Wednesday, 13 April 2011

To Not Win the Lottery of Life

I was listening to radio 4 on the way to work last Friday, as has become my wont. A discussion arose from the announcement that it seems over half of all English universities are planning on charging the maximum £9,000 for at least some of their courses and a large proportion of them will indeed make that levy across all courses.

First off we should remember that the announcements of universities planning to charge over £6,000 are exactly and only that - announcements of plans. To charge over £6,000 each individual university must be cleared to do so by the Government - the Office for Fair Access specifically. So, this may all turn out to be a storm in a teacup as the Government sticks to the dictionary definition of "exceptional circumstances" and does not let 65% of universities put some or all fees up to nearly 10 grand a year. Now what these "exceptional circumstances" are precisely, is less clear. It looks like it is not to be based on which universities need more money, nor on which ones provide the better education (therefore justifying the higher fees), but on the provision of bursaries and outreach programmes for poor students.

Ok, not necessarily the way I would have done it, but I see where they are coming from. Some questions though… Is the waiver to allow higher fees to be based on the quality of the programmes? On the number of applicants from 'target backgrounds'? On the number of accepted students from 'target backgrounds'? What if they give the waiver and the following year, not enough 'target' types are successful in winning places? Does the waiver get withdrawn? Do the university simply cram in the set number they require, regardless of talent, to keep their ability to charge lots and fart in the general direction of their pursuance of academic brilliance?

You see there are a lot of questions here, and many more. If it is only to be in "exceptional circumstances", you'd have to think the Office for Fair Access can only line up all of the outreach programmes etc and decide on the best 5, maybe 10. Well 11 at most - that's 10% of the 111 state-funded universities in England who offer undergraduate degrees. Any more than that can't be exceptional can it - otherwise it stops being the 'exception to the rule' and would just be called 'the rule'?

Anywho, I guess this will be a watch this space whilst we decide just how wide a bracket "exceptional" is. I don't hold out much hope. In the meantime, what I actually wanted to talk to you all about was what bursaries are meant to be available. It appears some universities are offering up to £6,000 off fees. This is where I take umbrage with the system. Suppose I should briefly go through the system first...

The fee structure has supposedly been brought in to make those who benefit from taxpayer-funded university education contribute more towards it financially. As you perhaps remember, I'm none too keen on the way they have gone about all this. For a refresher, or if you are struggling to sleep, it's here. The idea is that there is to be an end to up-front annual fees (previously of £1,000 and then £3,000), and replacement with up to £9,000 per annum charges. These are to be deferred in loan form until the graduate starts earning over £21,000. If they never do, they never pay back a penny. If they haven't paid off their loan by 30 years after graduation, it gets written off. If they earn over £21,000 then they pay back 9% of earnings over that. The amount over £21,000 they earn determines the interest on the loan balance in the form of increasing taper interest. Those earning £21,001 will accrue no interest on their loan. Anyone earning over £41,000 will be accruing 3% plus RPI on their loan. On today's RPI a 22 year old graduate from a 4 year £9,000 pa degree earning £41,000 would be paying 8.3% on an initial £36,000 loan. That's £4,500 pa, to start. It would take him 20 years in all and he would pay back over £67,000. All that is of course on top of any living costs he deferred from university in loan, overdraft or credit card form. Fun, huh?

Lots of maths there, and there's not even a firm announcement on potential early repayment penalties. It seems that the loan system is not so much there to make attending university more affordable but to extract the hidden cost of university, namely the loan plus interest, and there's potentially lots of it as you can see above - £36,0000 fees does not equal £36,000 payback .

Now my problem is with the type of financial assistance for those of meagre financial standing. The bursaries should not be reductions in fees. So we're clear, I'll say it again - bursaries should not be reductions in fees. The only good thing about this God awful system is that a large barrier to poorer talented students has been removed - up-front fees. Now it is the higher-educated graduate who pays for the education, not the aspirational poor school leaver. The amount paid back is paid based on earnings, and if you choose to go into low paid work, you are not saddled with a crippling debt. Someone from a poor background and someone from a rich background attending the same course have cost the tax-payer the same. They have been given the same increased earning opportunities that (a proper) university education is meant to bring. Why because one student's parents were richer, should he pay more back the the graduate from the poorer background?

It makes no sense and is desperately unfair. If we are to produce a system that essentially taxes your earnings in later life to pay for your education, and we base it on earnings, why would you also base it on background. The system is all about the advantage you have been given for future earnings, it is not about the privileged or otherwise life you enjoyed pre-university. If anyone isn't clear, giving a £6,000 bursary on £9,000 fees to the poorer student means he pays back his loan plus interest on a £9,000 loan from a 3 year course. The richer student will pay back loan plus interest on a £27,000 loan. If they go into the same job, and earn the same, assuming they make reasonable money after university they will pay vastly different amounts back to the taxpayer for the same education, for the same earning potential gained.

That is not to say, however, that there shouldn't be bursaries. There should, but they need to be living costs bursaries - cash for books, rent, food and drink, clothes etc. This is still an up-front cost that the poorer student cannot afford to pay. This is where a richer student might have their living costs paid for by family. We should not lose sight, however, of the fact that this is an option for fewer and fewer people these days. There are many people in the forgotten middle who will be unable to raise all the money from home, and who are deemed too well-off for bursaries and will therefore have to augment their post-graduate debt with loans, credit cards, overdrafts and the like.

As is obvious this is a delicate situation - to whom should we give bursaries? How much should these bursaries be? Should we expect even the poorest to take out some form of loan as their classmates from the squeezed middle will, or do we cover 100% of their costs? To whom can we afford to give bursaries? There will always be winners and losers. Ultimately I feel with this system there are likely to be many losers, and you will find them in the persecuted middle; the part of Britain most of us inhabit where you're too rich to qualify for help, but not rich enough not to need it. Ultimately it all boils down to lack of money. The way out of all of this would be, as I have said before, to examine who we should be putting through higher education, as that would free up the money to help not just the poorest but the equally-deserving not-the-richest too.

But some good news on which to end. Whilst there will always be losers from this system, there are some who will definitely be winners. Who are they? Simple, those who did not as dear Cecil Rhodes said "win the lottery of life"; that is, those who were not "born an Englishman". Scots will still pay nothing at English universities whilst English students pay vast amounts even at otherwise free universities in Scotland. Welsh students have their fees capped at £4,000. Where does the money come for the Celtic largesses? UK taxpayers. Same as prescriptions and hospital parking, but that's for another day.

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