Tuition Fees
I have very mixed feelings about the Tuition Fees package which the government successfully carried this evening.
When I was a student union officer I took part in demonstrations calling for improvements to grants packages which were vastly more generous to students at the taxpayers' expense, and I have no doubt that if I were still a student union officer I would have been of the same mind.
Actually it's quite ironic when you look back to the debates we used to have, to see what ministers of all parties have subsequently done.
Suppose that in 1985 I or one of my tory student contemporaries such as Iain Dale had told our fellow students that over the next 25 years
* Mrs Thatcher would be the last Prime Minister during whose tenure students were paid support from the state consisting entirely of grants with no loan element and the state covering fees
* When Labour finally got into power, one of their first actions would be to introduce fees payable by students despite a manifesto promise not to do so, and in their campaign for re-election they would promise not to top-up (increase) the fees and then break that promise too.
* And one of the last actions of the outgoing Labour government would be to set up a review which resulted in a further large increase in fees, though it would be left to Conservatives and Liberals to vote this through
I am quite certain we would have been laughed out of the room.
There is no ideal way to fund higher education. I really dislike burdening students with this level of debt. My own university education cost taxpayers some £30,000 in 1980's money, I have already paid this back to HMRC several times over in 25 years of paying income tax myself, and can expect to do so several more times before I retire. On reasonable assumptions about how much my university degrees have boosted my income, the government's 40% share of that extra income will have been enough to give a very good return on the taxpayers' money invested in my education.
But, but, but and again, but ...
The economics of providing student grants worked fine in a period when fewer than 10%of the age group had the opportunity to go to University. It is enormously more challenging to make the economics work when about 40% of young people have that opportunity.
And although I think we can and should look very carefully at the quality and value of all degrees, and encourage all potential students to think very carefully about what they want to study and why, I absolutely would not want to restrict access to Higher Education to the small minority who had the chance to benefit from it when I was a student.
What is not getting through all the screaming is that the increase in fees has been accompanied by a considerable improvement in elements of the package designed to ensure that no potential student, especially from an imnpoverished background, should be deterred from going to university by fear of debt.
In particular, the minimum income threshold at which a graduate starts to have to pay back to the student loan company the money borrowed to pay for fees and maintenance is being increased to £21,000. The repayment will be 9% of income above £21,000, and all outstanding repayments will be written off after 30 years.
Interest rates on the loan will be subsidised on a progressive taper. For graduates earning below £21,000, who are not yet contributing the real rate of interest on their outstanding balance will be zero. For graduates earning between £21,000 and around £41,000, a real rate of interest will be tapered in to reach a maximum of inflation plus 3%. When graduates are earning above £41,000 they will be making a full contribution to the costs of the system but still incurring interest well below normal commercial rates.
In fact, under the new system, a quarter of graduates – those on the lowest incomes – will pay less overall than they do at present.
More details of the measures taken to ensure that the fees increase does not restrict access to Higher Education by anyone who should be able to benefit from it are given in a statement by David Willetts which you can read here.
Consequently nobody should be made poorer by going to university - those who don't get a job paying more than £21,000 will not have to pay the money back, those who do have to repay the money will be those whose lifetime income will have been increased as a result of going to university by more than the extra repayments they will have to make.
Those who make a big fuss about the possibility of students from poorer backgrounds being put off going to University by the fear of debt are in danger of thereby creating the very outcome the possibility of which they criticise.
And, frankly, we cannot ignore the huge budget deficit which the coalition government inherited from it's profligate and incompetent Labour predecessors. When you are trying to correct a deficit of a hundred and forty billion pounds a year, and correct a situation where the government is spending four pounds for every three coming in, you have to take painful and unpleasant decisions. Those who argue that the student fees issue is separate from the problem of our bankrupt public finances merely prove themselves to be economically illiterate.
None of this takes us away from the fact that this system is enormously less generous than the one under which students of my generation went through university, and I do not blame the present generation of students for being cross about the change, though rioting will do them no good.
However much I dislike the fees increase, I think the package which the coalition government has voted through this evening was probably the least worst policy on funding Higher Education which could have been achieved for the country in the present horrible situation.
If you want to criticise the MPs who broke a promise, criticise them, not for their vote tonight, but for signing in the first place a pledge which they should have known was likely to be impossible to deliver if they were in government.
Those who voted for the measure will take plent of flak, but they have done the right thing. Those who voted against may get plaudits, but they have voted with their hearts and not their heads.
When I was a student union officer I took part in demonstrations calling for improvements to grants packages which were vastly more generous to students at the taxpayers' expense, and I have no doubt that if I were still a student union officer I would have been of the same mind.
Actually it's quite ironic when you look back to the debates we used to have, to see what ministers of all parties have subsequently done.
Suppose that in 1985 I or one of my tory student contemporaries such as Iain Dale had told our fellow students that over the next 25 years
* Mrs Thatcher would be the last Prime Minister during whose tenure students were paid support from the state consisting entirely of grants with no loan element and the state covering fees
* When Labour finally got into power, one of their first actions would be to introduce fees payable by students despite a manifesto promise not to do so, and in their campaign for re-election they would promise not to top-up (increase) the fees and then break that promise too.
* And one of the last actions of the outgoing Labour government would be to set up a review which resulted in a further large increase in fees, though it would be left to Conservatives and Liberals to vote this through
I am quite certain we would have been laughed out of the room.
There is no ideal way to fund higher education. I really dislike burdening students with this level of debt. My own university education cost taxpayers some £30,000 in 1980's money, I have already paid this back to HMRC several times over in 25 years of paying income tax myself, and can expect to do so several more times before I retire. On reasonable assumptions about how much my university degrees have boosted my income, the government's 40% share of that extra income will have been enough to give a very good return on the taxpayers' money invested in my education.
But, but, but and again, but ...
The economics of providing student grants worked fine in a period when fewer than 10%of the age group had the opportunity to go to University. It is enormously more challenging to make the economics work when about 40% of young people have that opportunity.
And although I think we can and should look very carefully at the quality and value of all degrees, and encourage all potential students to think very carefully about what they want to study and why, I absolutely would not want to restrict access to Higher Education to the small minority who had the chance to benefit from it when I was a student.
What is not getting through all the screaming is that the increase in fees has been accompanied by a considerable improvement in elements of the package designed to ensure that no potential student, especially from an imnpoverished background, should be deterred from going to university by fear of debt.
In particular, the minimum income threshold at which a graduate starts to have to pay back to the student loan company the money borrowed to pay for fees and maintenance is being increased to £21,000. The repayment will be 9% of income above £21,000, and all outstanding repayments will be written off after 30 years.
Interest rates on the loan will be subsidised on a progressive taper. For graduates earning below £21,000, who are not yet contributing the real rate of interest on their outstanding balance will be zero. For graduates earning between £21,000 and around £41,000, a real rate of interest will be tapered in to reach a maximum of inflation plus 3%. When graduates are earning above £41,000 they will be making a full contribution to the costs of the system but still incurring interest well below normal commercial rates.
In fact, under the new system, a quarter of graduates – those on the lowest incomes – will pay less overall than they do at present.
More details of the measures taken to ensure that the fees increase does not restrict access to Higher Education by anyone who should be able to benefit from it are given in a statement by David Willetts which you can read here.
Consequently nobody should be made poorer by going to university - those who don't get a job paying more than £21,000 will not have to pay the money back, those who do have to repay the money will be those whose lifetime income will have been increased as a result of going to university by more than the extra repayments they will have to make.
Those who make a big fuss about the possibility of students from poorer backgrounds being put off going to University by the fear of debt are in danger of thereby creating the very outcome the possibility of which they criticise.
And, frankly, we cannot ignore the huge budget deficit which the coalition government inherited from it's profligate and incompetent Labour predecessors. When you are trying to correct a deficit of a hundred and forty billion pounds a year, and correct a situation where the government is spending four pounds for every three coming in, you have to take painful and unpleasant decisions. Those who argue that the student fees issue is separate from the problem of our bankrupt public finances merely prove themselves to be economically illiterate.
None of this takes us away from the fact that this system is enormously less generous than the one under which students of my generation went through university, and I do not blame the present generation of students for being cross about the change, though rioting will do them no good.
However much I dislike the fees increase, I think the package which the coalition government has voted through this evening was probably the least worst policy on funding Higher Education which could have been achieved for the country in the present horrible situation.
If you want to criticise the MPs who broke a promise, criticise them, not for their vote tonight, but for signing in the first place a pledge which they should have known was likely to be impossible to deliver if they were in government.
Those who voted for the measure will take plent of flak, but they have done the right thing. Those who voted against may get plaudits, but they have voted with their hearts and not their heads.
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