Huge student debts are unfair. Let’s move towards a graduate contribution

There is one basic problem with university funding. Eighteen-year-olds bring many things with them – energy, enthusiasm, commitment, diversity – but they tend not to have any money. Universities, on the other hand, are expensive: staff, not unreasonably, want paying; utility companies expect bills to be settled; libraries, laboratories and computer suites all cost money. The Guardian reports. 

In publicly funded systems, universities join the queue for cash with schools, defence, hospitals, and so on. Moreover, public funding involves the government deciding how many students should go to university – inevitably an arbitrary number.

The 2012 funding reforms in England solved the problem by providing publicly underwritten loans for (almost) the full cost of tuition. Universities got the resources they needed and students repaid at a fixed rate once their income rose above a threshold, with debts written off after 30 years.

But the language of loan, indebtedness and default has proved toxic, compounded by ill-advised decisions to raise interest rates on repayment and to abolish maintenance grants. There is a widespread view that the system is generationally unfair: today’s students get a much worse deal than their parents.

The real question for the government’s ongoing review of post-18 education and funding is how we ensure that universities are funded properly to teach, research and innovate, while also making them accessible to students irrespective of family income. This is not easy and it involves addressing several different things at once. If I were advising the government, I’d make six changes.

For starters, we need core funding to underpin the research and innovation base across the university sector, which I would treat as an investment in national prosperity.

I would address the challenge of meeting day-to-day living costs for students through a means-tested maintenance grant, which could be framed as a social mobility investment fund. Meanwhile, sub-degree provision could be expanded in universities through incentives to students and universities, which would encourage credit accumulation and transfer schemes.

Most importantly, I’d replace the loan with a national fee bursary scheme, participation in which would trigger an obligation to make a graduate contribution payment through taxation over a time-limited period once studies are completed – not quite a graduate tax, but a more transparent repayment scheme. I would also reduce any real interest rate on post-graduation repayments.

Read the full article Huge student debts are unfair. Let’s move towards a graduate contribution

Please tell us your thoughts in comments or via Twitter ~ Tamsin

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