Gordon Brown is to “re-examine” the £3,000 cap on student top-up fees – i.e., increase it. Universities need more money and apparently charging people who aren’t available for full-time work and who are already paying thousands into the system is attractive to the Chancellor. Top-up fees haven’t even come into effect yet and already the Government is talking about increasing them.
He said the principle of top-up fees, which come into effect this autumn, was “the right one”, because it ensured that students who benefit from higher education must make a financial contribution towards its cost.
I’ve probably mentioned this before, but those who benefit financially from higher education do make a contribution towards its cost. It’s called income tax and it works like this: if you earn more money, you pay more tax. So if, over your lifetime, you earn an extra £400,000 as a graduate – a figure Labour trotted out time and again and a premium that is likely to fall – you pay roughly £90,000 more income tax over the same period. Surely that’s more than enough to fund one three-year course?
“People do not value free goods or services,” say report authors Richard Lambert and Nick Butler.
“It will be less easy for young people to think about higher education as a convenient way of filling time.
“Instead, they will have an incentive to complete their course at a less leisurely pace and they will have to think harder about the costs of dropping out.”
University isn’t free, and it wasn’t before fees were brought in. I left with a degree and student loans alone of £7,000, and that was before tuition fees were introduced. Living costs alone are thousands of pounds a year. Just because we didn’t pay the university directly, that doesn’t mean there wasn’t a cost associated with university, and that’s before you consider the opportunity to cost of not going straight from school to work.
As for dropping out, financial hardship is the biggest reason people leave university. The reintroduction of grants was an important step in helping out those from poorer backgrounds, but any system in which a 22-year-old is assessed on the income of their parents has something wrong with it.
This all applies to England, of course: the Chancellor doesn’t speak for the devolved administrations in Scotland and Wales.
Richard Lambert and Nick Butler
You couldn’t make it up could you – Lambert & Butler…:)
I know its heresy amongst LibDems but I’ve become more convinced of the need to charge substantial fees – we will cease to have any universities (public ones at least) worthy of the name if we don’t.
However, the amount you pay should not be based on your parent’s income and there should be a mechanism for affordable loans which are repayed as a small percentage of your earnings over the average earnings of someone of the same age who doesn’t have a degree.
That way you are taxed on the income you earn due to having a degree, so you pay out of the benefits which you gain from your education.
This is of course similar to the current student loans system, which as a recent graduate I have no problem with. The financial hardship suffered at University for me was from living costs (not the cheapest in university towns) and the £1000+ up front tuition fee.
I have two concerns off the top of my head with that system. First off, if you’re earning more, you already pay more tax. If having gone to university lifts you into the top tax bracket, that bit of your income gets taxed at a higher rate without the need to compare with “average” earnings.
If, however, you earn below the average non-graduate salary – as is often the case for recent graduates – it will be some time before you start paying back. Thanks to interest payments, the lower paid and those who take career breaks – for example, to have children – would end up paying more than those who go straight into a highly paid job and stay there.
Tuition fees are not the problem; graduate debt, combined with higher mortgage rates, income tax and the need for a private pension is. And slavishly defending the tuition fees policy is to ignore the fact that they are a reality for tens of thousands of young people these days – scrapping fees will do nothing for them.
Instead of pledging to scrap fees, why not offer partial tax relief on the repayment of graduate debt? It would apply to everyone still in debt, not just new students.
The problem with the party concentrating on fees for the last decade or so is that we’ve basically ignored everything else.
Tax relief on graduate debt or on student loan repayments only? The former would be very hard to implement; the latter only applies to a proportion of student debt. A low earner not much over the repayment threshold for the current style of student loan would gain very little from tax relief on it.
I’m not especially attached to the party’s precise position on student funding, but opposition tuition fees was something I believed in before I joined the party and one of the things that attracted me to it, so I’m loathe to adopt a position of “Well, they’re here now”. The principles haven’t changed and the costs of not having fees (which is still the case here in Scotland) haven’t changed, so what is the basis for a change in policy? Were we wrong to have opposed fees in retrospect? We have a bizarre contradiction in the system as it stands: 16-18 year olds are paid to stay in voluntary education, but charged to stay on after 18.
Scrapping tuition fees would reduce the graduate debt of the next generation by thousands of pounds. It wouldn’t benefit me, but then there are few policies that would. A cut in income tax is one; a switch to LIT from council tax is possibly another.
The problem is, you may be magnanimous, but I suspect a growing number of graduates feel much less magnanimous. I’ve heard countless numbers of recent grads say “Well I paid them, so why shouldn’t they?” in recent years.
The reason I prefer tax relief as an idea is that it applies to a much wider group of voters, while still having the same effect (and yes, low income earners would get very little out of tax relief, but then their repayments would be lower as well).
A poll into student and recent gradute attitudes would be interesting… When I saw a sabb – some time ago now – there was quite a lot of opposition from students to the government’s 50% target and that it would be better to keep university funding requirements down by reducing the number of students.
I have every sympathy with students who are in debt. This is mainly because we have come from a time when advance financial planning was not required. Remember that the Student Loans are deducted from your salary, therefore, it is important to try and keep bank loans to a minimum and keep away from credit cards.
Parents and Grand Parents should be prepared to save for the future fees. The cost of a pint of beer a day for 10 years will cover the fees and by giving up smoking and investing the cost of 20 cigarettes a day for 10 years will cover the fees and accomodation for a 3 year course.
I suggest you look at http://www.universitysavingsplan.co.uk where there is a lot of useful information.
Good luck
Tutor
It is even more important for parents to start saving before their children reach age of 12.
Remember the cost of one pint of beer per day invested over 10 years will cover the basic fees for a 3 year course.
Tutor