PSA: Raising student fees

There’s two student finance related stories doing the rounds, and some journalists and political campaigners are mistakenly conflating them. And it’s made me so annoyed that I’m writing this in my lunch hour.

Story 1: “Willetts refuses to rule out fee rises in the next parliament”.

This is actually a non-story. Over the last few years the £9,000 upper limit has not risen in line with inflation. But with inflation starting to creep back up, chances are there will be a rise in the next parliament.

This will come as a surprise to no-one – the possibility has been built in since “Students at the Heart of the System”. It is undeniably fun for the opposition to use this as a ruse to attack the government for refusing to rule out a rise – but Willetts can’t rule out a rise as he needs to take account of inflation.

Story 2: “Something something RAB something 45% something expensive”

After a parliamentary response from David Willetts implied that the RAB charge was now 45%, we creep dangerously close to the 48.6% figure that would mean that we are spending more – long term – on the new model of HE funding than we did on the old. (it is already inarguable that we’ll be spending more year on year than the old method, and this has been the case since 2012). This – as I’ve said before on here (since 2010) – means that we need a proper rethink on our model for funding HE.

If you don’t get the basics of the current (Browne/Willetts) system Andrew McGettigan has a two part primer.

Story 1 plus Story 2 ?

As tempting as it is for journalists and politicians to conflate these two stories, they are two different issues. In particular, we should be clear that raising the fees charged to students will make the amount of money that the government is spending on this new model go up in the short term and the long term.

If the government raises the cost of tuition this will have the effect of lending students more money whilst getting broadly the same amount of money back.

So absolutely the most stupid thing David Willetts could do at this point would be to raise fees.

There are also a range of stupid things that David Willetts could suggest that would annoy the Liberal Democrats to the extent that it could potentially bring down the government.

  • lower the threshold for beginning repayments
  • raise the interest rate on loans
  • move the end-point of the loan later or remove it entirely (making it, effectively, a graduate tax)
  • cut other HE budgets  to cover the hole

But he won’t do that because the Lib Dems won’t wear it.

The one sensible thing he could do is redesign the HE funding system, or even revert to the previous one (which is cheaper).

But the utterly terrifying thing he will do is to come up with some technocratic financial engineering way of pushing the problem a few years down the line into the next parliament.

3 thoughts on “PSA: Raising student fees”

  1. “some technocratic financial engineering way of pushing the problem a few years down the line into the next parliament”

    I think you’ll find that’s called a “graduate tax”.

  2. You’d think, wouldn’t you? However, the association of the “graduate tax” idea with Labour, and the efforts the Browne review went to in order to discredit the idea (it was totally independent, naturally…) makes it politically very unlikely.

    Guess we wait to find out what Ed has up his sleeve. A proper, evidence-led enquiry, I hope. (And then a graduate tax!)

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