Students should finance their own education
That students will have to pay more of their education costs is now a given. The question is whether the payment should be up-front or in arrears – higher fees while at university or higher taxes after they leave?
The expansion in further education and the recession have combined to highlight the unsustainable cost. Labour is looking for £2bn of cuts, the LibDems are ready to postpone their pledges on tuition fees and the current review of fees could recommend doubling them. The Confederation of British Industry wants a review of grants, loans and fees.
Perhaps the most important point is that students should know the cost of their education – whoever pays it. That way they can value what they receive. Past generations floated into university with no knowledge of the teaching cost, merely an idea of accommodation costs gleaned from the size of grants with mum and dad topping up the difference.
Even now English universities charge just £3,145 a year for tuition – probably about half the true costs. US public universities charge nearly £6,000 but at private American universities the cost is £20,000. The total costs of attending an Ivy League establishment is estimated at around £35,000 a year.
If UK students had to pay more they could better work out whether to attend university rather than drift there. People who are meant to be clever ought to have the chance to assess whether three years lost income and three years’ of education costs will be offset by higher earnings in the shortened working life.
If that makes fewer school-leavers choose higher education, good. The CBI is right to call for government to scrap its target of sending 50 per cent of youths to university. And business is right to join this debate because it can sponsor students, offer work experience and ultimately provide jobs. It is right to ask for students to emerge with degrees that enhance the economy. While student numbers have risen 35 per cent over a decade, the proportion taking maths, science, engineering or technology is down 20 per cent.
It seems reasonable that those who benefit from higher education should pay for it, but for most students, even up-front payment would be spread over many years because it will be financed through loans. Graduates thus start life in heavy debt at the time they might also want to take on mortgages and start families.
The CBI talk of bonuses is not necessarily helpful. If companies are to enter an auction of offering to pay-off student loans when recruiting graduates it will distort the labour market and expand a City culture of bonuses and golden hellos that ought to be suppressed.
But taxing the high incomes that degrees should bring is not satisfactory either. It allows those who fail to use their degrees to earn more to escape paying and it penalises self-made high-flyers who prosper despite missing university.
The principle of the student paying is right however. Fees should rise to reflect costs. And loans (or rich parents or generous companies) are the best way to recover payments. Tax should be a last resort.
