Opinion: Liberal Youth and the thorny question of higher education funding policy

The following article is by Richard Heinrich and Phil Jarvest, who are joint candidates for co-chair of Liberal Youth.

Lib Dem Voice welcomes articles from any candidates in the Liberal Youth elections.

The issue of higher education (HE) funding will very likely become a serious and highly contentious subject during the present Parliament.

We believe that for Liberal Youth – and indeed the Liberal Democrats – to play an active and useful role in this debate a full and wide-ranging internal discussion on the notion of a student contribution is needed. In our opinion Liberal Democrat policy has failed to adequately address the difficult questions surrounding HE funding and has instead remained wedded to a policy that is, although popular, ultimately flawed.

We believe that ensuring the twin objectives of enhanced quality in teaching and research and the widest possible participation is impossible under a system paid for entirely through general taxation. It is simply not possible for this government, or any future government, to levy sufficient taxation to fund our universities’ aspirations to compete with the world’s best.

Abolishing a student contribution in its entirety is a regressive policy that will overwhelmingly benefit the middle classes. ‘Free’ HE would be enjoyed disproportionately by the middle and upper classes, while the costs – if paid for through general taxation – are borne by society at large (Astle, 2008: 2). Since most taxpayers are non-graduates with relatively low lifetime earnings, the policy involves a significant redistribution of resources from poor to rich.

Such redistribution is indefensible at a time when large proportions of young Britons are leaving school without basic literacy and numeracy skills (see, for instance, Financial Times, 2010; The Times, 2010). Evidence has consistently shown that young people from less well-off backgrounds are not deterred from entering HE because of the fear of debt, but because they lack the requisite secondary qualifications (HEFCE, 2010: 2). To create genuine equality of opportunity it is essential that we target additional funding at young people before they reach university.

It is important to remember that whilst HE is a public good it is also attached to significant private benefits. We believe that in current economic situations it is only fair that those who stand to benefit financially from HE pay a contribution towards the costs of their studies. Whilst there are significant social benefits attached to a highly skilled and educated population, there are also notable private benefits such as increased lifetime earnings and enhanced status (Marcucci and Johnstone, 2007: 27-28).

However, we do not see tuition fees in their present form as the ideal method for that contribution. Tuition fees unfairly burden students who may contribute to society following graduation yet earn significantly less than fellow graduates. Furthermore, fees create a worrying culture of debt. We also strongly believe that it would be detrimental to the goal of equality of opportunity if the cap on fees was to rise and a free market was to be introduced in HE.

Retaining our position of abolishing tuition fees leaves us isolated from the wider debate. It is important that Liberal Youth, and the Liberal Democrats more broadly, enter into a mature, evidence-based debate on the role of a student contribution. To play a constructive role in combating the injustices of tuition fees we need to articulate a credible alternative. Personally, we would like to see a realistic and informed debate on the potential role for a graduate tax to provide additional, and much-needed, funding for our universities.

The exact nature of a credible alternative will need to be based on wide-ranging consultation and discussion with our members. However, the continuation of our current position is undesirable and unrealistic and ultimately, leaves us unarmed in the fight for a fairer system of HE funding.

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31 Comments

  • Andrew Suffield 26th May '10 - 11:29am

    I’d certainly like to “benefit financially”, but I graduated a few years ago and it’s yet to do anything but cost me money.

    I dislike policy proposals that are based on conformity to the average. Doesn’t it say something about that on the back of the party membership card?

  • Foregone Conclusion 26th May '10 - 11:43am

    Tony Butcher,

    The problem is what we mean by ‘courses which provide the greater benefit to society.’ Oxford University’s submission to the Browne Review suggested that students in such courses receive some sort of benefit, either in the form of lower fees (problematic since the sciences and medicine tend to be the more expensive courses!) or a reduction in any proposed graduate tax, or increased bursaries, or whatever. But as many people pointed out, how do you classify ‘benefit to society’? Do civil servants, journalists, librarians amd captains of industry, all likely to be arts students, benefit society? I’m not unsympathetic to the idea of targetting incentives into areas such as industry where we currently have a dearth, but a simple division between ‘useful’ and ‘not useful’ is not helpful.

  • I am generally in agreement with this. I accept the case for a student contribution and I’m happy with the current system of student loans and the repayment method. Student finance needs to be made clearer to people who should at least be considering university (almost everyone – at least consider it, even if you decide it isn’t right) as I think it’s quite common for young people to not distinguish between different sorts of debt and students don’t seem to be terribly well-informed about the availability of bursaries, etc.

    However there is definitely a problem with the universities. At Bristol students in the Economics department discovered that none of the extra revenue raised from top-up fees was actually going towards their education. You expect some cross-subsidy in universities, but this was beyond the pale, especially since students were being asked to accept “efficiency savings” in the form of less staff marking time.

  • Graduate tax, nice idea, but what is there to stop graduates taking employment overseas, thus avoiding the tax? Upfront tuition fees are the fairest way. What could be done is, for those taking certain employment, part of their debt could be paid off.

  • George Kendall 26th May '10 - 12:33pm

    >> Abolishing a student contribution in its entirety is a regressive policy that will overwhelmingly benefit the middle classes

    I completely agree. We’re a progressive party, so we should not be allocating disproportionate funds to subsidise the well-educated elite.

    Maybe it’s unfair, but I’ve always assumed that this policy was driven by, on the one hand, by members who went to university sympathising with younger people who are like themselves, and the political desire to win the student vote.

    There are unemployed graduates who do not benefit economically from their education, but, in terms of life-long earnings, this is not typical.

    The sad fact is, at a time of limited public funds, any proposal to subsidise one group involves taking money from another group. And the people in our society most in need of support are the poorly educated, not the well-educated.

  • The moment when the proportion of young women entering HE seems an odd time to make these arguments, they would have had far more force in the 1960s. It is true that HE funding involves a redistribution from the Upper Working Class to the Lower Middle Class but it also involves a similar redistribution from men to women & a much larger one from each generation to the next. Both the latter are good things surely ?

  • Matthew Huntbach 26th May '10 - 12:58pm


    Evidence has consistently shown that young people from less well-off backgrounds are not deterred from entering HE because of the fear of debt, but because they lack the requisite secondary qualifications (HEFCE, 2010: 2). To create genuine equality of opportunity it is essential that we target additional funding at young people before they reach university.

    How much does it cost to tell 16 year olds “if you are OK at maths, do A-level Maths”? That would solve half the problem of young people losing out from HE opportunities because they lack the relevant qualifications.

  • Duncan Ayles 26th May '10 - 2:11pm

    A graduate tax would be an absolute brilliant way of pissing off the most successful and talented members of our society who could quite easily work anywhere else. If people decide to do stupid arts degrees with no financial benefit in the long term then it is their own stupid fault taking that degree. Fees should increase for those degrees to subsidise degrees such as engineering, science and maths which help drive economic growth.

  • Malcolm Todd 26th May '10 - 2:29pm

    I applaud the general thrust of trying to move us away from our seemingly ingrained support for unconditional general taxpayer support for all students, but I disagree with the authors and particularly Richard’s later comment on the relative merits of graduate tax and income-contingent loans:

    1. “Although income contingent, the threshold is low and the loan must be repaid”
    That’s not quite true: after 35 years it gets written off. Few people will benefit from that provision, for sure, but the ones who need it most will.

    2. “Students from poorer backgrounds, from a background of no wealth and a fear of debt are likely to choose the cheapest courses thus reducing the meritocracy in the system.”
    Well, I keep seeing this argument, and I’ve never been convinced by it. Where is the evidence that people from poorer backgrounds have this crippling “fear of debt” that renders them incapable of calculating when it’s to their own advantage to take it on? Isn’t one of the roots of the financial crisis the “subprime” bubble – i.e. poor people borrowing more than they could afford to pay back? More generally, I haven’t seen any lack of participation by poorer social groups in the explosion of all forms of credit over the last 30 years.

    3. “the current system is deeply unfair in that in some cases the costs of a degree – especially if the cap rises – will be greater than the average graduate premium is that subject. … A graduate tax, where you only repay according to how much you benefit after graduation removes this risk.”
    This substantially misses the point of education, it seems to me. We’re generally quick to argue that the value of education is not purely economic: that there is a benefit beyond pounds and pence to the individual (and indeed society). I’ve never earned enough to start paying back my student loan (from the earlier 1990s scheme, with more generous exemption than the current scheme), but that doesn’t mean I didn’t benefit from those three years of taxpayer-funded mind-expansion – I just haven’t parlayed it into financial success. As and when I have to pay back, I shan’t worry about working out whether I’m earning more than I would have done if I weren’t a graduate (very unlikely, I should think): I’ll be paying for what I received, not for what I made out of it.

    I think the income-contingent loan scheme is basically terrific. We should look at more ways of encouraging people to study subjects that we think we need more graduates in. (There are already some bursaries for students in maths and science subjects which can make a real difference; government departments should look at offering specifically to repay student loans for people taking on essential, hard-to-fill jobs like GPs or teachers in deprived areas, etc.) We should talk — unhysterically — about the dangers of differential fees. But in essence, the scheme we have is a good one, and we should be working our way around to quietly accepting that.

  • Andrew Suffield 26th May '10 - 2:34pm

    That’s not quite true: after 35 years it gets written off. Few people will benefit from that provision, for sure, but the ones who need it most will.

    If you haven’t paid it off after 35 years then that’s the least of your worries.

  • Malcolm Todd 26th May '10 - 3:05pm

    Andrew, if you have a debt of say £20,000, at an interest rate of say 4%, then you won’t even be meeting the interest payments until your income reaches about £24k per year – which is roughly the median full time wage, I believe. It’s entirely possible, even for a graduate, to spend their entire working lives without earning more than that for any extended period of time. The fact that you don’t carry that debt on into retirement will be significant for those (relatively few, as I said) whom it affects.

  • I have just graduated from university, where I went on the grounds that I was qualified to, but couldn’t think of anything better to do. I had a great time and learnt a lot, socially, but I slacked, was unsure of my reasons for being there, and studied a subject that will certainly not “benefit society”. Far from the romantic notion of a studious lot working themselves into the ground for the public good, most people I met there were in the same boat. The idea that the taxpayer should unconditionally fund three-year drinking holidays for an increasing proportion of the nation’s youth, paying more and more people to be economically inactive for no better reason than to massage youth unemployment figures, is wrong, and I enthusiastically welcome this article as an attempt to reframe the debate and, as others above have mentioned, remove the economically unsound and socially unjust dogma.

  • EU immigrant 26th May '10 - 7:27pm

    It is encouraging to see people challenge the status quo within the party. Abolishing tuition fees seems to be sacrosanct, but for outsiders it will often come across as a cheap way to get the student vote. However, it is not.

    The authors are right that paying for university education from the public purse is a subsidy to the middle classes. They benefit more than anyone else from having their children educated for free. However, with the distribution of wealth as it is nowadays in Britain, many middle class parents have no problem paying for their kids’ education, however much fees are increased. They will stimulate them to go to university, as they know their children will benefit in the long run. However, for children from poorer families it is not quite so easy. There will be cultural problems (“our sort doesn’t go to university”), they tend to have gone to worse secondary schools, etc. The barrier to entry is just too high for many, especially if you ask them to pay more, either now or later. Asking people to pay e.g. £25k a year for university isn’t quite that bad if parents are used to paying that for secondary school. Asking people who have parents earning less than £20k, will be a completely different matter. Whether that is now or later, the mindset is the same.

    Having people pay later in their professional life is an attractive option. Young people don’t have to pay upfront. But it will only be a reason for the professional classes to claim they should get paid more to be able to pay off their student debts. I’ve worked in the City for over a decade, and I have heard this often enough from graduates.. Income differentials only increase this way.

    I agree, rationally you are completely right. Invest in your future, and you’ll be able to benefit disproportionally. However, research keeps showing that the main driver in income differentials between the US and (continental) Europe is free/cheap education. To keep fairness in society, please don’t throw that away.

  • an 'average' mum 26th May '10 - 9:41pm

    It really annoys me when I keep reading this or that uni chancellor etc saying the well-off can afford higher tuition fees, while poor students get state help.

    Because it ignores those who are neither.

    I graduated in the 1980s and still earn less than the ‘average’ wage. (Some people do a job for the satisfaction rather than big money.)
    My son, as things stand, qualifies (and it’s a bureaucratic nightmare applying – including tracking down his absent father’s statement of income, when we’ve not seen a penny of that in several years) for £400 non-repayable grant. Tuition fees, rent and living are around £9,000. And part-time jobs in a recession are in short supply.

    With the help I can afford, he will start his working life owing £20k at least. Then be expected to pay that off, pay rent, save a huge deposit for a mortgage (thanks to the property price inflation of recent years), AND save for a pension.

    I know of middle-class kids who have already opted not to go to uni because they don’t want huge debts. And one who is working abroad now so he doesn’t have to start paying off his loan. Middle class couples are delaying having children because they can’t afford child care on top of everything. Kids are moving back in with parents till their late 30s.

    If unis are allowed to charge what they like in tuition fees, only the very wealthy and the poor will be able to go.

    (Name withheld for sake of my son).

  • Another possibility is to try and instigate a culture of donating to your old uni. What about making money donated to universities tax free? Or have a state-matching scheme? It might also focus unis on the student experience too. Lastly if universities in the UK want to keep getting tax payers money, then some form of continuing assessment of undergrads (not taxpayer-funded, drinking holidays, as stated above) is necessary. Teaching and marking should be year-round.

    We need to think about how we keep our universities to be globally competitive.

  • Also, Huw, words like ‘idiotic and contemptible’ is not in the spirit of liberal, rational discussion. Play nice.

  • I graduated a decade ago, and have never earned above the threshold for student loan repayments. There is no doubt that my degree has helped me to get jobs I would not have had otherwise, but with more and more people going to university, degrees are worth less and less in the jobs market. Vocational or “practical” courses- medicine, computer science, engineering- are valuable. Anything else, not really. That is where I think the problem lies: the continual expansion of student numbers.

    Free, or nearly free, higher education should be dependent solely on ability and achievement.. Quality of students, not quantity. The issue then becomes how we measure achievement so the best candidates are accepted- reform of A-levels and their equivalents. Applications to University should be “institution blind”, such that those evaluating application forms have no idea what kind of area the candidate lives in, or whether they attended a private school, state school or FE college. They are judged by their exam results and what they write on their application alone.

    With fewer students with greater ability, the financial cost to the taxpayer is lessened, and the chances of them getting jobs with higher salaries, contributing to society higher tax rates and general smarts, are greater, as they aren’t one more bog-standard graduate in a sea.

  • Malcolm Todd 27th May '10 - 12:48am

    With the help I can afford, he will start his working life owing £20k at least. Then be expected to pay that off, pay rent, save a huge deposit for a mortgage (thanks to the property price inflation of recent years), AND save for a pension.

    See, this is where the argument about debt doesn’t make sense to me. You expect young people to go on to take out a mortgage, but think they’ll be paralysed by the prospect of owing £20k. That mortgage is likely to be a six-figure one, the interest rate will be almost certainly higher than the student loan rate, and the bank or building society won’t indefinitely reduce their payments when their income drops; but this commitment will be manageable, unlike the student debt. How does the logic of this work?

    @Huw:
    It is wrong on a fundamental level to charge for education.
    Why?
    Is it equally wrong to charge for postgraduate education, or does the wrongness stop at first-degree level?
    When I took A-level maths at night school a few years ago, was it morally wrong of the college to charge me for doing so?

  • See I don’t know what the solution is. Or even which suggestions are better. I can however tell which ones I think are bad, so at least that is something.

    The issue with the inequality caused by tax payer funded education did worry me, however, the taxation system is designed not to take as much money from those on lower incomes already. I also wonder about the validity of a graduate tax anyway. Are those very highly paid professionals who do not have a degree going to be exempt from this tax, simply because they don’t have a degree? That seems somewhat, dumb.

    Additionally, all degrees are not equal, and not all graduates of those degrees are equal, and a graduate’s monetary reward and societal value may not be related in anyway, or similar candidates on one value will not be similar on the other. So these distinctions are so subtle they could be treated as impossible to make. Therefore judgements cannot be made to reduce fees on one degree and not on another, or to apply higher taxation or repayments to one graduate but less to another.

    I greatly sympathise with the mum’s position. The choice of saddling yourself or your child with huge debts is not one that should have to be made. It would seem that potentially the lower-middle/upper-working class group is the one that could be hit the hardest. My personal situation is that due to my parents income I qualify for very little grants, no EMA and no bursaries or other support. I do not want to have to rely on my parents to support me through uni. So I have accepted that I will have massive debts when I leave uni. I am in the position to be able to do this, as my chosen career path is the military so I will have free bed and board whilst having a high starting pay (officer so about £30k) should this not happen I will have the option of moving back in with my parents. Some will choose not to do this, and once again students like myself should not be put off going to university because they do not want to rely on parents or to get into debt.

  • Matthew Huntbach 27th May '10 - 11:33am


    The idea that the taxpayer should unconditionally fund three-year drinking holidays for an increasing proportion of the nation’s youth, paying more and more people to be economically inactive for no better reason than to massage youth unemployment figures, is wrong,

    Yes, which is why we should re-think fundamentally how universities are financed in order to stop that.

    The current system for financing universities works as an incentive to minimise teaching effort and dumb down the material. University lecturers are under pressure to put all their effort into writing research papers, because that brings in extra money and pushes their uni up the league tables, and never to fail any student however little the student works, because that loses them money and pushes them down the league tables.

    This argument is not in the forefront of public debate because it seems no-one outside those who are employed by universities knows how they work. Up till the general election, that included the government minister responsible for them. At least in Willets we have someone who knows what the RAE is, and has some idea of its disastrous consequences in UK Higher Education.

  • Whilst this article is of great contribution to the HE debate, this duo are undermining members of the organisation they want to lead.

    The current VC Mem. Dev. has asked candidates for Chair if they want to take part in a “Jermey Paxman” type interview. But this cunning pair have not even replied to his facebook!

    I for one will not be voting for them because they clearly don’t want members to have a wide discussion with all the candidates!

  • Phil Jarvest 27th May '10 - 10:15pm

    Just to clarify a few points. Firstly, Richard and I are not wedded to a policy of a graduate tax. Our blog seeks to make the point that our current policy is both unfair and unrealistic. We believe making university fees paid solely through general taxation would damage HE funding and would be a regressive tax break.

    It should also be noted that we would like to move away from the current system of tuition fees. However, we feel that to achieve this we need to offer a credible alternative method of student contribution.

    At present, we lean towards some form of graduate tax yet we are willing to be convinced by other systems. If elected, we want to see research undertaken and wide consultation among our members on the subject. We want a full and frank discussion about what the most appropriate system is. This would ultimately lead to motion being placed before LY conference, which of course would need a vote of support. We’re proud to be part of a truly democratic party and respect due process at all times.

    To address some specific points:

    On the mantra that education should be free to all, I would agree with Malcolm Todd. We charge for night classes, vocational college courses and post-graduate degrees. What makes undergraduate degrees unique from these?

    On the question of differently priced degrees, I would tread with caution. Arts students are already disgruntled by paying the same level of fees as science students, when their courses cost a fraction of science degree. Whilst I recognise that the economy requires more engineering and science graduates, I would argue that the heart of this problem lies in secondary education prior to students’ university applications. Furthermore, I would not like to live in a society where education was purely seen as a means to an end; we believe education should been an end in itself.

    An average mum: I share your concerns and we agree the current system is not perfect; in fact we oppose tuition fees. However, we believe calling for a system which involves no student contribution is both unfair and unrealistic. We believe that to campaign against tuition fees, we, as a Party, a need offer a credible alternative form of student contribution. We want a full and frank discussion within the party as what form that contribution should take. Our current policy simply leaves us isolated from the debate.

    Huw Dawson: I appreciate that many people will consider our opinions rightly or not ‘idiotic’. However, it would be nice to hear a more detailed explanation of why you believe this to be so. As for ‘contemptible’, I think you’re being a bit harsh. I don’t understand why we should be held in ‘contempt’ for voicing a legitimate concern on HE funding. I believe as a party we should always be forward-thinking, challenging dogma and questioning the status quo. I certainly would not want to be part of a political party that admonishes it members, particularly those stand for an elected position, purely for raising a different opinion.

    Finally…Zak: I would challenge the claim you have made there. We have not been contacted about this interview but would obviously be delighted in any event that helps us communicate with our members.

  • >Malcolm Todd: See, this is where the argument about debt doesn’t make sense to me. You expect young people to go on to take out a mortgage, but think they’ll be paralysed by the prospect of owing £20k.

    With respect, you missed my point.
    Firstly, I was stating that AS THINGS STAND, they won’t be able to afford a mortgage for a very long time. Already, the average first-time buyer is in their late 30s, IIRC. (If you have to pay off £20k student loan, then save £20k for a deposit..)
    It’s not ‘paralysed’ – it’s not able to afford (unless you earn £35k+ after graduating: and there are graduates working at my place on £17k, with few prospects of that increasing over time).

    But my point (first and last paragraphs of the post), was that the Russell Group want the cap on tuition fees to be lifted, so they can charge what they like.
    So it wouldn’t be £20k in future: it could be – well, who knows how much? £30k? £40k? More?
    And their justification (and the Independent newspaper today supported the idea again) is that the rich can afford it/the poor will get state help.
    My point being that there are a lot of people in the middle who aren’t rich and don’t get state help. Struggling now and maybe priced out altogether in future.

    >Phil Jarvest. However, we believe calling for a system which involves no student contribution is both unfair and unrealistic.

    At no point did I say there should be no contribution.
    I repeat: the pressing issue at the moment is that unis want to be able charge what they like in future. And that would mean only the rich or the poor could consider a uni education.

  • I believe we should turn most universities into local universities, probably sitting a kind of HE A level which could be provided reletively cheaply and no costs for living away by those students and then a similar proportion to when oldies like me went to universities in the late 70s gain places at national universities and can be supported without debt. I am yet to se any convincing case for expansion but providing an extended OU style option as I have suggested would meet social mobility needs, be just and fair to thiose from low and middle income homes and provide the needs of the nation. After all in my day fewer of us went but managed to people the nation with teachers, scientists and engineers.

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