A collaborative blog for Current Affairs and Policy Debate

My Turn on Higher Education

In Education, Home Affairs, Ideology on January 14, 2010 at 3:06 pm

By Rob Brown

I agree with both Stephen Wan and David Weber on different points, but neither concludes how I have. It is necessary at this point to contextualise myself, I am a modern socialist and an active member of the Labour Party, I am also a first year undergraduate who is likely to be hit by any increase in tuition fees.

Firstly I am in agreement with David; university must be seen as a private investment. We must understand that, the people in HE are human capital investing in their future. I should make a profit in going to university, and the statistics argue that the profit will be massive. Look, for example, at this publication by the Royal Economic Society pp. 9, for an economic argument for the private returns to university. Notice in particular the percentage gaps in wages for graduates against non-graduates. For further evidence consult this paper the graphs pp. 3-4 clearly indicate a massive return to education and an ever increasing gap throughout the length of a career. As such in my eyes it is fair to expect those at university to pay for at least some of their tuition. Let us not forget that university is still subsidised massively by the government.

Labour is giving every 18 year old a right to public funding so that they can continue their education or training

These studies also show that at least until 2007 (the latest figures I have) that degrees have not devalued at all (contrary to both David and Stephen’s presumption) and have actually become more valuable. This is due to an increase in relative demand for graduate workers with respect to the increase in relative supply of graduate labour; the market analysis clearly demonstrates that Stephen’s statement that university should be kept for those “really at the top” is wrong. As such I believe it is one of Labour’s key achievements to open up more university places than ever before, and this is why it is a target for the next term of Labour government to enable 50% of young people access to a university place. This is not, as some claim, forcing young people into unsuitable education, but it is a figure that surveys show matches the aspirations of young people. Stephen indicates that he would want to see people in appropriate education, I agree and would ask for the appropriate praise for this Labour government: introducing accredited apprenticeships enabling young people to earn whilst learning, there will be 285,000 of these in 2010; setting aside £1bn for Train to Gain; and prioritising youth unemployment during this recession. Let us not forget the key pledge that Labour is giving every 18 year old a right to public funding so that they can continue their education or training; at university or at college; in work or an apprenticeship – until they are 25 or they get a level 3 qualification. Labour has provided a range of opportunities to all, and most importantly stimulated a climate of aspiration and choice in education.

Both David and Stephen indicate they favour a redistributive system, but fall short of giving credit where credit is due. The current system is redistributive; grants are given to poorer students at a decreasing rate inversely relative to household income, two thirds of students will receive at least a partial grant. Obviously there are holes and administrative problems but the redistributive principle is in place. It is here that I agree with Stephen, the Tory plans are actually regressive, in a way he describes brilliantly.

The reason I think the current tuition fee, student loan system is a fairly good one is because it allows people to pay back their loan according to their future income. The interest on a student loan is the inflation rate meaning there is no increase in the loan in real terms (exempting a small period of negative inflation), if a student does not earn after university they will not have to pay back their loan, the loan repayments are fairly generous and relatively low percentage of income, and most importantly the loan is not counted against you when applying for credit (a mortgage for example). The idea that we are forcing millions of young people into unfair debt is a misconception. Returning to a grant system (or any system where the government take a larger role in financing HE), would cause a greater fiscal disincentive for the government to create university places, and as I have already indicated greater access to university is what I am most proud of with respect to Labour and HE.

The principle of choice within education, the idea of HE being a private investment for individuals and the importance of social mobility, redistribution and fairness to be accounted for in the system are all areas of consensus. I would argue that it is these things that have been aimed towards in Labour policy and it is only through Labour that opportunities and aspirations will continue to be stimulated.

  1. […] Posted by Robert Brown on January 14, 2010 I have been short on content for the Daily Soapbox for a while, this is largely because it is a policy driven site and I am often short of original content. But I thought I would wade into an ongoing debate about higher education. I am fully aware that I will make myself unpopular with this. I wrote in praise of the government record, setting out our promises for the coming years and defended tuition fees (and student loans). I actually do not support the system in every way, and there is a gaping whole of people who despite having high household income do not parents making up the finance gap that exists between the full grant and the full loan. However to over analyse this problem is to ignore the fundamental principles that I outline in the article. […]

  2. I find your economic arguments very interesting, not least because they’re broadly sympathetic to my own position — particularly how a too government-controlled system of funding could be a disincentive towards creating university places. One thing I’m interested by is whether the University of Buckingham, which according to Wiki is the only private one in the country, is covered by the loans system or not.

    When it comes to student grants, I’m not sure whether I view it as necessary for them to be paid to as many as 2/3 of students. I think it’s important to remember that there are actually two different considerations when it comes to funding and repayment: the first is family income, the second is later graduate income. Family income is important to bear in mind, but I think the further up the scale you go the less strong the connection between it and student welfare becomes, particularly as many see University as a time to become much more independent of their parents.

    I’m also interested whether you can link to the “market analysis” you mention above?

  3. I am fairly certain, although I do not know for sure, that the University of Buckingham (which is the only private UNI) would not be covered by a student loan, just as many private drama or dance colleges are not covered by the loan. I imagine it works in a similar way, I am noit a big fan of private education at all but this is to be left for another day.

    2/3 will not get the full grant, it is a decreasing scale. But when it is considered the median salary is only £20,801 the support is really necessary. Family income must be considered, it must not only be made acceptable but perfectly normal for people from all backgrounds to access university; this can only be achieved through a grant as debt (however nicely it is paid back) will put people off. The grants are also inherently redistributive which is good because even after having the same degree background, parentage and other socio-economic factors still determine someones employability, one persons degree unfortuantly does not make them equal to another person with the same degree.

    As I mentioned HE is still massively subsidised the government give massive grants to many universities, helping with not only specific projects but also with basic running costs. We all in this way recieve government funding, grants are merely a way of making this fairer.

    I will try to fix the second link, sorry.

  4. I take some comfort that the line so far on the TDS is still against the Tory plans for scholarships for children of parents who died in active service, albeit for different reasons, with particular regard to David’s article. The Tory policy itself has quite obviously been buried, as it overspills into territory I did not intend to cover originally at all; a systematic review, it seems, of Higher Educaiton policy as a whole, both descriptive and normative. Since it wasn’t my intention to go into such depth of HE, you may forgive me for not substantiating my views on how HE ‘ought’ to be funded.

    To outline my view on HE more broadly, I am a large supporter of Labour, and their continuing support of a more skilled workforce, both in terms of its undergraduate degrees, apprenticeships and equilivant qualifications. I feel that Labour has done a lot to change the attitude towards universities as the achieveable goal of the many, not the lofty residence of the wealthy few.

    In terms of how it should be funded, I can’t help but feel a great deal of money can be shifted from somes budgets (e.g. the military) to HE, but that may be a combination of naaivity and ignorance on my behalf. http://www.dius.gov.uk/higher_education/~/media/publications/W/Why%20not%20a%20Pure%20Graduate%20Tax has compelled me, however, to support the current system of the Graduate Contribution Scheme.

    I do feel compelled to spell out my position on HE again in another blog entry however, since this is obviously an important topic for us all, either going to, or currently studying in, university.

    • “I take some comfort that the line so far on the TDS is still against the Tory plans for scholarships for children of parents who died in active service, albeit for different reasons, with particular regard to David’s article.”

      Well, I suppose it’ll depend whether TK or JL weigh in.

      HE is a contentious subject from a lot of angles. I should, to be fair, have given more credit where it was due to Labour in my original article, particularly as the next will be more critical (concerning education prior to this stage). Incidentally, this will cover Private education as well.

      Cheers for the link, will read with interest.

      • Incidentally, when it comes to Defence spending, I’m cautious — there are probably many projects which aren’t value for money (Bird and Fortune used to cover these, with general hilarity), but it’s having a lot of non-front-line spending cut already, and I think that probably a lot of the cost is generated by the ongoing conflicts, which are stretched as it is. That said, I’m not an expert on this.

  5. I am glad we are on a similar page stephen, atleast ideologically. I would agree in principle to reduce defence spending, but it has always seemed to me a bit of a cop-out argument. We could also use that money for NHS, for ID or a VAT cut (or anything else you can think of); it does not move the debate much further forward.

    I await your next article with excitement, more to discuss I imagine.

  6. “But when it is considered the median salary is only £20,801 the support is really necessary.”

    Interesting you put it this way — I would have probably taken the perspective that if you can still be elegible for a partial grant over £30,000 above the average wage*, then its use is probably over-extended.

    *granted, this is actually including part-time earnings. The median for full-time is more like £26,000 P/A

  7. Firstly, you have used the mean measure for average income, as you can see 10,000 more than the median measure I cite. As I am sure statisticians will verify (although I am not one), when using data that includes a few very extreme outliers eg those on very high incomes the median measure is better to work out what most people actually live on.

    only 16% of all students will have household income larger than this and still recieve a grant, and as I say the grant will be smaller. I do not believe in just making it possible for disadvantaged people to go to university, but I want to make it one of many normal choices they have to choose between, this does mean support for lots of people.

    £25,000 is not much money for a family say supporting two other dependents and then to support a child through university.

    You made a comment about the finance gap on my blog, I shall explain here, so as not to have a split decision. SFE when informing you of their assesment results come back with three income suggestions: grant, loan and “family contribution”

    However a person who gets the full means tested grant is allocated more (including the family contribution) than a person who gets no means tested grant at all. The implication being that it costs more for a poor student to live, there is of course no reason for this. This finance gap must be made up from somewhere, there is no more loan to be had, and it is already determined that said person has no grant, therefore it must come from further parental contribution. Yet parents or students who do not realise this implicit further contribution are left with a significant amount less money, in the most extreme cases not actually paying a students rent for a year. This can account for nearly £3,000 (so £9,000 over a standard 3 year course, £15,000 or more for our doctors and dentists etc shocking) a year, a sizeable amount I am sure we can all accept. This is administrative and complicated hence why it was not included, this is not partisan so it was irrelevant to the point i was making anyway

  8. I was using median, actually, though I was a little out — it’s closer to £24,000 P/A. http://www.statistics.gov.uk/cci/nugget.asp?id=285

    Thing about the grant is this. I know some people who receive only a very small portion of the grant due to their parents’ income. As you say, this technically makes it more difficult for them to go to University unless their parents help out. So I see that there’s a problem — but I don’t see the inflated levels you can be elegible for a grant as the solution. Instead I think grants should be restricted more, and the student loan should be boosted by quite an extent.

    Being a student means a lot more independence from home, but this independence is undermined if you have to continuously ask your parents to chip in with the rent (which will happen if you’re not elegible for most of the grant and rent privately). So I don’t want to cut the funding of students from higher-earning families — on the contrary, I think if anything the settlement is unfair on them. I just think it would be better improved through boosting the loan, and funding that by drawing back how many people are elegible for a grant. I hope this makes sense. I appreciate that it’s a contentious view.

    “£25,000 is not much money for a family say supporting two other dependents and then to support a child through university.”

    Yeah, I agree with this. My point was more about families earning higher amounts — above the median.

    I’m not sure I understand — are you saying that the student finance form has a “family contribution” bracket? I don’t recall that, though it is a while since the application.

    What happens if parents don’t make up the funding? Does the Uni help out? I know there’s technically a “parents not supporting” option on the Student finance form (is this what you were referring to), but I think if you fill that in you can’t be registered at your home address at all, not even for holidays, or something like that, which is a bit of a harsh alternative, and doesn’t allow for any middle way — such as parents prepared to support you at home, but not pay the full gap between living costs and the basic loan.

    Complicated stuff!

  9. The student finance assesment does have a section labbeled “family contribution” but i dont want to dwell on this. If parents dont fullfill this, then you are poor. But even if they do you have less money than somebody receiving the full grant, it is this hidden gap i worry about. As I say lets not dwell on it.

    Above median people will still struggle to afford this.

    I couldnt care less how much independence uni gives (from a governmental pov) I certainly would not base student finance on it.

    • Sorry, didn’t notice this before. I do think it is an important perspective, actually, as it’s crucial to the question of whether to treat Uni as a personal investment or an extension of a parent’s choices for their child.

  10. “I am also a first year undergraduate who is likely to be hit by any increase in tuition fees.”

    you won’t, you get “locked in” to the level of fees you had in your first year (adjusted for inflation).

  11. Oh thats good, fair enough. Of course all this is at gov discresion it could all change, including for those who

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