Don,

All very well, but “should develop an alternative way of funding post 18 education on a more sustainable and fairer basis” needs some concrete ideas. Because wierdly the universities, which have been concerned over this for a while, have not been able to come up with such ideas.

Bluntly, if you want decent University education, you can either have the state pay for it (which it can’t afford) or have students pay for it. You could perhaps only state-fund certain places or students, but that would not be fair.

And politically, opposing a fee raise without an alternative idea, or with vague promises of state funding (when it was Labour that not only imposed fees but also removed the standard grant) is hardly going to look like inspired leadership rather than just opportunism.

The only way in which the state could afford to cut/remove student fees would be to reduce the number of university places / universities.

A sensible idea, though few will dare suggest it.

Whether the state can afford to pay rather depends on what its paying for. If its to send over 50% of 18 year-olds to university then it may not be affordable.

Its worth asking whether the new Labour experiment of trying to get over 50% of 18 year-olds into uni has had its desired effect. Are they magically earning more because they have degrees? Does, therefore, the extra tax they pay make the policy sustainable? Or has it led to a devaluation of degree-level qualification and a block on skilled, experienced people getting jobs simply because they haven’t a degree in something?

Universities might be able to find money from overseas students, as they did in the past, if some of the more paranoid New Labour policies regarding foreign students are reversed.

But burdening aspirational middle income voters with unaffordable fees is wrong in principle and unsustainable in practice as a way of funding public services

I’m a bit puzzled by this … the burden doesn’t go away if fees are frozen/cut, it just moves into general taxation. And who bears the burden of paying for university education via taxation, if not “middle income voters”?

If the burden of fees doesn’t increase, and the burden of taxation doesn’t increase, then the money spent on universities can’t increase. Unless you want that, you must burden aspirational middle income voters one way or another.

“f as people on modest and middle incomes spend their savings on enabling their children to go to university”

But this is basically a combination of their own stupidity and the limitations attached to the amount of ‘loans’ that you can borrow. Viewing student loans as a form of debt equivelent to say a credit card is just ignorant, they don’t have to be paid back until you have a job earning over X. All they are is a clever way of saying “there will be slightly higher rates of income tax for graduates earning over X, specifically to pay for higher education”.

The issue is essentially the maximum amounts students can borrow each term are too low, and thus students have to work or get parents to spend money to cover living costs. Fees are a distraction, they are means tested anyway.

CJCJCJCJCJCJCCJCJCJCJCJCJCJ makes another good point – the degree is over-valued, to distinguish yourself now you need a postgraduate degree, for which fees are far higher, not means tested and loans are only available on a commercial basis. It is this that needs addressing, as it is where the class system still retains many of its features.

Student fees are only a small part of the problem. Actually our whole funding system for students is horrifically unfair on the working classes.

For example – a working class kid who goes to uni will be leant up to about £30,000 to pay rent, food, fees and everything else he or she needs for a four year course.

At 28, earning a typical £28k per year, that former student will still owe around £30k (only that over £15000 is taxed in repayments) and will be losing £1200 from their income at an age when they might be hoping to save a deposit for a house and start a family. (plus if inflation hits 4% that £1200 won’t even reduce their debt)

Compare that to a middle class youngster – who borrowed the same amount of money, though his or her parents actually paid their way through uni for them. At the end of course years they make a tidy sum by paying it off and keeping the interest from the high interest account they put it in.

By 28, earning the same £28k, they have parents who can help with a deposit, might have kept the money from their student loan windfall too, and are effectively paying £1200 less tax.

Now fees might be neccesary – but Labour was always wrong to claim it was fair for students to pay for their own education. It entrenches unfairness across decades of peoples working lives.

So hopefully the party will now learn.

Of course poor kids could work alongside their studies. But that obviously diminishes educational attainment. So should we really encourage it, and is that really any fairer?

planeshift

“there will be slightly higher rates of income tax for graduates earning over X”

Surely you mean

“there will be slightly higher rates of income tax for graduates earning over X if they came from poor backgrounds.”

margin4error,

Why do you assume that all middle class families pay their children’s fees? My own observations (anecdotal, through working in universities) is that most students (who are mainly middle class) seem to be paying their own fees through loans. Do you (or anyone else) actually have any evidence for the assumption that middle class students are therefore better off because they have saved their loan (my generation did that – but we had the frozen remains of the grant)?

@1

As one of the A-Level class of 1997, I’d like to point out that the standard student grant had been penny-pinched to death by that year and didn’t even cover accommodation for a single term.

@6

In actual fact, in the years I was an undergrad only the very wealthy students were able to do the high-interest savings trick – most of my middle-class peers had to dip into their loans considerably.

@9

I know – I had the same pinched grant at that time. And we knew then it was on the way out – but Labour had actually said they would review the Conservative plan to abolish the grant, but then went ahead with it anyway. Hence my comment that their track record on this may not be strong enough for them to stand up and oppose the lifting of the fee cap without actually having a concrete suggestion to hand.

““there will be slightly higher rates of income tax for graduates earning over X if they came from poor backgrounds.”

As fees are means tested, then no.

lets try a third one; ““there will be slightly higher rates of income tax for graduates earning over X if they had parents who were not poor enough to avoid having to pay fees, but were equally too miserly to contribute”

“Compare that to a middle class youngster – who borrowed the same amount of money, though his or her parents actually paid their way through uni for them. At the end of course years they make a tidy sum by paying it off and keeping the interest from the high interest account they put it in. ”

Yes that is indeed an issue, but not one that invalidates the case for fees and loans. You can get around it by introducing penalty fees for immediate re-payment that reflect that it may have been used to generate interest.

“Yes that is indeed an issue, but not one that invalidates the case for fees and loans. You can get around it by introducing penalty fees for immediate re-payment that reflect that it may have been used to generate interest.”

Technically all that would achieve is encouraging people to keep the money invested in high-yield accounts or wherever, and to make more money out of it for longer…

@10

Interesting – so we’re probably not too far off each other age-wise.

There was something a bit moer insidious about how things were run by 1997 as well however, and that was the fact that the grant was eaten up – and then some – by accommodation expenses (or travel expenses if you decided to stay with your parent(s) and commute), but compounding that was the terms of repaying the loans as they were then being considerably more onerous.

Working in London, my wife’s wages (she started university in 2001) have largely followed the track of mine, but her compulsory monthly payments have consistently been a quarter of what mine were at the same income level – so while Labour deserve a boo-hiss for abolishing the grant – though having promised to match Conservative budgetary commitments I don’t think they had a realistic choice – I think they did what they could to soften the blow.

The grant may have been officially abolished from 1998 onwards, but the utopian age of the publicly grant-funded undergraduate degree had been effectively dead for the best part of a decade prior.

@12,

Thats why I probably need to do that degree in economics before I start thinking aloud on blogs 😉

@13

In this process of reverse deduction (I’m about three years older than you by the way) I assume you and your wife are earning pretty well.

This is because the payment threshold for pre-2000 (I think) grants is actually a lot higher (now something like £25 000 to £14 000) than for later ones, but is steeper once you go beyond this. Speaking as someone who rarely has been over that threshold, I think this is a much fairer system. I do agree the utopian age was long dead – even before the grant was frozen (1992?) it had dwindled in value, especially as the cost of student living seems to have risen more (perhaps, in my case, in line with the alcohol duty…).

Agree with #3 completely. The emphasis on 50% of th epopulation going to university was one of New Labour’s most naive policies.

@16

While we’ve never done too badly on paper, any amount we were earning (both before and after the missus and I met) was pretty much decimated by the cost of living in London to start with. I’m not sure what the exact numbers were, but suffice it to say that what was given to me by my employer in the form of my first pay rise actually left me worse off to the tune of about thirty quid month on month, as it took me over the repayment threshold.

This wasn’t helped in my case by the cat that I graduated as a Software Engineer in 2001 – just in time for the tech crunch and the first wave of mass outsourcing – it took me over a year after graduation to find steady employment, and that was for a lower salary than I was offered at the end of my placement year, and all that time the interest on my student and graduate loans was compunding. Personally speaking I’ve actually been in pretty dire financial straits until very recently.

Sorry, above should be @15 (Watchman)

@6 Margin4error

“Of course poor kids could work alongside their studies.”

Not a science graduate, I take it?

Tuition fees are another example of New Labour having to deal with the consequences of its own policies. The point of any review was to report after an election in 2009 but, as we know, that didn’t happen, so the review was put back to 2010. David Lammy (former HE minister) had absolutely nothing of use or importance to say on fees as he was hiding behind the review process. The other parties followed suit – apart from Clegg, who downgraded the LibDem’s ‘commitment’ to abolishing fees to a mere ‘aspiration’. The LibDems’ abstention in any tuition fee vote is a sop from the Tories to keep the coalition together (the Tories would still have a workable majority for whatever they wanted to do). The ‘Russell Group’ universities are lobbying for at least an increase in fees, if not the abolition any ‘cap’ whatsoever – which might appeal to the Tories on the basis of a ‘free market’ devoid of any regulation (alongside the Office of Fair Access getting thrown onto the scrapheap of hated quangos to save a few bob). If the Tories go for ‘uncapping’ fees, it’ll be hard for Labour to complain about the end-logic of a market-based fees regime that they voted into law in the first place. They could argue for greater protection for poorer students, but whatever protection there was in the first place wasn’t part of the government’s original plans. Moreover, successive ministers kept insisting it wasn’t really ‘debt’ because the terms were so generous and the students wouldn’t really ever notice paying it back – though that argument won’t last if (a) the payments became subject to commercial rates of interest; (b) the threshold at which repayments start is lowered – both of which would raise more money more quickly for the government (assuming the graduates get jobs).

The short version of all this is: the fees will go up (the only question being by how much); the terms will get less generous; the LibDems will sit on their hands; most of the Labour leadership candidates won’t be able to pledge anything because it would mean having to argue against a situation they created.

@ Watchman As far as I can make out anecdotally most middle class students pay their fees through the tuition fee loan but get their parents to help them out with living expenses rather than claim the full living allowance loan (I forget its proper name).

Thanks – lots of good comments.

I’m interested in the hostility to the 50% target of young people going into higher education. One way of saving quite a lot of money would be to cut down significantly on the number of university places so that, say, 20-30% of people went to university. Is this something that people here would support? Is the idea that most 18-21 year olds should get a job instead (or, rather, as well, since most students work) and don’t need to get any further qualifications, or is it that getting a degree is pointless for a large number of students, but that they do need some kind of further education/training which the government would need to develop and fund instead of expanding universities?

It’s a very useful comparison to look at OECD statistics on higher education. Table A1.3a has country statistics for sub-degree (type B) and degree (type A) tertiary education. There are a number of countries where more than 50% of younger people already have some kind of tertiary education. The problem with any discussion of higher education in this country is that it tends to presume that only a full three year degree is worth getting and that anything less is a meaningless qualification. if Labour really is concerned about middle income people, it also ought to be thinking far more constructively about further education, and working out how to treat part-time university students better (who do have to pay fees up-front). It should also scrap the policy on ‘equivalent or lower qualifications’, which discourages re-training.

The fundamental argument behind this is whether or not students should be required to make a contribution to their education, considering that
a) On average they earn more (albeit with caveats surrounding degree devaluation) and b) Good universities are expensive to run.
While the idea of free tertiary education is a nice one, I am not averse to paying for the cost of my degree. I would describe myself as middle class, and I did use all of my loan allowance (albeit under the pre top-up fee levels), but I was convinced to think of the loan as a tax.
The difference is that this is effectively a tax that rich people can get a break on by paying it off in one go.
Hence why I would back a graduate tax, Ideally one applied to every graduate, including those who didn’t pay towards their degree, on the grounds of generational redistribution to punish the feckless baby boomers.

I know that the government tends to hate hypothecated taxes, but in the tertiary skills sector, Industry Training Boards impose a levy on all businesses in an industry to fund skills training.

@24

The fundamental argument behind this is whether or not students should be required to make a contribution to their education, considering that
a) On average they earn more (albeit with caveats surrounding degree devaluation) and b) Good universities are expensive to run.

Could not the same argument be used for introducing fees for A-levels? (damn, I’ll give the coalition ideas…)

I guess it comes down to what you would consider the essential level that should be provided by the state?

I imagine that the argument goes that – a minority of people get to go to university (even in a perfect system based purely on ability), these people on average earn more and lead an ‘advantaged’ life, therefore the state should not be subsidising them.

The counter argument would be – the state should support higher education because the advantages to society are shared by all, even those who do not attend.
However, it is harder to argue this point if 50% are going to university, because trying to convince people of the social and intellectual value of a third class or pass degree is difficult.

@donpaskini (24): The hostility to the 50% target usually boils down to the ‘more means worse’ school of argument (see also improving exam results), allied to the idea that scarcity equals value (i.e. the fewer people have a degree the more valuable it is, if only for the person who has one). I’d point out that the government’s invention of Foundation Degrees (usually taken at FE colleges) counts towards the HE target (I’m not sure about Higher National Diplomas, but as they can then be ‘topped up’ by an extra year of study, they probably do.) Mandelson’s idea of ‘fast-track ‘ two year degrees is already being tested, but having them simply to save money is not the best reason for doing so. The alternative might be ‘pro rata’ fees for part time study, but there’s no indication (so far) of Browne going for that idea

Simply opposing fees for their own partisan sake would place Labour right back in to the days of Neo Con Labour and their hypocrisy over the Dearing report. The 1997 Labour manifesto made clear that they did not support the Dearing proposal which was EITHER an extension of loans or the introduction of top up fees. Labour in office went and introduced both.

So if Labour comes out against an extension of fees now what would be their alternative? And what would the Party of Bush/Blair really have in mind for when they came to office?