A collaborative blog for Current Affairs and Policy Debate

The case for tuition fees

In Ideology, The Media on June 28, 2010 at 3:16 pm

David Weber

I’ve decided to kill two birds with one stone, and, while writing a response to a recent article by James Graham on the subject of tuition fees, go somewhat further and make what I feel to be a moral case in favour of them. In doing so, I am sure I will make few friends, either among students or the social liberal forum, but I feel it needs to be made. Being a student on a full maintenance grant, I also feel I have some room for maneouvre here, as I can hardly be accused of the indifference of the wealthy.

First, however, we must analyse what is meant by ‘poor students’. It refers to students who come from low-income families, those who receive the full maintenance grant, and thus get more direct support from the taxpayer than many of their peers. Poor graduates, however, can and probably does refer to a different set of people, those who fail to land high-paying jobs after doing their degree.

Technically, I will most likely fall into both categories — I come from an income category classed as ‘poor’ by the government, and will most likely not land a particularly high-paying job after University, as I study music. As with most technical definitions, these are inaccurate. I come from an income probably fairly close to the median — making me middle class, yet still qualifying for maximum state support — and most teaching jobs, my preferred career, pay solidly middle-class wages. By middle class, of course, I mean middle income, not the Telegraph’s definition of middle class, which seems to exclude anyone who isn’t in the top income tax tier.

So, despite having had a reasonably fair background, I qualify for the most generous support. What does this support grant me? Well, taking into account living in London — which, despite the boosted loan, probably well makes up for it in terms of higher rent — I still find myself with about £90/week to live on next year, without even taking into account the bursary which my college is obliged to pay me (as a lower-income student). Given that in the previous years, I managed to on average live on less than this despite getting rather much more (due to sharing a room with another student, therefore getting a discounted college rent), my savings were sufficient to fund a summer trip to Sweden and back, plus regular journeys to and back from home, neither of which were particularly cheap. And these were, needless to say, not essential. And the bursary has gone more or less untouched, so far.

So from the face of it, student support seems fairly generous. Certainly more generous than the support granted to my siblings during the 1990s, even if the horror stories told to me are 90% exaggerated. So the up-front finance is certainly more generous in 2010, without a doubt.

So we have to go into deeper arguments about student finance. What about the massive debt, as forewarned by the kindly president of the National Union of Students?

The answer is actually helpfully rebutted by James Graham himself:

What is fascinating here is that he [David Willets] seems to think that it is news to people that tuition fees are a tax on students. That’s what the Lib Dems have been saying consistently since they were introduced in 1997!

In doing so, I applaud James for moving beyond what I feel to be the scaremongering tactics of the NUS and other anti-fees bodies. But he also has to realise that this also brings the argument on to a far more nuanced position, that of how best to set up a strong finance framework for higher education, rather than a “helping poor students to attend University” one.

James seems to reluctantly support a Graduate tax instead of a Graduates’ contributions system (the current means of repayment of fees), which is a matter of yet more nuance, as the two systems are very similar. The argument ends up resting on what he terms “progressive”. A graduate tax is “progressive”, whereas a fees system is not.

This is a buzzword which tends to drive me up the wall. This is because when it comes to general taxation, there’s certainly a point to be made — services for the use of all should be funded on an ability to pay basis, in a way which impacts everyone in the same way proportionally, or even a little more than proportionally, as Adam Smith himself argued.

But university is not a service for the use of all. It is rather a use for those who make the choice to pursue an academic or highly skilled career path, the overwhelming result of which is better wages and more skilled work, and this is a choice, rather than a necessity. So the argument for the wealthier graduates subsidising the poorer ones is not nearly as simple as that of wealthier taxpayers subsidising poorer ones for the funding of public services.

Universities also are a good way of weakening generational disadvantage. Students from poor backgrounds may not end up as graduates with poor incomes. In fact, they might out-compete graduates from more privileged backgrounds. The biggest barrier to people from poor backgrounds is getting into University in the first place, rather than what happens once they leave University. Universities are empowering. Therefore the fees system, in leaving poorer (or actually middle earning) graduates paying off loans for longer, is not necessarily hitting students from poor backgrounds only. In fact, an analysis by centreforum concluded that the biggest benecifiaries in abolishing fees would be the top 40% of family incomes.

So why the opposite conclusion? Well, the blame centres largely around the biggest mis-selling of a government policy in a long while, which allowed the media to run riot with the idea that students would be swamped by “massive debt”. This is something which even a well written article like the one I am responding to sins in briefly towards the end. It irritates me incessantly, all the more so because it is a classic example of something which is technically true, but thoroughly misleading in practice. Student loans cannot bankrupt you. You do not have to pay them back till you earn £15,000 per annum, and then only at a rate of an extra 9% on top of income tax. There is no call for this kind of hysteria.

If you want to see a system which did swamp graduates in debt, it was the pre-1997 system, where grants had been slashed and laon repayments were not income-linked as they are today. In other words, Labour has been good for Higher Education.

The rise in numbers going to University has been proportionally higher among those from lower earning families, too, than among those from high-earning families. This indicates that fees have not in actuality put off the average pupil from poor families. This is in spite of a massive barrage of negative publicity, patronisingly telling them that they are not able to afford a perfectly affordable higher education. Therefore the constant onslaught among the left against tuition fees looks even more ill-advised.

Furthermore, what has to be considered is what the effect of changing to a system of graduate tax would be. In this case it largely depends on whether or not the tax is ring-fenced, like the licence fee, into funding a specific purpose.

If so, then what you would immediately find is a huge incentive being placed on Universities to invest disproportionately in subjects which have high market values, generating graduates who are likely to earn big wages. If anything has become clear during the last few years, however, it is that market values are not the only ones in need of consideration. Furthermore, as education has a very long-term effect, it is wise not to over-value the commercially successful courses, as security against sudden changes in the sort of skills which are required. These sorts of courses will also tend to be more popular, as well as paying slightly more into a university, as high-earning graduates are more likely to pay their fees back quicker and the lowest earning graduates will not be able to pay their fees back in full (the loans expire after a period of 20 years). Finally, fees are relatively simple to budget for. Having most above-average earning graduates repay their fees in full means that it is far easier to calculate what students will bring the university after graduating. Replace this with a graduate tax and the system immediately becomes more of a headache to budget for. This is, incidentally, a warning about raising fees, which would immediately become far harder to plan for as far fewer graduates would be able to repay their fees within the 20 year period, unless of course the loan period itself was extended.

So, why not just let the government fund Universities then, with the graduate tax as a general source of funds rather than a hypothecated one? I suggest that the best argument against this is the row over funding cuts in the last year, which provides ample demonstration why being dependent on government funding is not a great idea if there are better systems to be had. In the case of Universities, I suggest there are, in the shape of the current system.

Then we have the question of where money should be going. Willetts is, in fact, right to claim that Higher Education is a burden on the taxpayer, as fees are still subsidised by the State, hence the current review into fees which promises to cause the coalition so much pain. Given the state of public finances, it seems inconceivable that more money should be redirected into an already affordable system, away from areas where it is far more urgently needed.

Finally, I think there is a strong moral case for fees. Students are, with one or two exceptions, all adults, and they should be at a stage where they can see the difference between “free” and “affordable”. Nothing is free, but certain services may be made affordable. Instead of the constant sniping about fees, if the left really cares about higher education, it should start sending out this message above all else: University Education is affordable to all. It is far better to encourage people to use the opportunities they have than to discourage them in pursuit of unattainable alternatives.

  1. Excellent, I am in full agreement David, particularly as I see the tuition fees argument increasingly swamped with misnomers – loans implying debt for example, which although technically true, is hardly going to “bankrupt” as you said.

    I was all the way up with you up to when you say Willets was right that students are a burden on the taxpayer – I think (and I’m sure you didn’t mean it to), that’s a bad characterisation. Students are not a burden on the taxpayer, because that implies students are imposed upon them, or that it is a particularly arduous task to sustain them with little reward for the taxpayer. In fact, graduates add substantially to the economy, both nationally and internationally, in terms of skills, innovation and technologies. This indirectly benefits the taxpayer, and so should be considered an investment by taxpayers into security of a improved and better future, much like how the government puts money into scientific grants.

    I do think though that you make a good distinction between public provision of public services, such as health and so on, and public funding of higher education which is nowhere near such a fundamental need. Higher Education is best thought of, from the perspective of the student, as an investment in themselves for the long-term future, as graduates are likely to earn much more a lifetime than their other peers.

    I think the left’s main case against tuition fees really rests on the idea of education having some form of intrinsic value, in it being part of a fulfilling human life or experience – it’s therefore wrong to charge for it, because to do so means only the rich can access such an essential part of our experience. However, this case is severely undermined by the fact that graduates do go on and tend to be rather successful, and it’s only right that they are the ones who contribute back.

  2. Stephen,

    Yes, I agree with you re: the long term benefit of university education. I suppose I was being a little combative to suggest that Willets was right, although he wasn’t exactly wrong so to speak, in that all unnecessary up-front investment from the taxpayer, if the coalition’s desire really is for a balanced budget, is a burden at the moment, and other methods of financing higher education exist.

    If the left’s case is simply “it’s therefore wrong to charge for it, because to do so means only the rich can access such an essential part of our experience”, then it’s obviously a wrong one. Charging for things doesn’t mean by default that only the rich can access them – that’s discredited thinking. The only argument I’ve seen is “people are put off by tuition fees”, and as I mention in this article, I’m a little unsure of the evidence for that (anecdotally, I recognise something in it, as I had a misguided view of fees before they were explained to me), but in any case, that argument has more weight against those who misrepresent the system than the system itself.

    Glad you agree to the extent you do, anyway. I’m worried about the prospect of fees becoming a thorny issue politically, because that could be a serious problem for the coalition. Though I don’t want to see them untested by such problems, the Lib Dems are soon going to seriously regret taking such a line over fees.

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