Mike Baker (who declares an interest) explains the incredibly complex new University tuition fee system. I think he gets it exactly right (but am not sure because…it is so complicated). His final paragraph:
So it is somewhat ironic that the greatest concern over the new fees system has been on behalf of students from the poorest homes.
This is a Robin Hood-style, redistributive scheme: taking from the better-off graduate in order to give to the student from a poor home. Government ministers have always been nervous of spelling this out for fear of sounding like socialists. Yet, this obfuscation, like the terminology of “variable fees” rather than “graduate taxes”, could threaten the success of the scheme if it deters the very people it is meant to help.The government has a big explaining job to do.
{ 17 comments }
dsquared 08.17.05 at 10:38 am
It has to be remembered that the parts of the scheme that Mike Baker likes (grants and easy repayment terms) were extracted out of the Blair government as last-minute concessions to the backbench rebellion; the reason the government isn’t “selling” them is not that they don’t want to look like socialists but rather that they never wanted to put these bits in in the first place and are presumably looking round for an excuse to take them out.
(Also, I’d note that someone with commercially contracted debts of £22,000 who was on an income of less than £15k would almost certainly be in some sort of debt counselling scheme and it would be very unlikely that they’d be repaying full principal and interest).
otto 08.17.05 at 10:55 am
Not a bad article.
1. It’s not clear to me why payments to poor students are to be divided between grants from the government and bursaries from the colleges (who are forced by the government to provide them?). A rather odd amalgam.
2. Sadly, there are lots of students from families with 50,000 a year whose families will not provide cash or loans for their student children. I doubt there is much financial saving here by not offering the full living loan to these students, and it would certainly ease family relations in many cases for these loans to be available.
3. I’m not clear how much money the government is spending (net present value if you like) on this every year compared with the previous system. It would be interesting to know what proportion of this new money (both government and private) is going to increased consumption for low-income students and what as increased income for universities.
Nick 08.17.05 at 2:33 pm
Back in the 1970s, when I was lucky enough to attend the finest university in the world entirely at the British tax-payer’s expense, the interesting-if-true fact was often repeated that ‘the British government earned a real return of 9% per year on its investment in higher education’. I have no idea whether or not this was the case, but perhaps some of the economists on this blog could shed some light on the plausibility (and historicity) or otherwise of this claim?
Daniel 08.17.05 at 3:03 pm
How did you get the British taxpayer to pay for you to go to the Ecole Polytechnique?
Nick 08.17.05 at 3:37 pm
(Groan) We both studied irony at our schools didn’t we?
John Quiggin 08.17.05 at 3:58 pm
As I understand it, it’s the “variable” part of variable fees that caused the biggest problems, and this is not an issue of semantics but of substance.
The UK scheme is essentially a copy of the Australian one in place since 1989. As introduced by Labor it was a fixed-fee scheme: the shift to variable fees was done by the current government and was seen on both sides of the debate as a move towards privatisation.
otto 08.17.05 at 4:26 pm
Well, since state funding in the UK has resulted in massive declines in per student income over last 30 years, and exiguous academic salaries and reserach resources, maybe a few private universities wouldn’t be such a bad thing.
Simstim 08.18.05 at 6:35 am
Don’t forget to throw in the complications afforded by having the Welsh Assembly get its mitts on this area as well.
Peter Clay 08.18.05 at 8:18 am
otto, do you have a cite for that surprising statistic? Does it correct for the fact that more people are going to university now than 30 years ago?
otto 08.18.05 at 8:29 am
There was a graph of per student spending over time in the Blair govt’s White Paper on the introduction of tuition fees. (Sorry – must leave office ASAP or I would track it down).
harry b 08.18.05 at 10:48 am
JOhn Goldthorpe has reseacrh suggesting that there has been a decline in the income premium attached to a degree since the mid-80’s. But that is not surprising given the dramatic increase in uptake, as peter day suggests. I think you can find it by going to the IPPR website and looking around for research on social mobility (sorry — can’t look for it myself right now).
John Quiggin 08.18.05 at 4:02 pm
Note that the claim was that the government’s return, presumably through the tax paid by higher-earning individuals, was 9 per cent. This seems overoptimistic to me.
While the income premium has fallen somewhat, the increase in participation has been offset by the shift in demand towards more educate workers. In the US, where participation has been more or less stable, the income premium has risen greatly.
Gary Farber 08.18.05 at 10:06 pm
This may seem an odd thought, but have you considered simply putting the thing into your own words, maybe under 200 or so?
It seems very odd that you’d criticize the others, vaguely recommend the one, and not simply bother to sum it up yourself. I’m completely unclear what the bother would be about that. (Mind, I wouldn’t do it, because I don’t understand it; but since obviously you do, why not take kindness and simply sum up?
Gary Farber 08.18.05 at 10:09 pm
Um, I’ve tried to post a message, but all your software says is that it is rejected. Attempts to reload the page seem to claim it was an attempt to repost. This is wrong.
Gary Farber 08.18.05 at 10:10 pm
Is posting blocking or working?
Gary Farber 08.18.05 at 10:11 pm
Sigh.
harry b 08.19.05 at 10:30 am
Gary – comments often take a while to show up, there’s a moderation process which seems to delay them for some reason that I don’t understand!
But another thing I don’t understand is what you want me to do. Summarise the top-up fees system? explain the graduate tax? Tell me more explicitly and I’ll do it when I have time.
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