university financing the injustice of this perspective soon becomes apparent. One speaker at the symposium shared a number of findings from a survey with prospective university students. Amongst these findings was that many young Muslims feel unable to access the existing loan system because student debt accrues interest, which Islamic finance considers haram. This amounts to faith-based exclusion, a serious issue that ought to throw the current model into a legitimation crisis. Yet this finding was mentioned as an afterthought and provoked no discussion from the room. But if this issue does not register as unfairness, much less as injustice, then our conception of fairness is self-evidently and unquestionably inadequate.

This is the sort of injustice methodological individualism facilitates. Because all it recognises is graduate outcomes, an individualised cost-benefit perspective on the current financing system fails to register faith-based exclusion from that system. In other words, its focus on the abstracted individual prevents it from seeing structural features of the system. On this issue, as on others, it is notably out of step with accepted consensus in social theory.

We Must Do Better

I left the symposium feeling deflated. Though some participants, myself included, tried to make the case for revisiting first principles, the overarching tenor of the discussion stayed firmly within the bounds of methodological individualism. And because the sector is in crisis mode, the focus was firmly on immediate fixes and short-term solutions that will hopefully stave off university closures but are not oriented towards the structural overhaul the sector so desperately needs.

Much of this comes down to an imagined distinction between what is ‘politically possible’ in the present and utopian imaginaries for the future. There is no point sketching out an ideal model, this mindset preaches, because the Treasury or the taxpayer will never go for it. What this mindset overlooks is that the boundaries of political possibility are never given but constructed, the porous outcome of an ever-continuing struggle over meaning. Although some ideas take many decades to percolate into policy-making, the landscape of opinion can and occasionally does shift rapidly. This is especially true in times of crisis, when received ways of doing things are shown to be inadequate or indeed unfair, creating room for alternative visions.

In my view, now is precisely the time to discuss first principles. The ongoing crisis should prompt systematic reform precisely because the model we have is expensive, exclusionary, regressive, and, indeed, unfair. The present crisis has laid all this bare, which makes this exactly the right time to start a public conversation about the sector’s future.

Academics and other university workers have to step up and do better. If they will not speak up for the sector, nobody will. And if no alternative vision is forwarded, the sector will default to the institutional vandalism its managerial class now inflicts by rote: austerity, cuts, and perhaps even closures. Now that would be unfair.