Creating a genuinely sustainable higher education system (UK)

The funding system set up to support the increase in tuition fees in England is financially and socially unsustainable. Last year’s white paper, Putting students at the heart of the system, built on the Browne review, which sought to put higher education on a sustainable footing. There has been much debate about what we might call social sustainability since tuition fees rose to £9,000. Discussion has focused on higher fees putting off poorer students. Yet, although application rates have decreased, thus far this decrease has not added to social inequality, because applications from poorer school-leavers have held up.

The reforms have introduced a lot of support for poorer students – increased maintenance grants, the national scholarship programme, bursaries and fee waivers from individual universities. But perhaps, most importantly, the message seems to have got through about the generosity of loan repayment terms: that if you go on to be a low earner, you’ll come nowhere near paying back all you’ve borrowed; that repayment does not start until you earn £21,000; that the percentage of salary taken after this threshold is only 9%, meaning a graduate on £30,000 can expect to pay around £68 a month).

This is all well and good, you might think. If we are going to make students pay more towards their education, then we better establish substantial and progressive means of financial support.

So what’s the problem?

In focusing on making repayment terms on loans as generous as possible, the government has lost sight of other very important issues of social and financial sustainability. The first and central of these is the possibility that somewhere between 30% and 40% of student loans will never be paid back. Previously, the write-off rate for loans was about 26%. The Treasury is concerned by the new higher write-off rate and, as a result, has insisted on the continuation of the cap on overall student numbers first introduced in 2008. It has also overseen a further tightening of the cap over the last two years, with an estimated 25,000 university places taken out of the system.

Enforcing the cap on numbers has the potential to do much more harm to social mobility than increased fees because most of those who would benefit from more places are from poorer backgrounds. The Higher Education Policy Institute estimates that, by 2020, there could be as many as 100,000 applicants per year who are genuinely capable of entering higher education but who are locked out of the system, which is equivalent to more than one quarter of the 360,000 new entrants to higher education who went through Ucas in 2010.

So, although the recent changes to tuition fees look socially sustainable, they are in fact not. Debt might not be putting off poorer students from applying to universities, but many tens of thousands a year are unable to get a place when they apply. In a time of prolonged economic stagnation, where there are far fewer jobs, this denial of access seems particularly harmful.

So what can be done?

The government has two choices within the current spending restrictions. It can accept the status quo and publicly admit that it will never get back a large amount of its loans, defending the loss by saying it is the price of a fair and progressive funding system. Although doing this would store up future bad debt and leave England’s higher education system unable to keep up with increasing demand.

On the other hand, the government could tighten up repayment terms so that it gets more money back. This would mean lowering the threshold for repayment and increasing the “tax” rate on income above that threshold, as well as raising interest rates for higher earners. The money saved from less bad debt could then be reinvested in increasing the number of total student places.

These two options leave us with a very tough choice – between making students slightly worse-off when they start work and locking out tens of thousands of young people from higher education each year. But, on balance, I believe siding with increased access through funding more places is the right thing to do, Moreover, it puts us on track to create a truly sustainable higher education system – both fiscally and socially – not just a progressive repayment system.

This is an excerpt from the Higher Education Careers Services Unit’s spring edition of Graduate Market Trends. The full article can be viewed at

Source: Guardian Higher Education