Why £9,000 tuition fees have been a moral and economic disaster

The evidence is mounting that the argument for £9,000 tuition fees has failed - both morally and economically, argues James Bloodworth.

The evidence is mounting that the argument for £9,000 tuition fees has failed – both morally and economically, argues James Bloodworth

Tuition fees were the Liberal Democrats’ Iraq, minus the bombing. The fallout from the Lib Dems reneging on a 2010 pledge has had a similar impact on Nick Clegg’s popularity as the Iraq war did on Tony Blair’s – it’s left him polling at rock bottom with it hard to envisage him recovering.

A significant period of time has elapsed since what was undoubtedly the U-turn of this parliament, therefore it’s possible to take a clear-sighted look at the policy of raising tuition fees to £9,000 a year – as well as its consequences.

The first intake of students paying the higher fees are also set to leave university next year, so it seems like a particularly apt time to take another look at the arguments against higher fees.

Unfortunately for Clegg, however, this is unlikely to help his case.

£9,000 fees may not raise much money after all

According to the Institute for Fiscal Studies (IFS), that hotbed of left-wing radicalism, raising tuition fees to £9,000 may not save taxpayers any money after all, and students could end up paying even more as graduates fail to earn enough to pay back their loans.

The IFS calculated that every £1 loaned to students to cover tuition and maintenance costs the the government 43p. This means that a £40,000 loan to a student receives a subsidy of just over £17,000 – a sum that many students will never earn enough to pay back.

In response, the IFS has come up with three options for the government to reduce its subsidy under the current system, none of which are particularly student-friendly: increase the repayment rate, extend the repayment period or reduce the threshold at which people have to start repaying their fees.

This comes on the back of an admission by the government last month that the number of graduates failing to pay back loans is increasing at such a rate that the financial benefit to the government of tripling tuition fees will be negligible.

Young people are already getting a raw deal

It’s tough being a young person today. A recent IPSOS Mori survey found that young adults in the West are today less optimistic about their prospects than their counterparts in the developing world.

And it isn’t hard to see why. Young people are racking up debt left right and centre. Today it takes a first time buyer saving half their annual income more than 10 years to put together a deposit for their first home, and in London that figure is a daunting 24 years. Young people today are also more likely than older adults to be unemployed. In the last quarter of 2012, one in four young workers with five good GCSEs and 40 per cent of those with no qualifications were unemployed. Wealthy older people don’t pay national insurance but young people do.

Because of tuition fees, those who decide to go to university will now be saddled with further debts that, in some instances, they may not pay off until their 50s (and like most people, young people will rack up other debts too).

Tuition fees *have* deterred students

University applications from UK students for courses starting in autumn 2012 – the year that fees increased from £3,000 to £9,000 – fell by 8.9 per cent on the previous year. The figures for 2013 were slightly higher, with 428,000 applicants applying, however that is still well below the 464,000 applications in 2011 and 461,000 in 2010.

In contrast, the number of people applying to go to university in Scotland and Northern Ireland – where there are no fees and where they have been capped respectively – has remained largely the same.

It’s not clear that higher fees have deterred poorer students, as it’s often argued, but they do appear to have put off students in general. It may be argued of course that as a society we want fewer people going to university, but then surely the best way of doing this is to tighten up exams, rather than make it prohibitively expensive.

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4 Responses to “Why £9,000 tuition fees have been a moral and economic disaster”

  1. robertcp

    I agree but we are where we are. Labour should consider reducing the repayment rate, shortening the repayment period and/or increasing the
    threshold at which people have to start repaying their fees. Reducing the fees to £6000 is pointless and stupid.

  2. Disputer

    Tuition fees are basicly another attack on the young. If graduates must pay for their university education, why does it only apply to new students? The fairest method would be a graduate tax that applied to all graduates, whatever their age. So people of my age have to pay and not just the youngest.

  3. Parter

    There is a big dilemma here. If one believes in free higher education for all who want it then you need to work out where the money is coming for to pay for that? Already the welfare state cannot meet its existing obligations.

    Or do you actually spend effort instead trying to remove the employment glass ceiling for non-graduates, and leave higher education free to those who enter based on merit doing worthwhile degrees (i know subjective area here).

    Or you have the current system. The government tries to encourage everyone to go to university, but cannot afford it, so the cost of university is covered by a combination of tuition fees and government grants to universities.

    The current system does not work. Young people entering the job market with £30’000 of debt is a terrible milestone around their necks, and makes things like buying your first home very very difficult without wealthy parents. However also hindering young people is the high tax environment which makes accumulating capital even more difficult. But thats ok, as long as the socialist baby boomers can continue to enjoy their accustomed lifestyle at the expense of the young.

    And please dont suggest ‘tax the rich’, the ‘rich need to pay their way’. High tax rates are a counter force to a country’s wealth and basic standard of living, Laffer curve/incentivisation/the fact lesuire cannot be taxed etc etc. We all suffer if wealthy people decide to emigrate and those that remain are not incentivised to work. If there were a 70% tax rate I would just quit my job and join the dole (but who pays for it now?)

  4. Mr Calvin

    Do you need a loan? we offer loan @3% interest rate. if you are interested kindly contact us via email:[email protected]

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