Universities: what can we learn from the US?
Risk sharing lives in the States and the UK should pay close attention
By Peter Ainsworth, author of Shares in Students: A New Model for University Funding
Trump’s executive action-fuelled battles with woke universities fill the headlines. Columbia has capitulated; “heroic” Harvard holds its £53bn-endowment-funded ground. But these are skirmishes - tactical spats in a broader culture war. The real strategic shift is unfolding quietly in Congress, where profound legislative proposals to restructure university finance are advancing. If enacted, they won’t just reshape American higher education - they could undermine the UK’s global standing as the world’s No. 2 provider.
Enter the College Cost Reduction Act (CCRA), introduced by Representative Virginia Foxx, Chair of the House Committee on Education and the Workforce. A key component is institutional risk-sharing – where universities accept some liability for student loan defaults. This idea had been circulating in Republican policy circles for some time, and the bill was formally introduced in January 2024. At the time, it went nowhere—just one of several structural reform ideas parked under a Democratic president and a divided Congress.
But Trump’s return to the White House, coupled with Republican control of both Houses, has propelled the idea back onto the legislative agenda. What’s new is that key provisions have now been introduced to the House as the ‘Student Success and Taxpayer Savings Plan’. A revolutionary structural reform that once looked purely theoretical is now a live prospect. Amid headlines fixated on campus protests and DEI rollbacks, the CCRA carries a deeper ambition: a legislative mechanism for holding universities financially accountable when their graduates fail to repay their loans.
The implications for the UK are hard to overstate. As I argued in Shares in Students, published by the IEA in November last year, a properly structured risk-sharing model would align universities’ financial incentives with student outcomes – leading to higher educational quality, as measured by career gain, across the board. Universities would no longer be rewarded simply for recruiting students, but for helping them build a better financial future. The U.S. now looks set to beat the UK to the punch. What matters is who is next to adopt risk-sharing - whether the UK acts to protect its position as the world’s No. 2 provider, or whether China and other Anglophone competitors seize the initiative, the resultant quality gain enabling them to overtake Britain in the international rankings. The danger is that UK institutions remain trapped in the comfort of subsidised underperformance while others progress.
The politics of this in the UK are wide open. Both the Conservatives and Reform are in the midst of developing their platforms. Reform has openly signalled its intention to borrow elements of the Trump agenda, and if it seizes upon risk-sharing before the Conservatives do, the Tories may find themselves outflanked. Yet this is precisely the kind of policy Conservatives should own: aligning institutional financial incentives with educational outcomes will not just be efficient—it will be popular.
But it’s not just a Conservative opportunity. Labour, too, may be open to structural reform. Having increased defence spending and cut welfare, the party has shown a willingness to move beyond its comfort zone. Risk-sharing would serve its student constituency well - putting pressure on universities to deliver real value for money, and making student success central to how universities are funded
Under the current model, where universities are paid on recruitment, the graduate earnings premium has been in long-term decline. The only way to reverse it is to link institutional remuneration to graduate success, as the Americans are proposing to do. Done well, that would motivate universities to reduce costs and/or reorient courses toward real labour market value, reestablishing the economic relevance of higher education.
What’s needed now is political courage. Risk-sharing isn’t just a technical reform—it’s a reset of the relationship between students, universities, and the state. The U.S. is moving first. If the UK hesitates, America - and any country that follows its lead - will improve the economic returns of their degrees, while the UK becomes less appealing to the international students who pay most of the bills.
The UK still has the infrastructure, the reputation, and the global footprint to lead. But unless universities are rewarded for delivering real value - measured in outcomes, not enrolments - it risks slipping into the second tier: still talking about the problem, while others get on with solving it.
An interesting view. I am with you on Universities should be remunerated based on results, only if you believe in monetising education that is? The debt ridden graduate is certainly a worry. I’m not convinced that the standards of education has increased with the Blair’s tsunami of university applicants. I’m still ‘old school’ in my view that universities should be limited to those of s true academic bent. And the theory of taking any pupil and making them a graduate seems to me only possible if standards drop to accommodate a lesser pupils ability or pretend they are better than those who went before! I’m not sure that standards have increased. I’m of the opinion that graduates now have too high expectations of their abilities. They are not guaranteed a better paid job and most would have been better to have left education and learnt life and actual skills by going to work than learning academic skills of a lesser degree with the inability to achieve a job paid enough for the debt gained! I worry about anything that is linked to money! Is private health better than a perfect NHS for example? Do you get the right skills from a monetary based education or one that is free of constraints? I’m not so sure. In my view education should be free! It should be based on the old system of preparing pupils for work at 15/16 and to triage those of a true academic bent to higher education. And that should include proper manual skill based higher education of apprenticeship also. We have too many young people leaving education in their twenties with no life skills no chance of a well paid job and a massive debt! We need to mould young minds into work not how to avoid work by ending up being out of work! Having my view for me isn’t enough here. This two tier education system of those who have money and brains and those who have money and not enough brains is just another US style of putting money first! It’s wrong in so many ways and we must not go down that route! Society should have a safety net for all wether you have money or not. That is not the US way. Look, the education system like the housing system and the defence system we have in the UK are all under pressure from money. But we shouldn’t chase that dragon to start looking at the next decision in line to squeeze but to go back and look again at our ability to have a monetary system that works for all and pays our way for everything we need including a free education system. So I am trying to get the right economy to pay sufficient tax revenue rather than accept a low tax take and make it fit the money by making everything a false result pretending a university degree is a better life choice and forcing pupils to pay for it! It’s not a utopia for society. We need lower paid jobs to be filled as well as higher paid jobs. But let’s have better paid all jobs! Not low paid anything. Now that is achievable if we all start thinking properly. At present we have a monetary system that allows our money to be held in such an amount unused each month that our economy is devoid of it so we can’t pay the tax take required for our needs! That’s the problem. Why? Because we allow the rich and wealthy to hold on to our money for days, weeks, months, years, decades, and centuries unused snd unspent! These mega rich few hold that money making our daily economy devoid of it! Now that is immoral but moreover undemocratic! What we see playing out is the allowance of the few to remain rich by holding that money outside of our economy that pays tax. So this type of thinking of making education monetary based is a result of that system. We need the system to change. We all spend our money each month hoping our hard work will bring it back again but, in our present system that is not guaranteed. But in my view it should be! Income tax is not paid by the employer! It’s paid by an employer based on income. We don’t get to choose how or when we pay it. It’s never ours to do that! In any case more tax is paid by Bat and Duty on fuel or tobacco or alcohol but that tax is hidden from us so we don’t see how much of it is taxed! So most of our tax is collected by money being spent! Either by the employer or by us the majority spending. But the rich and the mega rich dint need to spend all their money? They only pay tax on what they spend which may be very little. So ‘we the tax payer’ are the poor benefit recipients and the middle working classes who spend all their money each month. And not the rich! They pay less pro rata of income. Now that can’t be sustained. The pot by which we earn tax revenue is saturated and unable to produce enough tax revenue. But it could! If the money held by the few is spent back then it would cause a tsunami of money providing more than sufficient monthly tax take. If spending earns tax for the exchequer then to make more tax take we need more spending of the money that is not normally in our economy! It’s that simple! We are told 95% of money is held by the top 5% of the wealthy and the rich. So by deduction we should see that 95% of people are working off just 5% of money. So their lies the problem and answer all in one! Make money move each month on force by putting a ‘spend by date’ on all money digitally using computer bank cards! Make it an even playing field. Earn as much as you can, but you have to spend it! Be rich on goods and services bought with the money, not the money itself. Thatcher took away exchange control regulations allowing money out of our country in the hope money came in! But that just allowed the rich to get richer while we all get poorer in the process. We must put exchange control back in situ and not allow money to go out the nation. Everyone must hold a uk bank to be in the uk or who want to trade in the uk and all must spend that money back within the country or have it taken by the exchequer. Let all goods flow across borders not the money. No one person should be richer than a whole country! It’s absurd to allow it. More spending means more tax take. It also means higher wages and better benefits as well as a proper pension! Not one half the minimum wage! Now that’s an education! Get the system right and happiness for all rather than a few will reign.