The day after the day after ….

As Raymond Geuss pointed out to the Cambridge Occupation a couple of weeks ago: the fees will be £9,000 at first, but before you know it they will be up to £20,000 like in America. This is just the opening of the floodgates.

Oh, and for those CT readers who don’t know: arts and humanities departments in the UK are set to lose something like 80% of their funding from the state and will have to raise the rest from fees alone; institutions like London’s SOAS are looking at 100% loss of state funding in some areas.

Truly, the Liberal Democrats have given us a brave new world of higher education provision.

Nick, we have a excellent mechanism for that very thing. It’s called taxation.

“You pay when you are rich” — wow, very succinct. The market-as-casino installed as sole guarantor of all learning, all culture, all gathered knowledge.

I’ve never bought the ‘Labour clientele’ thing, myself.

If you believe that prices are the one true indicator of what ‘the people’ want, then perhaps you’ll be reassured to see more and more students choosing only those degree courses that lead to the well remunerated jobs. This, though, ignores the strong possibility that our society has many well remunerated jobs where nothing much goes on than an exploitation of the contours defined by conventions on property: i.e. whole chunks of the British law and property surveying professions.

Previously, it wasn’t possible for better off parents to do much in the way of buying their children’s education at tertiary level: this legislation gives them something more to buy. Some students, I’d bet, will be leaving university debt free; others will have a hill to climb. Increased tuition fees look set to contribute to the entrenchment of inequality across generations.

Finally, I have to say I didn’t really understand the ‘progessive’ claim in the recent IFS document on tuition fees. The IFS says that the new plans are more progressive than the Browne plan or than the current arrangements. Perhaps I wasn’t thorough in my reading, but I didn’t see any attempt to take account of the most basic fact of all about the changes: the absolute amount of fees to be paid will triple. I don’t see what good it does to make hay out of the fact that some will pay less per month than before if they’ll now be paying it for three times as long.

There was a similar argument when the poll tax was brought in: while it was (quite rightly) considered enormously unfair, it was possible that if it established itself, it would be accepted as normal, and that people would respond to it by kicking downwards (“I pay, why shouldn’t they?” ).

The second of these certainly happened to some extent, but I don’t think that the first did, perhaps because the poll tax never quite did get accepted. Possibly because the fight against it never stopped and was never defeated. If it had been, perhaps it would have been different.

@Alison You’re spot on – but rather than have these “rich kids” education paid for by themselves – as would now be the case – you’d like it paid for through general taxation?!

Similarly, with the poll tax: it wasn’t at all about making poorer people pay more, dear me no. It was all about helping out the old granny who just happened to live in a large house. As I recall.

Not many people believed that one either, and they tended to develop opinions about people who claimed to believe it.

you’d like it paid for through general taxation?!

Sure, as I would like the roads, the hospitals, the libraries and the fire service to continue to be paid for by general taxation, despite the horrific possibility that a rich person might enjoy them just like I do.

UK folks might be interested in this glimpse of their future: http://finance.yahoo.com/college-education/article/111460/is-the-college-debt-bubble-ready-to-explode.

I think (with ejh) this is to gloomy because it assumes the government will succeed in pushing the majority of their cuts through. This is not at all inevitable.

As for “only rich people will have to pay”… what nonsense. It surely is the case that many rich people refuse to acknowledge they are rich, but on what planet does 21k per year (yes I know it’s pounds) make you rich?

the Prince of Wales’s car got bricked as people chanted “off with their heads!”

You know people must be angry when they blame not only Parliament, but also a symbolic-figurehead constitutional monarchy, for something Parliament has done. Whatever happened to the Glorious Revolution and the genius of the English/British constitution? Or am I a victim of an inaccurate, propagandistic version of British history that gets fed to (some) Americans?

You know people must be angry when they blame not only Parliament, but also a symbolic-figurehead constitutional monarchy, for something Parliament has done.

I believe it’s been a consistently safe assumption that a Windsor’s heart is with the Tories. Who was the last monarch to favor the day’s opposing party? The young Victoria with her crush on Melbourne?

If you’re trying to express yourself, symbolic action seems reasonable.

Yeah, I suppose as Anderson kind-of says, in the heat of battle (or kettle), going for the PoW (if the news reports are to be believed, the assailants knew a Royal was in the car) may have seemed a salient enough gesture.

Am I alone in finding that whole incident rather bizarre, and indeed in a number of ways rather suspect?

I don’t think it’s suspect , I do think it’s being over-hyped (as it were). In the videos I’ve seen, one person’s chanting “off with their heads”, rather boringly. (No hate-filled rage.) Otherwise it fits — so far as I can tell — with a resentment of personal privilege and wealth (Charlie Gilmour’s presence, despite..!).

But I do think the consequent harping on the fact that the royal police “nearly fired”/might have fired/will fire next time a bit suspect.

20: Excellent comment, NP

“What needs to be clear to UK citizens about this program, is that the intent is not to keep brilliant working class kids out of university”

Except maybe for this, although it might not be the primary intent. Social control of the middle class may be primary, but a) these types can be trouble, and b) the aristocracy may not want the competition.

I have been recently looking at Japan (neo-liberalism everywhere!) where the expense of education starts in grade school, b) there are very few scholarships, and c) university credentialism determines social status and political opportunity. Really increases the savings rate/expropriation of the surplus. Watch those Pell grants. Wait.

I forgot the hereditary aristocracy that is reforming in Japan.

That is where Marx went wrong, forgetting the irrational desire of Capitalists to recreate the hereditary aristocracy. Neo-liberalism is necessary precursor to neo-feudalism.

I don’t know the structure of how the fees and loans to cover them are going to be dealt with in the UK, but the US structure of government subsidized loans for college is very likely to lead to extremely high college fees for everyone. We talked about it in the comments recently at obsidianwings. If you accept that university degrees have a large component of a positional good (that it derives a large portion from the mere fact of having it when other people don’t), then direct subsidies to students are almost always just going to bid up the price higher and get captured by the university. If this is in the form of a loan, you have just succeeded in raising the price for everyone, and forcing someone who needs a loan to pay even more than they would have before.

Very good points about the social control (and rent-extraction); I hadn’t spotted that one.

Norwegian Guy,

Student debt averages $25,000 for graduates of private colleges and $17,000 for graduates of public ones. That includes all debt. But that’s primarily for tuition and related costs, since most students in the US work while attending college. Maybe that’s less common in Norway?

29: Thanks, bob. I guess I should clarify: What I meant was that the college funding scheme in the US is not meant to keep working-class geniuses out of college. Nor is it meant to keep out the chancers who are adept at gaming the system. It does present an often unclimbable barrier to your “average” working-class student, who does not have the middle-class wind at their back to overcome mediocre grades and test scores.

36: I should point out that my $18K in loans did not include about $5K in credit card debt, and about $6K of gifts from family (mostly from my grandmother’s small estate). Also, it should be noted that I was working 30 hours a week for the 3 years I took to finish my BA, and making an above-average student wage, as an editor at the campus newspaper. I probably could have gotten by with a slightly smaller loan balance had I been significantly more frugal, but not by all that much.

Does it cost much money to apply to university in the UK? I was talking with a young woman recently who is a HS senior at the same school I graduated from, and she was planning to spend over $500 in application fees (this in addition to the SAT and ACT fees of course).

In practice for most graduates the loans will be largely equivalent to a graduate tax. You will pay an extra 9% on income above £21,000 per annum which is indexed. Anything not repaid after thirty years is written off. According to More or Less on Radio 4 on the 10th December (at the beginning of the programme which is available on the BBC website) if you earn on average less than about £35,000 (net current value) you will pay back little or nothing, if you earn on average about £50,000 you’ll still pay back less than half the sum borrowed, only if you earn on average about £70,000 will you actually pay back £30,000 even then you won’t pay the interest. According to the IFS about 22% of the lowest earning graduates will pay less than under the current system.

Arts and humanities departments in the UK are set to lose something like 80% of their funding from the state and will have to raise the rest from fees alone;

In thirty years, a country whose elite,will have all basically an MBA or engineering or some other Useful Studies background? Why ever would the Tories want that?

Let’s hope this is the beginning of the end of the coalition.

I have a feeling that Nick Clegg’s ego is rather like the hard, black smoking lump of Ultimate Evil the firemen miss at the end of Time Bandits

I mean, it looks insignificant…

Complaining about debt? Where did all this debt come from anyway? It didn’t use to be this way. Since 1980, total debt in the US has way more than doubled. The UK is in worse shape.

How did this come about?

When a bank makes a loan, it creates the money to loan out of nothing, just adding numbers on their computer. So the total money supply is just the principal of all the loans that have been made by all the banks.

The banks then charge interest on the loan, on money which they have created out of nothing.
Because of interest, the total money needed to pay off all loans will be greater than all the money loaned, ie greater than the money supply. That is not all borrowers will be able to pay off their loans, simply because there isn’t enough money for them to do so. This leads to an exponential growth of both the money supply and debt. Only with an exponential growth in real consumption, and thus real production, can this be maintained. Since this is ultimately impossible, this spiral has no (nice) ending.

There is simply not enough money to pay off all the debt and the interest. So the banks force the rest of the system into increasing indebtedness to them, in order to pay off the debts they already owe.. They force individuals, companies, and governments to take out more loans or default. They have simply created a shortage of money needed to repay the loans and the interest, in the real economy, while hoarding the rest of that money to themselves.

This simplifies the description. For a more detailed one, see http://anamecon.blogspot.com/2010/11/banks-are-forcing-debt-on-rest-of-us.html See also the references there in, in particular: “Money as Debt”

The financial industry has been doing this for years. That is why individuals, companies, governments and their countries’ real economies, are gradually being ruined. That is why, in the US, for instance, total indebtedness has been climbing to over $50 Trillion, now about equal to all the real assets in the US. Great Britain, and many other countries are in worse shape.
Government austerity is just going to force the paying off of this debt on the private sector. But this debt cannot be paid off. The private sector will be ruined.

The students are protesting their enslavement to the banks. They are right to do so.
The rest of the country should be out there with them.

I like to think of this as a scientific way of maintaining the grip of the upper-classes in a society where technical competence is important. The stupid rich lose their money and are condemned to the middle classes, and are replaced by the very best and brightest of the working class – thus ensuring hybrid vigour when the rough youth mate with the elegant children of the ruling class. Evolution in action.

On the Royal Wedding last time around.

The new system is substantially more progressive than the existing system. The Institute for Fiscal Studies calculate that roughly 22% of the lowest paid graduates will pay less than they do now (due to the increase in the minimum payment threshold). While high earning graduates, rather than paying the same as medium income graduates, will pay more. It is also more progressive than the tax system in general as it is basically an additional income tax. It is slightly regressive at very high wages as it is possible to pay the loan back early and avoid some of the interest. Structuring as a non commercial loan rather than a graduate tax allows repayments to be collected from graduates living abroad, otherwise what we have is a de facto graduate tax. General tax revenue will then be used to pay the Student Loan Company any remaining debt after thirty years, calculated to be between 30% and 50% of the money borrowed. So in fact the cuts to state funding of universities are rather smaller than has been stated. Due to the state guarantee the SLC should be able to borrow at about the same rate as the government effectively the universities are being funded on borrowing rather than from current revenue with an hypothecated graduate tax covering most of the cost of paying the bondholders.

I’m sorry Chris, when you wrote “what the Government has done is to shift the cost of financing universities to the individual,” I took you to mean “what the Government did…” We’re talking about some inequality-reducing minor adjustments to BLP policy here, right? The basic plan to part-finance the cost of study through a graduate tax is Labour party policy, right?

As I understand it there is no government grant to cover living expenses for students in the UK, right? The single biggest change any government could make to reduce inequality would be to introduce one (like Australia has), so that students can go to the top universities without having to find a job in a country town (well I suppose also the British government could fund high schools properly, and address the cultural anti-intellectualism in the working class, but that would be something one might expect from Labour, not the Tories, no?).

But that was too much for Labour. Would have pissed off their working class base. So instead the tories tinker at the edges.with

“It is also more progressive than the tax system in general as it is basically an additional income tax.”

This is complete bullshit. Let me repeat myself: A 9% surtax on income above £21,000 is not progressive by any standard. It is a huge burden on low-to-middle income earners while not hurting real high incomes at all (since the total amount is capped at what they consider change). We are talking of a 9 percentage point increase in marginal tax rates for *everybody* except the poor, plus the total tax is capped. We are talking of an amount being charged to students – around 50,000 say – that is totally out of reach for low-income students, a crushing debt burden for the middle class, and not even change for the rich. The argument being bandied about that graduates should be made to pay for the advantage they derive from their education is bogus. By that standard, why should the graduate making a million a year thanks to his/her education pay the same amount than the graduate making 50,000 a year thanks to his/her education?

The only way in which education funding could be progressive is by tax funding. Why do they need to invent complicated loan and repayment schemes with huge bureaucratic apparatuses going along with them instead of just using progressive taxation? It would make a little bit of sense of it were actually reducing the deficit but not even that is apparently the case.

60: it’s pretty much correct with the exception of things like research council scholarships. The way it used to work (up to 1997 or so) was that the government paid your tuition fees completely and also (sometimes) gave you a grant, whose size or existence depended on family income, for living expenses.
Then that got replaced with a system where the government paid most of your tuition fees. You had to pay most of the fees, and you paid your own living expenses as well. To help with this, you got a student loan at artificially low interest rates.
How non-rich people have coped: some combination of 1) live at home while studying 2) the grant 3) the loan 4) sponsorship – for example from HM Forces 5) getting jobs.

I’m amazed how well off German students still are in comparison. The introduction of tuition fees has been slow, currently some states charge EUR 500 per semester and pressure is strong to get them abolished. Low-income students get up to 648 Euro per month cost of living support (BAföG) half of which is paid as a grant and half as zero-interest loan. That is not much to be sure but I could manage (back in my time) with summer work without getting into any other debt. Up to the earl;y 80s, BAföG was all grant. Then the neoliberals converted it into 100% loan. Meantime they backpedaled and settled on 50-50.

Charles St. Pierre: “When a bank makes a loan, it creates the money to loan out of nothing, just adding numbers on their computer.” That is wrong. If banks had this power, how could they ever get into financial difficulty? ( Central Banks can create money out of nothing: it’s called ‘Quantitative Easing’.)

Davis X. Machina: “In thirty years, a country whose elite,will have all basically an MBA or engineering or some other Useful Studies background? Why ever would the Tories want that?” I’ve not found any detail on how funding of Science/Engineering/Medicine will work, but my impression is that government grants to universities will be used to cover the extra cost of teaching those subjects, with the tuition fees charged to students being the same for all subjects.

I’ve also not seen full details on what the repayments will be. But if the marginal tax rate is to be an additional 9% starting at 21k, with a maximum annual repayment of 1k per year (a total payment in cash terms of 30k over 30 years) then that in effect creates a new tax band 9% higher than what would otherwise prevail for earnings between 21k and and about 32k. Which no one would enjoy paying, but would no one would be reduced to poverty by.

I’m trying to imagine myself as an 18-year-old: would I expect to earn more than 21k even without a university degree, and so be put off going by to university by the potential repayments?

sg, sure the living expenses need to be taken care of (see 63). What I can’t understand however is the argument that saddling poor students with fees in addition to the difficult financial situation they already face doesn’t make things worse. Of course it does. The loan for the fees is not irrelevant if it is on top of all the other loans and the end result is a mountain of debt.

“When a bank makes a loan, it creates the money to loan out of nothing, just adding numbers on their computer.” That is wrong. If banks had this power, how could they ever get into financial difficulty?

Fractional reserve banking.

I like to think of this as a scientific way of maintaining the grip of the upper-classes in a society where technical competence is important. The stupid rich lose their money and are condemned to the middle classes, and are replaced by the very best and brightest of the working class – thus ensuring hybrid vigour when the rough youth mate with the elegant children of the ruling class. Evolution in action.

Possibly, although I don’t actually think this is conscious as much as it is a sort of a gut reflex as to the proper order of things, etc., on the part of Conservatives and so on.

Who was the last monarch to favor the day’s opposing party? The young Victoria with her crush on Melbourne?

I believe Ramsay MacDonald was heavily favoured by the monarch of the time (can’t remember by whom), and wasn’t Jim Callaghan well-liked by the Queen as well, I think? George VI and Elizabeth Bowes-Lyon desperately wanted Chamberlain to succeed in preventing war, but that’s not so much a Conservative position as it was a contemporarily universal one. Victoria didn’t like Gladstone, but that had little to do with his political views, and much to do with his tendency, as it were, to address her as though she were a public audience.

The Windsors are basically a caricature of the block-headed countryside-bound aristocrat, so trying to tease out their political allegiances is tricky at best. Sometimes you just have to regard the whole thing as a giant edifice to self-sabotage (for example, when the Lords voted thrice against proportional representation for E.U. elections, the result of which was a doubling in the number of Conservative MEP’s.

The student fees……

It’s pretty unfair, of course, but that’s not really surprising. The system of free tertiary education was a part of the post-war, Attleean bargain, and the unraveling of that bargain was a process that began a long time ago. I am not sure, actually, how committed the Lib Dems are to their free tuition pledge anyways; it’s pretty apparent that it feels more like, per the memorable words of Monsieur IOZ (I think? Correct me if otherwise), a “magical performative,” as it were, not much an act of will as an unpersuasive attempt to convince oneself of having such an act of will. Which is a long way of saying that the Lib Dems, I think, quite honestly believed, or tried to believe, that they believe in free tuition, but actually, not quite, they didn’t really (I am speaking of the Lib Dem leadership, not voters, of course). I don’t think they were being consciously dishonest; they just weren’t being consciously honest with themselves.

After all, believing in having free tuition given optimal conditions, growing economy, budget surplus, etc., is not believing in having free tuition. It’s actually an excuse for not really believing in free tuition. Of course, pledging to vote against any rise in fees and then voting for a trebling of fees is another matter, but I suspect that the Lib Dems had more agency here than the protesting students would like to admit; they are pretty simply less bound by pledges to voters than to the rather more constitutionally fundamental responsibility to provide a functioning parliament and, as it were, government. The wishes of constituents do not take precedence over the British constitution.

It would be nice, on some level, to have free universities, but in the real world (again), there are no such thing as well-funded, good free universities for everybody. The French actually have superlative free universities, the grandes ecoles; but I doubt the enarchy was the vision the Lib Dems, or indeed anybody else, had in mind. The rest of the French tertiary system is hardly worth mentioning; the universities actually encourage the lecturers to fail as many students as possible (or so I have been informed by one of the lecturers), as there are more people than spaces, and the universities are contractually obliged to actually admit more students than spaces, on a permanent basis (the bloggers here, being academics, know much more than I do about this, so I’ll pre-emptively retract and apologize for any description of the French university system which is deemed inaccurate). Oxbridge/Imperial/LSE/UCL/KCL/etc., for example, were horribly underfunded compared to their American peers, and are still comparatively underfunded today.

Which isn’t to say I applaud the move. The motivating instinct, no doubt, is pretty nasty, as it were. And one does have a healthy suspicion of “never letting a crisis go to waste” as opposed to “we seriously, seriously, seriously couldn’t find the money any other way except to raise tuition by 200%.” But then the United Kingdom does have a predominantly Conservative government, and Conservatives are not obliged to govern like social democrats (insert horrible joke about Liberal Democrats). Nor Nick Clegg, actually, who never masked the fact that he is a Liberal and not a Democrat, at least a democrat in so far as it is distinct from being a liberal.

ajay (69): The link you kindly provide plainly contradicts the proposition that a fractional-reserve bank can create the money to make a loan “out of nothing, just adding numbers on their computer”. We could debate this further on a thread it’s relevant to, when one arises.

very high income graduates will pay less than high income graduates

I think this is what Piglet is getting at, though. Tuition fees as another datapoint for the ‘squeezed middle’ argument. A welfare state for the 1st through 9th deciles, to be funded by the 1st through 9th deciles. It might even be progressive in there.

73: “The practice of fractional reserve banking expands the money supply (cash and demand deposits) beyond what it would otherwise be. Due to the prevalence of fractional reserve banking, the broad money supply of most countries is a multiple larger than the amount of base money created by the country’s central bank”. RTBA.

“…middle income graduates (those earning around the median wage) will not even come close to paying off the full value of the loan before it is written off.”

To believe that is to believe that a right-wing government, when privatizing some aspect of the government, decided to make a steeply progressive payment schedule.

The Canadian experience with government student loans, while nearly not as bad as the American, is hardly a unreserved recommendation of loans. The ideas that scholarships can bridge the gap for most students, or that university education is a guarantee of higher earnings (or even employment) both of which have surfaced in this thread, are risible and get repeated so often in our newspapers that I suspect people’s motives. The only guarantee is that unless your parents are well off *and* are inclined to support you, you will have debt. Whether you finish your education or not, whether the program is any good or not, whether your field is expanding or contracting, none of these things change the fact that you will have debt. Exceptionally bureaucratic, inflexible debt. The government measures intended to ease the impact of that debt on lower-income earners are flawed, limited, and prone to failure at critical times. The idea that the UK will be able to avoid the well-worn and well-known pitfalls of government student loan schemes seems either pie-in-the-sky optimistic or advanced in bad faith, take your pick.

With a commercial debt the amount that must be repaid is linked to the outstanding balance, for example with a mortgage, which is a debt of comparable size. The student loan repayments are determined only by the graduate’s income above £21,000 per annum which is indexed, there is no liability to pay beyond that. This means that low income graduates may end up paying nothing at all. For most except very high earners it is a graduate tax payable for thirty years, with the outstanding balance written off.