Measuring value

Until now, the performance of the higher education system has been judged mainly in terms of the inputs: recruitment numbers, prior academic achievements and social backgrounds, and the processes through which students have then journeyed, such as student experience and satisfaction. System outputs, including completion rates and post-graduation employment and earnings, have been downplayed as strategic concerns for universities by policymakers, even though the viability of the loan-based funding system depends on them.

But just as “student experience” has come to refer to a diverse range of higher education services, so “student outcomes” can be interpreted in many different ways. These range from concrete measures such as completion rates, initial employment rates and graduate earnings, to less tangible (but arguably more important) considerations such as value-add, employability, competences and the relevance of graduates’ university experiences to their subsequent careers.

The government wants universities to carry some of the fiscal risks associated with their graduates’ future earnings. This is because such a move might help to improve the repayment performance of student loans, both to contain the rate of default and to sweeten the saleability of the loan book. The direction of travel was first indicated by David Willetts, the former universities minister, who foresaw “the higher education policy debate moving towards the actual Exchequer risk from lending to students at specific institutions.”

This is bolstered by the new Conservative administration’s more general emphasis on outcomes, evidenced by the establishment of ten new policy outcome delivery units, including one named “Earning and Learning”. Indeed, this reflects a move among policymakers both in the UK and internationally to seek more scrutiny of the value added by a university education and the lack of public accountability in the current awards system, for example through calls for a Teaching Excellence Framework and pressure for the UK to join the OECD’s Assessment of Higher Education Learning Outcomes programme.

These pressures are likely to be further compounded by the demands of new consumer legislation and the interest taken by the Competition and Markets Authority in universities’ services to fee-paying students. This may open the prospects of litigation from graduates who feel short-changed over the promised benefits used to attract them to particular institutions.

On the employer side, dissatisfaction with the knowledge and competences displayed by many graduates is already leading some to look at alternative routes for recruiting future talent, such as advanced apprenticeships and school-leaver programmes. Graduates too may be disappointed with the quality and rewards of the kinds of job that many find they have to accept, leading to questioning of the returns to a £40,000 three-year investment in university education, especially as these alternatives become more widely available.

Given the difficulty of unambiguously defining, still less measuring, the intangible benefits of higher education, there is a real prospect that graduate earnings will come to be used as a catch-all proxy for student outcomes. The previous administration signalled its intentions with legislation to allow the collection and publication of graduate earnings from individual institutions through the Small Business, Enterprise and Employment Act. This would imply that relative earnings are the most appropriate measure of the personal and societal value of higher education, which would risk suggesting that institutions which produce graduates who enter lower-paid but socially important careers in social and community work, teaching or healthcare have worse outcomes.

Making universities more accountable for the outcomes and benefits gained by the students they recruit, charge and educate is a positive step. However it must be nuanced and balanced across the spectrum of those outcomes. Universities should combat the bureaucratic hankering for simple metrics, benchmarks and league tables by working to take ownership and control of this challenge, before others do the job for them. Not only must universities show leadership in setting out the criteria against which successful student outcomes should be judged, they must then also demonstrate that they are delivering.