Wednesday, 16 February 2011

Student fees, student debt and higher education.

Given the current ongoing debate about tuition fees, student debt and how University education is funded, it's interesting to see some of the points that were made when tuition fees, and top up fees, were introduced (by Labour in case you were wondering)

Below we reproduce an article written by Liberal Democrat Councillor Paul Clein and published in Liberator magazine back in 1998.  It makes very instructive reading when compared to some of the statements Labour Parliamentarians (the people who voted for the fees) make today.

(article starts)
Labour’s plans to pull up the ladder by introducing tuition fees and doing away with maintenance grants for students has caused heated debate, but rather less than might have been anticipated. One has to admire the cunning manner in which discussion in the week after the initial announcement was all about the so-o-o sad plight of the handful of students taking a gap year in 1997-8 rather than focussing on the untold millions of students who will be in debt for decades to come after 1998. And I still cannot understand why students with poorer parents will be exempted from having to take out loans to the same extent as the rest. The supposed logic is that graduates earn more than average by having had the privilege of a university education and can thus afford to repay loans; if so, then the proposed exemptions can only be explained as a sop to get wavering Labour MPs onside and ameliorate criticism from the party at large.
However, little attention has so far been given to the possible knock-on effects of this radical change of policy, which I believe could be profound. It seems likely, for example, that the housing market will be markedly affected. Graduates tend to have graduate partners. If a household consists of two people, each with student loan debts of £20k or more, could they afford a mortgage? Will this cause greater demand for cheaper properties? Will this cause an incremental shift of house prices across the range? How long would having children have to be postponed? How many will choose not to have children at all, or have fewer, later for economic reasons? What effect will there be on credit ratings? Will sales of cars and other consumer goods on credit be reduced? A big boost to DIY and furniture stores? Don’t think so …
This is also a policy likely to discriminate against those from ethnic minorities and women, especially women who take time out to have children. Currently, regrettably, salary levels for these are lower than average and could see such graduates in debt till death do us part from their student loans.
We have already seen sizable reductions this year in the number of students applying for certain universities and a sharp decline in the number of mature students. (And by the way, you won’t be eligible for student loans if you’re over 50. So much for lifelong learning.) Can we expect to see a shift towards 3 year courses rather than 4? Will courses currently four years or more be reduced in length to avoid smaller numbers of applicants? Would the breadth of quality of some courses be reduced? Will this accelerate a move towards a longer university year and shorter vacations in order to cut the length of courses to try to make student debt less burdensome? Will the viability of some institutions and/or certain faculties be threatened? It would be ironic if the only students able to afford to apply for, say, veterinary science or medicine turn out to be only those from very affluent or very poor backgrounds. In any case, one would expect to see a sharp reduction in numbers of students opting for those courses with less promising or less immediate earnings potential post graduation. Can we thus expect to see shortages of practitioners of certain professions? Who would be daft enough to do a PGCE and incur an extra year of loans – unless this ends up being another exemption. Who would be able to afford to be a teacher if current pay levels continue anyway? Prospective students will certainly need to be more careful choosing their courses. Pick the wrong one and you could end up with an extra year of loans to repay. What will be the debt situation for those who drop out or fail their courses?
The job market will probably also be distorted. Those firms willing and able to afford to offer paying off graduate debt as a recruitment incentive will have a distinct advantage. However, will employers insist on tying graduates into tighter or longer contracts as a quid pro quo? Perhaps the graduate equivalents of Premier League footballers will cost companies a transfer fee? And if you want to take out a loan and start your own small business after graduation – who will lend you the money if you already have personal debts of £20k or more?
These are just a few of the dominoes likely to fall during the coming years if this policy goes through unchanged. It is possible that not only is it ill thought out in terms of its execution, but also that no thought has been given by Labour to long term consequences. It is also possible – depending on whether you subscribe to conspiracy theories or not – that there is a hidden agenda and this is deliberate social engineering on the part of the Labour Party kontrolmeisters to engender fundamental changes in the workings of our society. One thing seems highly probable – this policy will not achieve its stated aim.
Published in Liberator magazine, February 1998.

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