Higher education funding fiasco

I had a rather good rant about Sarah Palin typed up for this week’s column but then I read the NUS’ new report on student finance. The report, over its twenty pages is a well written and carefully thought-out analysis that largely succeeds in its attempt to ‘step up to a real debate about how our universities are funded’. It begins by describing the changes made in 2004 with the increase in tuition fees to the new cap of £3000 and how this was done with the idea of creating a market in Higher Education with students choosing institutions based on fee levels as they did based academic league tables. This, of course, failed as virtually every institution increased its rates to the maximum level as soon as they could. The report then goes off to discuss a shadow market created by the mandatory bursaries, but we shall leave that for the moment to concentrate on the next part.

The NUS created a hypothetical situation in which, to create the intended fee market, the cap is lifted to, say, £7000. This then causes the repayment system to fail as the loan would be less likely to be paid off, with the worked example showing only the interest to be paid back, assuming the graduate managed to secure a graduate-level job immediately upon graduation. So, for the exchequer to be able to afford this, the repayment system must be changed. This, of course, is not going to be advantageous to the graduate and, the NUS claim, in some cases the debt will exceed the ‘graduate premium’ (the amount a graduate will supposedly earn in their lifetime compared to a person with two a-levels).

With a far greater number of people entering higher education than ever before, it seems logical that fees would have to be increased as the government have to pay more en masse. The problem with the system is not the funding, it is simply that too many people are entering higher education.

In 2007 the higher education drop out rates were, according to the National Audit Office, one in five. In 2004-05, 28,000 full-time students and 87,000 part-time students dropped out of degree courses before their second year. Whilst a proportion of those students no doubt would have greatly benefited themselves and society had they completed their courses, and, in better circumstances would have graduated, it seems ludicrous to suggest that they were all suited to academic study at that level. Indeed, there is almost certainly a proportion of students who do not drop out but who achieve only mediocre or poor degrees who would have been happier and better off if they had entered directly into work after their a-levels.

The argument for encouraging this increase in undergraduate education is the loss of non-graduate jobs to other countries and the assertion that Britain must compete in the graduate market as a consequence. I’m not an economist but it seems clear to me that this is not entirely true. It was not long ago that we were being told about a shortage of plumbers and electricians for instance. Why should more high school students not be given the full choice rather than being pressed continually towards higher education?

The Vice-Chancellor of Cambridge, Alison Richards, railed against universities promoting ‘social justice,’ stating that whilst they promoted social mobility in seeking out the best, it was not their ‘core mission’, which was to provide an outstanding education within a research setting. The government, predictably, did not like this much, but I wonder if it could not be used for a new funding system: the academically able and willing get financial help, the rest paying their own way?

Jonathan Potter

Tags: NUS, Student Finance