Take up fees: The NUS has got it wrong. Fees help the poorest.
Professor Nicholas Barr
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Name:Professor Nicholas Barr
Title: Guest ContributorOccupation: Professor of Public Economics at LSENicholas's Full Profile
When I was a lad, students were leftwing and campaigned for progressive causes. So it’s good news that, last weekend, students campaigned to widen access.
photo by Philip Morton
The bad news is that they went about it the wrong way. Contrary to their intentions, the anti-fees demo was effectively campaigning to entrench middle-class perks.
How does the new system work? First – and central – university is largely free. The previous system required students to hand over a cheque on day one for fees. Now, most universities charge £3,000. But students do not have to write a cheque. The student loans company pays the fees, and money into the student’s bank account for living costs.
Students benefit because upfront fees disappear and the reforms increase the loan for living costs to a more realistic level.
The reforms benefit all students by reducing dependence on overdrafts and expensive credit-card debt. Students from poor backgrounds benefit even more because the system restores grants.
The new regime is better for the least well-off. The NUS should say so. These benefits are financed by taxpayers, who pay most of the HE budget. The rest will come from loan repayments.
The way the system works for graduates is not well understood. Repayments are 9% of earnings above £15,000. Thus someone earning £18,000 repays £270 a year, or £5.19 a week, a deduction on the payslip alongside income tax until the loan has been repaid.
Income-contingent loans are very different from credit card debt, which has a high interest rate, a short repayment period and no forgiveness if earnings are low. Student loans have built-in insurance: low earners make low or no repayments; repayments drop to zero if someone stops earning; people who never earn much do not repay; and any loan that remains after 25 years is forgiven.
We pay national insurance to finance our future pensions – income-contingent graduate contributions are the mirror-image.
A credit-card debt of £25,000 is seriously scary. A student loan of £25,000 is not. Over a working life, a typical graduate will pay nearly £1m in income tax and national insurance. Parents do not lose sleep over their children’s future tax bills; student loan repayments belong in the same box.
The system redistributes from today’s best-off (who lose some of their tuition fee subsidies) to today’s worst-off (who get a grant) and tomorrow’s worst-off (who will not repay their loans). Those campaigning to abolish all fees are campaigning to benefit tomorrow’s better-off graduates. This cannot be right.
The NUS argues that students should not pay high fees nor incur large debts. If government ministers wish to join a future demo, here are some placards they could use: “What fees? The reforms abolish upfront fees.”"Students get higher education free, it’s graduates who make repayments.” “It’s a payroll deduction, not credit card debt.”
The next demo should be about genuinely widening access. Access does not fail at 18 because of tuition fees. Access fails when someone leaves school at 16 for reasons that started much earlier. If the NUS organises a campaign to spend more on the under-fives, I’ll be marching with them.
Reproduced with with kind permission of Guardian News and Media Limited
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It would be more amazing if you write about “INTERNATIONAL FEES” ,which is huge amount of money.
The idea of being in debt is horrifying yet we have to consider that it may be the only way of benefitting our futures. Regardless of our parents wealth – or lack oif it, we must learn that in the end we only have ourselves to count on and way up te pros and cons of gaining a better future for our families.
You brought to my attention the wierdness of being tested by your parents income. My mum is widowed and spent the last year supporting my 29 year old brother aswell as myself through college, yet she still gives me whatever she can and I never ever went without. My friend recieves nothing off his mother (not that thats bad just that its different from me)outside of the home for his dinner and what not at college and has to buy everything like clothes and books and entertainment himself and is now finding it daunting. Similarly a girl I spoke to from a well off family will not get grants yet she could not afford to move out because her parents would not help her out despite their income. Something weird about the system eh? The government should see whos parents will pay the fees for the course, and which students will have to finance it theirselves somehow and help those who are struggling. and whats this about students who have family at uni get more money? why did i get asked if I have siblings at Uni? Im the first one out of 5 in my family to go to Uni because I love academia whereas they hated it, and I did not have my parents footsteps to follow in, nor are my friends going to Uni. Surely I should be rewarded for using my own intiative and making my choice rather than those who have role models and external help from people to make their decisions <_> leik amg
I agree that everything seems to be done to help those in certain situations (young parents, the unemployed, etc) and the middle and upper classes can afford to do everythin themselves, yet there seems to be little help for the working classes who are aiming to further their education; I received EMA, whic was brilliant at college, but £30 a week isn’t a lot, and I also worked to higher my income, so I didn’t put a strain on my family. The word ‘loan’ frightens many people of my own age, and the idea of debt, be it student or otherwise, seems to put manyy off altogether; it’s ridiculous that the average student leaves uni with over £10,000 in loans, etc, even if they are being paid back at a smaller amount; the government used to give tuiton fee grants, back when education was free for all, why can’t it be like that again? Also, I’m at uni in london, so I’m in it even further that a lot of people!!!
am from a working class background. i dont care about the debt. am just happy am able to go uni!.due to the new system. my friend is under the old system and he is in serious overdraft and personal loan debt. i will never experience that due to the new system. its ok for the middle class to complain about this debt. but their parents are able support in some way are able to support in some way. my parents can not in any way and both work 6 days a week in low paid jobs but am lucky!!! cause of the new system. nus and middle class dont understand will never understand because goin to uni is better then being on the dole and working in asda for the rest of your life!!
Being from a ‘middle-classed’ background, I think I am very lucky to be able to go to university. I still have the debts hanging over me as I am mostly funding myself through university. I work as much as I can in the holidays, and don’t spend excessively. However, I will still come out of university with near £15,000 of debt!! I don’t think this is fair, as many poorer students will not have to pay back this amount, simply because they are from below the threshold for grants! This system neither penalises the rich, or the poor but those in the middle, the ones most likely to go to university! Whilst I value my education highly, and can put up with the debt I am incurring, some of my friends really struggle to get the money together. Whilst I believe education should be available to everyone, no matter what ‘class’ they are in, the cost of it is putting middle-class people at a disadvantage in the long run. I also agree with above statements that the government shouldn’t be pushing everyone into higher education. By pushing more people into higher education, it reduces the amount of labour available for skilled jobs and manual jobs which are just as vital to our society as those that need a degree. Our society currently depends on a lot of immigrants to sustain our lower skilled job sector. Other countries, using france as an example, don’t always encourage people to go to university if that is not suitable for them, from what i understand, people taking the baccaclaureate are generally encouraged to become particular proffesions if they achieve below a required standard, which i’m sure would be much more suitable to post-16 school leavers.
I’m sure the statistics suggest that those with the ‘poorest incomes’ get the best support but inreality it never quite works that way. Means testing is seriously flawed. Take for example a friend of mine, who shall remain anonymous, who lives with one of his parents (on a low income) whilst receiving support from another re-married parent on a fairly high income. The high-income parent is not assessed because he isn’t living with that parent. Also, some students whose parents fit into higher income brackets dont have it taken into account that their parents may have large debts (as is true for many families in this country) and despite their ‘large’ income have considerably little to spare.
Neither do i,pearltorto. I also don’t think they take into account the number of kids you have too
I live below the poverty line with my mum and brother, in a council estate, and how income has been slowly declining since this government have got in. and I have no idea how im going to afford university, feed myself and my family or find a house (becuase the rich people are buying them all) let alone pay for these fees at the end of it. I don’t think this guy is qualified to make an opinion about how the poor are coping well, with his cushy job and income. In fact he makes me sick. Try living on £80 a week in a tiny house while revising.
I do not agree with the proffesor!!My parents could be classed as middle class but with three children and a morgage to pay they can not help me with any of my university fees!so people who think that donot know what they are talking about! Also why would we want part of ou hard earned incometo be leaving our pay each month, no matter how small an amount. Obviously this system does help people with no money but does not help people whos parents go out and work for a living!!Just because they have worked hard and are now earning a resonable sum does not mean that they can be throwing money at me!!I think you need to do your homework before you can comment on this subject!!
The points made in your article are certainly accurate. Loans from the SLC, being income contingent, should favour access for those from disadvantaged backgrounds, who fear dropping out, ill-health, or failing to perform in the job market after graduation. Nevertheless, the transfers involved in the student loan system are distinct from those involved in the tuition fee system. The raising of tuition fees in themselves are not so much a transfer of wealth between socio-economic groups, as they are a transfer between generations. Those who benefited back when their parents as taxpayers paid for their higher education, now refuse to pay for the higher education of their children. Since student debt is being sold off, this intergenerational transfer isn’t even acknowledged in the budget.
Duffin, the whole concept of determining the support by the earnings of parents is flawed; why should the child of frivolous parents with high incomes, but who have highly leveraged themselves in debt, be penalised? The non-means tested section of the student loan – all that i will receive – is £850. I will receive no real support from my parents, but will have to fund myself through private loans and part time and holiday work. The earnings of parents cannot be considered a fair or sufficient determinant of student support.
Professor, as one of the so called Middle class, I find it hard to believe that the anti-fee campaign was to increase our ‘perks’. What perks? I find myself having no grant and a smaller loan for living expenses based purely on the income of my parents. I will be financing myself through uni yet the system judges me BY my parents. I would be financally better off if I left home and gave up work to live off the state, yet I am being penalised for refusing to do so. Why can’t state benefits count as a wage when filling in the forms? After all its still a source of money.
Here`s a tip for everyone paying tuition fees, become Scottish. The only fee that we in Scotland need to pay is a one off payment at the end of our course (this may no longer be true if the Liberal Democrats have their way). We are givn student loans (the same basic syatem as in England and Wales) to cover living costs, these loans are means tested so those with parents of a high income get less. Students whose parents have little or no income are given grants. Also if s student has a sister/brother at university as well they also get more. This system works very well, maybe the rest of the UK should take it up.
I agree with tuition fees at the current amount, however any further increases would concern me greatly. I am however amused by the many comments regarding ‘finding it difficult to manage’. I am a lone parent currently in my 2nd year of education. I gave up a well paid job to return to education in order to provide not only an example to my children but to provide a better life for them. I am constantly amazed at students younger than myself who within one week of student loan payments are crying poverty. I have, in my previous job, come across a wide variety of students, those who work hard at uni and in paid employment thus minimizing their overall debt, and I have met thos who think they can go out everynight, buy the lastest fashions, spend spend spend! Everyone is fully aware of the fees involved when embarking on University life, why is then people still enter this life if the fees are not giving value for money. I myself will have £24000 debt by the time I complete my education, I consider this to be money well spent as my potential for earning will increase dramatically but more importantly for me I will be educated to a level I could never have imagined which in turn will help me to fulfil my lifes ambitions. Finally while there are some constructive arguments put forward there are far too many uninformed people commenting (not just on here). There are people world wide who would give their eye teeth for an education, the fees for overseas student are twice that of ours which should tell you something.
I also have to admit I do not like the Student Loan forms. They’re hard to understand properly I think and rather obscure. They ought to be made more simply.
whilst our system charges demesured fees for studing, french or german studies are either a lot cheaper or free. Why can we have a EU legislation to tackle the problem and uniforms it in EU. Moreover, overseas student are already paying about £7000 to £12000 per year. This outrageous if those amounts are to be encreased.Everyone has right to education; by increasing fees that are already expensive, this simply a way of denying it!!!
Has the professor considered how attitudes to debt may vary between the rich and the poor? When you have assets behind you (equity in your home etc.) maybe you can think in the terms that he suggests, but when you don’t the idea of having so large a debt hanging over your head is off-putting. I know that had the current system been in place when I left school (1979) I would not have gone to university. As it was my grant was very small because my dad did a lot of overtime, but my parents were willing to keep me (I still lived at home, common in Scotland then) and so I could go. If there had been fees, even deferred, I would have regarded that as something hanging over my head and I would have played safe and gone for a job. My parents would not have been able to help, the debt would be solely mine. Additionally, I dropped out through health problems. How much worse would it have been if I had also been worried by debt? What happens to students now who drop out? No, I remain against fees. As has already been pointed out, the professor and all those bringing in fees benefitted from the old system. Pulling up the ladder behind them, is the term I think. An uncle, a foreign national, was funded in a very different way. he studied over here and had a reasonable grant to live on, and in return he was expected to work for the government for x number of years on his return, which he did. His government took the “investment” route proposed by Nick, and I would prefer we did the same. Incidentally, I am funding my current studies from my redundancy payment. I still fear being in debt.
the amount the student loan company gives people to live on is ridiculous no person can live on and buy books on a tenner a week.
Not much I can add its all ben said. I am a mature student in socisl work, But because I have a diploma in nursing, I do not get help with Fees. I am unable to work as a nurse at the moment due to bad back, I will find it very hard to find the tuition fee for my 2nd year.
I meant the people that take advantage of the system, not the people that do actually need it. Sorry if I was unclear and came across as rude!
I find it hard too. I’m in voluntary work at the moment but hope to move up soon.
The Labour Government seems to be more interested in funded George Bush’s obsession with eastern countries than anything else. I’m finding it quite difficult financially in my 2nd Year at Sheffield Hallam Uni despite having a £7.5k salary from a weekend job…
Access to education should be possible for all. It also has to be the right sort of education. Many people prefer practical training, using their hands or actively working, to ‘academic’ work. Making everyone stay in school til they are 18 won’t work, if anything, everyone will get a worse deal. Saying that I still believe that people should come out of school with at the least the basic minimums in reading/writing/numeracy, which isn’t always the case. Nick may comment on the european education system.I could give France as a example of how not to treat students – no small class hours and barely any individual-teacher contact. Their system is free. everyone can go but that doesn’t mean that everyone will be able to get a degree. Alot drop out. BAC+2 (ie qualified with the baccaleaureat and 2 yrs at uni) is worth almost nothing in France. You have to consider what education will get you in this country. I believe Lyon has 69 000 students. The average here is probably 10-12 000. We are pampered here. We may complain about the shock of moving from 9-4 schooling with structure and teachers who know us to being one of hundreds in a lecture room with barely any support but it could be MUCH worse. Top-up fees aren’t going to go away. The point made about student loan debt vs credit card debt is also a valid one that shouldn’t be overlooked . The debt may be ‘huge’ but the terms are better than some – though unfortunately Prof Barr doesn’t take into account the (almost) 20% take of income tax on top of that. Weighting fees depending on course hours would not work. For one, poorer students would go for the cheapest degrees (which wouldn’t be eg: medicine) and we’d have a complete class divide in the professions. Additionally, with many degrees the course hours are inversely proportionate to amount of marking/assessment the teachers have to do or the amount of eg: reading a student has to do. Personally, the grants were what got my mum throught university and I agree completely with them. She also would have been horrified to be in debt. I think that our society is too complacent about financial debt. Some students are too willing to spend money. Earning during term time to top up student loans often interferes with academic work and poorer students shouldn’t have to be in that situation….so many issues…
We in Britain have one of if not the best economies in the world – right? Then why can’t the government pay, or rather invest, in the country’s future doctors, scientists, lawyers and leaders of tomorrow? I just can’t see why other substantially poorer European countries can afford to do this but it seems we can’t.
I think you are mostly right, but you come across a little rude when you talk of benefits and the like. People are on benfits for a reason, not so that you can turn your nose up at them. But i agree with you on everything else.
Poor you cookie monster. I think that’s kinda the same as me. In my uni, we get not much outside teacher time at all.
Cookie Monster speaks a lot of sense. Personally, and I may be alone on this, I feel that children past the age of sixteen should be able to leave school if they want too. Trying to push kids into education when school is just not for them just takes away from those who WANT to be in school and who WANT to do well. Paying lazy students to stay to do their A Levels? A waste of money and takes away from those who are they because they want to be. I don’t think that students should be penalised (sp) for wanting to continue to university either. Not only does this effect those intelligent and gifted potential students who just can’t afford it but once qualified we continue to pay for our short experience for years to come. Tax the lazy instead
Got it in one, Cookie Monster. Need we say anymore?
I went to college for 3 years and rcaekd up $ 20 000 in gov’t student loans and $ 3 000 in a no interest bank loan. Now I am in university and I have borrowed another $ 7 500. In total for 4 years of school I have a debt of $ 27 800.The first 2 years much of the loan was spent on clothes, shoes, and food. When a young student is given $ 4 000 at the beginning of the school year it is tough not to go out and buy personal items. I would say I spent a good 60% then.My 3rd year I had a part time job (10 hours a week) I used that money for going out with my friends. And used my loan for rent and car insurance.And in my current 4th year, I am way more knowledgeable and know that all of this money must be paid back so I have only used it for rent and household bills. I now work between 7-14 hours a week and that money is for groceries and fun times.
Whilst I agree with the concept of students paying for their education, I do not believe that the tuition fee amount should increase. For my degree course, I only have lectures totalling 4 hours a week, and seminars totalling 4 hours a week. Other subjects such as Computer Science have around 21 hours contact time. I’m paying the same amount in fees as people doing different subjects, yet they get more contact time – who is better off? Who is getting more value for money? Additionally, surely if the cap is lifted and universities are allowed to charge whatever amount they wish in fees, this could encourage further elitism between universities, and between students, arguing that their university is better and that they may benefit more from the degree they got from a particular university. At the moment, I’m working full time during university holidays and chances that I get to earn money, as I do not want to come out with a large student debt. With the prices of houses rising, how will I be able to put a deposit on a flat? Moreover, when I’m elderly, I don’t expect there will be a state pension, so I’m going to have to start saving for that as well. Why is it that because I want to make a better life for myself by being educated, I appear to be penalised for it? Other people my age (apart from those who are working) are either pregnant, on the dole, living in a council house with their baby, on drugs or get benefits and money off the state when I’m working at every opportunity to counteract my debt, pay my tax and national insurance stamps? From the way I see it, the government are more or less encouraging me to not bother educating myself when I can do better living off the state!
I agree with Catherine. A parent even said to me ‘When I went to uni, at your age in Oxford, it was free. You got in,got your diploma and that was that. The end’ I don’t want the fees to increase at all as I’m very happy how they are. £3000 to me goes a long way. £12000 is very painful and heartbreaking. Some students in my class have children even. What even defines middle class then?
Professor, it is clear that you went to university when it was free and lived without the cost of what should rightly be given, as it once was. Whether the expense is future or present is irrelevant. The campaigns are necessary in order to prevent the fees increasing, as is planned, to £9000 or even £12000 a term, which is a large amount for anyone. I also disagree that access needs to target toddlers. Preventing youngsters from leaving school at sixteen assumes that higher education is necessary to succeed in life; sometimes it is not the right path to take. Whilst you are trying to value access for the non-middle-classes, you are revealing your own middle-class judgments about education in the first place.