RECENTLY THERE HAS been a great deal of speculation in the press about whether 16 and 17 year olds in Scotland will be given the vote in the forthcoming independence referendum. There is, however, another group of 16 and 17 year olds for whom the referendum holds a massive opportunity, and it isn’t those living in Scotland, but those who will be under 18 in 2014 and live in the rest of the UK. Why? Because an independent Scotland offers potential undergraduate students living in England, Wales and Northern Ireland the opportunity to study at university for free in Scotland.

Whilst there are many areas of policy that have still to be set out in detail for post independent Scotland, the SNP has made it clear that Scotland will retain membership of the EU and that “free” (or taxpayer funded) tuition fees will remain in place. There are a number of consequences that the combination of these policies will bring to the funding of higher education in Scotland and the availability of places to Scottish students that have yet to be debated in much detail, and which I attempt here to highlight. I do not believe the problems outlined below are an argument against independence per se, simply a consequence which, as yet, has been unaddressed.

EU rules mean that students coming to study in Scotland from other member states have to be treated in the same way as Scottish students. At present this means that students from the EU are not charged tuition fees, but because students from England, Wales and Northern Ireland come from within the UK, it is possible to charge those students fees and from this year students from these areas of the UK have had to pay up to £9,000 a year to study for a degree in Scotland.

Following concerns from some that candidates from the rest of the UK who have to pay up to £36,000 for a four year degree in Scotland could be more attractive to higher education institutions and crowd out Scottish students, Education Secretary Michael Russell made it clear that there was no such competition as the Scottish Funding Council allocates each university in Scotland a number of funded places for students from Scotland and the EU, the places taken up by students from the rest of the UK and outside the EU are not part of this quota and therefore not, currently, a threat to Scottish student numbers.

According to figures published by the Scottish Funding Council in March 2012, in 2010/11 there were 149,715 first degree students studying in Scotland. Of this 109,390 came from Scotland, 19,876 were from the rest of the UK and 10,700 came from the rest of the EU. As a result, students from the rest of the UK accounted for roughly 13 per cent of all students. This means that by 2016, the rough time line by which, if Scotland votes for independence in 2014, Scotland could be independent, Scottish universities will be receiving roughly somewhere between £119m and £179m per year in fees from students from the rest of the UK undertaking first degrees in Scotland. (Assuming 19,876 students paying between a minimum of £6,000pa and a maximum of £9,000pa at Scottish HEIs this would generate between £119m and £179m per year in fees.)

However, upon independence, these individuals would no longer have to pay fees and Scottish universities would suddenly loose this substantial amount of revenue. To put this funding in context, the Scottish Funding Council granted Scottish universities just over £1bn in 2012/13, including grants to cover additional places funded by the Scottish government, so the revenue from rest of UK students would be roughly equivalent to 10 to 20 per cent of Scottish universities’ government grant.

As referred to earlier, the Education Secretary has explained that students from the rest of the UK are not in competition for places at Scottish universities with Scottish students, because the Scottish government provides funding for places for individuals only from Scotland and the EU. With independence, students from the rest of the UK would fall into this category and would be competing for Scottish government funded places. On present levels, assuming the Scottish government doesn’t choose to fund additional places (and this doesn’t seem unrealistic given the current economic situation), this would lead to a measurable increase in competition for places. It is, however, unlikely the increased competition would be based on the current level of students from the rest of the UK – given the option of studying elsewhere in the UK for up to £9,000 a year, or studying in Scotland for free, there is bound to be a huge increase in applications from the rest of the UK to study in Scotland. And unlike other EU members, students would not face language barriers or cultural differences.

Politicians from all parties have started commenting that we should not talk about “free” services but refer to the fact that they are taxpayer funded. However, for students from the rest of the UK, following independence, studying for a degree in Scotland would arguably be free as they, or their parents, would not have paid tax in Scotland and therefore not contributed towards the cost of the tuition.

So what can we do?
Given the problems described above, an independent Scotland would face the following choice;
a) Don’t join the EU and enable universities to charge non-Scottish students tuition fees;
b) Increase the number of government funded places to cover students from the rest of the UK and help make up the funding short fall that institutions will place;
c) Change the system of funding higher education in Scotland.

Option a, while maybe attractive to some, is unlikely as all mainstream political parties appear to believe an independent Scotland should remain in the EU.

Option b would be difficult in the current economic climate and would be hard politically to justify increasing spending to cover the cost of educating individuals who live in another country.

This leaves option c, something which I believe needs to be done regardless of whether Scotland becomes independent or not.

Rather than introduce up-front tuition fees, one such option is that set out by Reform Scotland in its report, Power to Learn, which looks to the Australian system of deferred tuition fees for inspiration.

Reform Scotland argues that even the current system is unfair as there will be those who are academically able but financially unable to go to university, regardless of “free tuition” but pay taxes that pay for those who do go to university. While it is true to say that society as a whole benefits from having a well-educated workforce, the individual graduates themselves also benefit from the higher earnings they accrue. At present, only wider society pays for graduates through the tax system, while the graduate does not contribute. (Although graduates may earn more and subsequently pay more tax, many successful top rate tax payers may not have gone to university, so higher tax contribution should not be seen as payment towards higher education.) Therefore, there needs to be a better balance with the individual graduate as well as taxpayers contributing towards higher education.

To provide this balance, Reform Scotland suggested that a form of deferred fee should be introduced. The deferred fee would cover a proportion of the cost of the tuition incurred by the graduate. The Scottish Government would fund a certain per cent of the average cost of a degree, broken down by
subject area meaning that they would contribute more towards the cost of a more expensive degree, such as medicine, while the graduate would have to pay the difference. There is a lack of published evidence and research on the true cost of higher education so the Scottish Government would have to commission independent research to work out the true average costs of degrees in Scotland. Then, in discussion with representatives of Scottish higher education institutions, decide what proportion the government will pay.

If a particular Scottish university charged more or less than the average, this would have an impact on the cost of the deferred fee. The deferred fee would only be re-paid once the graduate is earning more than the Scottish average salary. Such a system should not deter anyone from entering higher education because the amount would not need to be repaid until the individual earned more than the Scottish average and would not need to be repaid if the earnings threshold is never crossed.

I don’t believe the problems I have highlighted are necessarily an argument against independence, but it is up to those in favour of independence to explain how these issues could be addressed if Scotland is no longer part of the Union and that is an answer that everyone who will be 16 and 17 in 2014, regardless of whether they live north or south of the border, should pay particular close attention too.

Alison Payne is Research Director at Reform Scotland and is writing in a personal capacity.