At-a-glance: Scottish University funding proposals

Author, Andrew Black
Role, Political reporter, 91�ȱ� Scotland
16 December 2010

The Scottish government has set out plans for the future of university funding, amid budget cuts as a result of the public spending squeeze.

Education Secretary Mike Russell has outlined six options in a Green Paper, with the aim of making a final decision next year.

The only proposal off the table at this stage is the re-introduction of up-front tuition fees.

Here is a look at what has been put forward.

State retains primary responsibility for funding

Funding for Scotland's university sector is taking a £67m hit in the year ahead, as part of a cut of about £1bn in the 2011-12 Scottish budget.

This option would see the Scottish government continue as the main funder of the sector, but closing the gap would mean having to take the cash from other budgets, and protecting the higher education budget, which is already done in the NHS.

That would also mean the government continuing as the primary funder of EU students and students from England, Wales and Northern Ireland - although the home nations would pay fees directly to Scottish universities.

The Scottish government believes strongly in the state as the main higher education funder - but going with this option would mean tough cuts elsewhere.

State retains primary responsibility for funding, but with a form of graduate contribution

This option would see the government try to close the funding gap by raising extra cash through graduate contributions.

The SNP isn't happy about going down this route, but economic circumstances may leave them with no choice.

The thinking behind the move is that a degree benefits both the holder, in terms of their level of education and potential future earnings, and the economy and wider society.

Under a graduate tax high-earning graduates would contribute more, helping pay for others.

However, the Scottish government does not currently have the powers to bring in a graduate "tax" and, ministers say it might be 2041 before the measure produced a solid income to fund higher education.

The alternative would see graduates pay a variable amount, depending on their eventual earnings, with a maximum limit to avoid the highest earners making disproportionate contributions.

The concern here is that, if funds are channelled into increasing levels of student support, as the National Union of Students has called for, then universities are not funded on a comparative basis.

Other forms of contribution could include a one-off payment, either made in full on graduation, or added to student loan debt.

However, this option is not unlike the old graduate endowment - which supported poorer students - scrapped in Scotland in 2008.

The fee could be standard, or vary by course or university.

Increasing income from students coming to Scotland from other parts of the UK

Fees in England are rising as high as £9,000 and the concern is that Scottish universities are seen as a cheap option for so-called "fee refugees", potentially meaning less opportunity for Scots students to study at home.

The same concerns have been expressed about EU students, who see that fees in England are going up and regard Scotland as a cheaper alternative.

One option would be to set fees for non-Scottish students on a par with England, meaning an annual charge of £4,500 for a four-year degree in Scotland.

Or, given that two thirds of incoming UK students go to "ancient universities" whose English competitors are likely to set their fees at the highest level, the paper asks if the fee be set at about £6,500.

Other options, such as allowing universities to set their own fees, have been floated or distribution of extra income more widely across the higher education sector.

Increase donations and "philanthropic giving"

While Scottish universities already benefit from donors, a more widespread culture of philanthropic giving should be considered, says the Green Paper.

One way forward would be a matched-funding scheme, already in operation in England, where donations are matched on a ratio basis, linked to the track records of individual universities.

Those with a strong record receive funding on a 1:1 basis, while institutions with less experience could receive up to £3 for every £1 donated.

An alternative could take the form of a specific funding drive, and a more collaborative approach by universities in this area.

Increase investment from Scottish businesses in higher education

Business benefits from higher education - firms get their pick of highly-skilled graduates, while taking advantage of academic knowledge.

Businesses argue they already contribute to higher education by paying tax.

Other options to increase income here include in research and development and more support from business for students while they are at university, through, for example, scholarships.

And universities could charge employers to provide a graduate recruitment service.