Britain: making working class students pay

What a travesty the proposed changes to university fees in Britain are!   There is so much hogwash dished up by the defenders of raising college fees.  The cowardly Liberal Democrat ministers are much more interested in keeping their plush jobs in the coalition government than in honouring their election promises to end higher education tuition fees.  Far from ending tuition fees, they are more than doubling them!  They justify this by saying that the scheme of loans and grants they want to introduce is  ‘more progressive’ than the existing scheme imposed by the outgoing Gordon Brown New Labour government.  Well, that’s hardly a recommendation!

Let’s deal with the facts.  Yes, the coalition’s scheme is more progressive, as the Institute of Fiscal Studies shows in its analysis of the proposals (http://www.ifs.org.uk/bns/bn113.pdf).   By ‘progressive’, we mean that the students of richer parents will have more debt to deal with when they graduate and get a job than students from lower-income families than under the current arrangements.  BUT that is not the point.

What is the point is that the cost of higher education is to INCREASE  for each student as the government contributes less to the cost of higher education than before.  Under the current system and level of fees, the government contributes £21,820 per graduate while the student contributes £16,080 while they are in higher education.   Under the coalition plan, universities will be allowed to increase fees to up to £9000 a year.  And most colleges will put it up to £7,500 a year.  The reason they have to do so is because the contribution from the government will drop to £16,750 (on a £7,500 tuition annual fee) and to £18,950 (£9,000 fee), while the contribution from each student will rise from £16,080 to £25,020 (£7,500 fee) or £27,200 (£9,000 fee).  So students will have to pay back 55-75% more in debt repayments than they did before!  That is the reality of the progressive deal for graduates that the pathetic Liberal Democrats try to defend.

As the IFS says, it may be more progressive than before, but only 22-23% of students would be better off than under the existing fee system, which is already flawed.  So 78% of students will be worse off than before!   Students from the poorest 30% of households will pay significantly more than under the previous system, simply because fees are going up.  And students from middle-income families will be seriously worse off because they fall between the two stools of grants and loans.  Half of all graduates will be paying back their debts for 30 years and some will pay back more than they borrowed!

If the parental income of a student totals less than £25,000 a year then that student gets a grant of £3,340 a year but still has to take out a loan of £3,980 a year.  So for very low-income families, their child will still have to go into debt.  Students with parents who have incomes between £25,000 and £42,600 a year (pretty modest by City of London standards) start to pay more in loans and get less in grants until the household income reaches £62,215.  Then the cost of going to college is down to the parents and the student apart from a minimal loan – no grant.   So that means the vast majority of students will have to cover their university fees with loans and even low-income students will have to do so as well.  There is no free higher education for even the poorest students. That is the bottom line.

University fees are going to more than double and the financing of price rise is through parents in helping their children where they can and by students taking on vastly increased debts.  The cost at the point of use for higher eduction is being doubled (even if payment is delayed until after graduation, with interest) because the government wants to save money in its austerity programme. It is nothing to do with making it ‘fairer’.  This is not a measure where the rich pay more and the poor pay less.  Everybody pays more.

I heard somebody from the Reform Institute, a Liberal Democrat ‘think tank’, debate with students on the radio.  He argued that as graduates would earn more by getting a degree, they should pay fees for their higher education.  As half of young people would not go to college, why should they pay through taxes for the other half to go for free?

Well, on that argument, why should I, as somebody over 60, pay for any education as I don’t use schools?   It’s the classic argument of pro-market supporters, which this character from the Reform Institute admitted he was.   For him, ‘choice’ is to be decided by individuals on price when they use a service as ‘customers’.    But as one student pointed out, what about the ‘public good’.  There are many externalities that society gets from a better educated population: not only more productivity, skills and innovation, but also more civilisation.  All benefit from that.

If, as a result of free higher education, larger numbers of young people start to earn more in salaries than others, then a proper general taxation system would cater for that.  A finely graded progressive income tax would mean that the more you earn, the more you put back into the public purse for higher education.  That does not exist in modern capitalist economies because the rich don’t want to pay taxes.  So in the UK we have just three income tax rates and a host of sales taxes and ‘stealth’ taxes that are highly regressive.

By the way, a really progressive income tax regime would make New Labour’s ‘graduate tax’  proposal unnecessary (and anyway, they still propose to have tuition fees).   Higher education for all, free at the point of use, paid for out of progressive general taxation would be the most equitable and efficient system, just as it is for all public services.  ‘Each according to his or her needs; each from his or her abilities’, as Marx just might have mentioned once.

The coalition’s fee-paying higher education policy is a policy made by pro-market supporters.  Ideologically, they want services paid for through market prices and to be seen as individual consumer decisions, not ones democratically made by society at large.  It’s a recipe for the rich minority and not the majority.

And the increase in tuition fees is a policy choice by this government – they’d prefer to pay for a nuclear missile programme (Trident) and allow thousands of tax loopholes that enable the rich to avoid up to £50bn in lawful taxes than make higher education accessible to all.  And then of course, tuition fee rises are merely part of an 80% cut in government funding of higher education in the government’s austerity programme designed to ‘balance the books’.  The Liberal Democrats’ talk of a more progressive system is just so much humbug.