When the government announced it would be implementing the proposed changes to tuition fees as recommended in the Browne report there was uproar nationwide. Student unions began branding the fees “unaffordable” and “damaging for the UK’s long term economic future”. In truth, both of those charges are wrong, and in fact these changes could do far more good to the UK economy than fees of less than £3,500 ever did.
Previously we had a system where students from the UK could pick up an entire degree for less than £15,000. This lead to a boom in the number of students going to university and consequently a massive increase in the courses available. This included a rise in so-called “Mickey-Mouse” degrees; degrees that in theory don’t lead to an increase in options or pay in the labour market relative to that which you would expect from a university degree.
Let’s get one thing straight – regardless of income £9,000 should not be unaffordable, because when it comes to repaying the loan; the monthly payments are indeed progressive (the percentage paid back increases as your wage rises) and the payments don’t even begin until the graduate is earning over £21,000. Regardless of this, there is still the belief that this will put people (particularly from low-income backgrounds) off going to university and instead lead them into taking up low-paid work immediately. The logic behind that idea is bizarre – what higher fees should (and probably will) encourage students to do is to look at the course they’re studying and ask themselves the following questions:
Is this course a worthwhile investment of my time and money?
This should help discourage those who would have otherwise dropped out of their course or spent all their time and money in the student bar instead of focusing on their course, from entering uni in the first place (taking up a place that could have been better allocated to a more committed student who would have completed the course).
Will I make a healthy return on my investment?
This should discourage students from taking degrees that offer no real leg-up in the labour market and should also encourage applicants to fully assess all the possible routes into the workplace (particularly apprenticeships) before committing to taking out a five figure student loan. In effect this will reduce the percentage of people who merely go to university because they feel it’s the done thing after finishing A-Levels; and should in the long term improve the quality of the UK labour market as students pursue the path that’s best for them.
Here’s a fact which is often overlooked: over a lifetime the average earnings of a graduate are £160,000 higher than a non-graduate (interestingly when you break it down by subject the range varies from £340,315 for a medical graduate down to £34,949 for an arts student). It’s also important to remember that a graduate can expect to be offered a starting salary of around £23,500 in their first job post-university. Given that as of 2012 the average degree will cost £27,000 – this is a pretty good rate of return. Surely spending £27,000 in return for a £160,000 increase in salary is perfectly justifiable. The bottom line is will: it discourage students from going to University? Only if they feel the degree isn’t worth their time or money.
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