University admissions 2012-13: more displacement than dip

The 2012-13 university admissions cycle in England has not yet finished and the speculation has already begun as to where the final numbers will settle and what the impact will be. While the full picture won’t emerge until much later in the autumn, we do know that the overall number of new entrants will be lower this year than in previous years by around 54,000 students.

This blog looks at some of the reasons for this, examines why 2012-13 may well be an anomalous year as far as admissions are concerned, and suggests why instead of talking about a fall in demand we should be talking instead about demand being displaced.

Headline figures about the reduction in the number of students entering university for undergraduate study this autumn have ranged from 30,000 to over 60,000. While there are still factors in play which will affect where this number finally lands, we can start to look at the likely causes of the reduction.

1. Deferred entries

The biggest factor by some distance is student behaviour regarding deferring entry to university. There are two aspects to this. First, many fewer students in 2011 decided to defer entry to 2012 than had been the trend in previous years, in all probability to avoid the higher graduate contribution. This can be seen clearly in the chart below, which breaks down the likely composition of university entrants by ‘deferred’ and ‘immediate’ (i.e. applying and entering in 2012) entrants. There was an increase in acceptances in 2011 of 24,000 students, largely as a result of this fall in deferrals. Second, there is evidence that the number of students deferring entry from 2012-13 to 2013-14 has reverted to previous levels. This is also the year when the qualifications-based regulation threshold will be relaxed from AAB and equivalents to ABB and equivalents, thereby potentially allowing more students to gain access to their first-choice institution. The combined effect of these two aspects of deferral has been to ‘hollow out’ the cohort of students entering higher education in 2012-13: deferred applicants entering in 2011-12 numbered around 23,600, this fell to around 9,500 for 2012-13, and based on current numbers will increase again to around 18,160 for 2013-14.

2. AAB+ population

There was a decrease in that component of the deregulated AAB+ student population holding A-levels, which was offset by an increase in the population holding other qualifications. This change in the composition would have affected the match between supply and demand of student places in the sector. So, with fewer students in the potential applicant pool, and the very real threat of heavy fines for over-recruitment, universities that might otherwise have filled their places had no scope to do so this year, giving rise to some unmet demand.

3. Supply and demand

As part of the government’s overall policy on student number controls, 10,000 places were transferred from the university sector to further education colleges this year. The pattern of applications and admissions to further education colleges differs from that for universities, very often with students deciding much later in the cycle whether to attend, so it will not be clear for some time what proportion of these places have been filled.

4. Mature students

There has undoubtedly been a reduction in the number of mature students entering university this year. This has been a consistent pattern throughout the 2012-13 admissions cycle and will be seen in the final numbers later this autumn. The number of mature applicants has grown strongly from 2006 to 2010, due in part to the recession and to an increase in students from low participation neighbourhoods attending university. But since then, a decline has started which is continuing this year. This will have policy implications which will need to be returned to later on given the importance of this market to skills growth and social mobility, among other things.

Of these factors, the first and second were unanticipated (and sizeable). They could be temporary effects relating to: a) the introduction of changes in the fees regime; b) the impact of policy developments outside the higher education sector (in this case the grading of A-level qualifications). The emerging evidence on deferrals is already indicating a return to trend for 2013-14, and the government and universities will be far better positioned next year to anticipate the effects of any changes in A-level grade trends.

For these reasons, and also given that applications and acceptances from the core group of young full-time undergraduate entrants has declined by only a very few percentage points at most, it looks likely that overall demand for university places will remain strong from next year onwards. We could therefore expect the number of entrants in 2013-14 to revert to levels close to those seen in previous years (all other things being equal). Indeed, in answer to the question “Where have all the students gone for 2012-13”, the answer could be that in large measure they are either already in the system (having decided not to defer last year), or will be in the system next year (having decided to defer from this year) – although this is not the only factor accounting for the reduction in entrants this year.

The remaining two of the four factors listed above (supply and demand, and mature students respectively) could be early indications of what are more like structural breaks in university entrance behaviour. In particular, a continuing mismatch between demand from applicants and the effects of applying policies to control overall student numbers could indicate deeper problems in the system which would need to addressed by further changes to policy on student number controls. However, at this stage it is too early to draw any firm conclusions.

Recent government interventions in relation to student numbers have focussed on micro-managing the system to achieve certain policy outcomes. In spite of this, by far the biggest risk to the sector in public funding terms remains the government potentially overspending on student support, and while the headline figures on acceptances for this year might suggest some room for manoeuvre here, they should be treated with great caution. The student support funding commitment is determined not only by absolute numbers of acceptances, but also by other factors such as the average fee level, the rate of upfront payment, student retention, institutional financial aid, loan uptake by part-time students, and the growth in private providers accessing student support.

In short, we won’t know until December at the earliest how many students have turned up, how many have stayed, how much they or their parents or guardians have paid upfront, and how much loan they have taken out. Until we begin to know some of these factors, we won’t know how much headroom the government has for reassessing its current strict policy on student numbers.
In the long term, the country’s expanding skills requirements are such that we need to find ways of relaxing the overall constraints on student numbers to allow for expansion, while maintaining an affordable and high-quality higher education system. This remains the most pressing policy priority in relation to student finance, and one to which all parties need to attend urgently.