The Higher Education Fees Dilemma

To further its objective of labour market integration, the European Union attempts to ensure that EU citizens can cross national boundaries with minimum obstruction. This principle applies in particular ways to higher education students. EU laws ensure equality of treatment in respect of fees charged between national and international students.

Specifically:
“Whether or not tuition fees are charged varies from Member State to Member State. Equally, loans or grants to help meet the cost of tuition fees may also be available in some Member States. In either case, where either fees or tuition fee loans/grants exist, students from an EU country have the same rights and/or obligations as local students — both, to pay the fees charged, and to receive a tuition fee loan/grant from the Member State where the student will study.”[1]

To hold otherwise would be to discriminate on the basis of nationality which contravenes the Treaty of Rome.  This would therefore mean that if, after Scottish independence:

  • Scotland and rUK continue to be members of the EU,
  • rUK continues with a policy of charging tuition fees of around £9000,
  • Scotland continues with its policy of charging no tuition fees for higher education,

Scotland would be obliged to offer free university tuition to qualified English students if places are available. The effects of this might be to:

  • Restrict the number of university places available to Scottish-domiciled students
  • Make more difficult the funding of Scottish universities, which would lose the income they currently receive from charging rUK students fees broadly equivalent to the £9000 fees charged in England (intra-state discrimination in fees does not contravene EU legislation)

The increase in demand from England is difficult to predict. The demand from English students to study abroad has already increased markedly since England introduced the highest tuition fees in Europe.[2] The distribution of the additional demand suggests that English school leavers who are avoiding fees prefer to be taught in English. Thus, though the system of higher education is different, Ireland and the Netherlands have proved popular. There was a 28 per cent increase in applications to Ireland from England for the current academic year.[3] However, the prospect of no tuition fees in Scotland is of a different order. Not only is all teaching in English, there is well-understood comparability between HE qualifications on both sides of the border. rUK employers are more accustomed to evaluating the quality of degrees awarded by Scottish institutions than those from European universities or those from the rest of the world. HE qualifications in Scotland and rUK are almost perfect substitutes.

At existing fee levels, which mean there is little financial advantage to be gained from studying in Scotland, there is still a net flow of students from rUK to Scotland.[4] If these fees were removed, then the flows from rUK to Scottish institutions are likely to increase significantly. There is no easy way to square this circle. Attempts to use some other form of “charge” other than fees are likely to be the subject to legal challenge. The Scottish Government could switch its student support funding towards maintenance grants, which can legally be differentiated between home and foreign students. By increasing funding on maintenance by the same amount as the increase in fees, such a system could be designed to be cost-neutral. If it was available to all Scottish-domiciled students, it could not be restricted to those studying in Scotland, but would also have to be offered to Scottish-domiciled students wishing to study in rUK. But this process would mean giving up on the shibboleth of “no tuition fees”.   

Table 1: HE Student Flows (FT/PT, Undergraduate and Postgraduate) Between UK Nations 2011-12

Institution

All modes

England

Wales

Scotland

Northern Ireland

Domicile

England

646925

14385

7585

480

Wales

10385

33315

220

20

Scotland

6010

215

59575

70

Northern Ireland

5090

235

1360

18155

Guernsey, Jersey and the Isle of Man

1495

85

75

5

Total

670985

48305

68875

18740

Source: Higher Education Statistics Authority

About David Bell

David Bell is Professor of Economics at the University of Stirling and an ESRC Research Fellow on the Scotland and the UK project. He specialises in labour economics and the economics of the Scottish economy.
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