Tuition Fees are a fair system of paying for higher education.

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The recent Sheffield Students’ Union elections saw many candidates promise many things; one bold candidate proposed a policy paid for the renationalisation of major British industries (which is probably beyond the remit of the SU President). However, there was one area of agreement; the current system of tuition fees must be fought, and overturned. Nobody mentioned why 2014 was the year for this revolution, or why it hadn’t happened in any of the years since they were first introduced in 1998. Either way, 2014 doesn’t seem like the year fees will finally be overthrown; and that’s a good thing.

The common complaint against tuition fees is that they will ‘price out poor students’ and lump them in debt before they even find a job. This would be a pretty nasty thing to do, but luckily for prospective students it simply isn’t true. The fear that (increased) tuition fees would lead to higher education being the preserve of the rich has not come to pass – 2013 saw 35% of 18-year-olds applied to university in England, an application level for that “age-group in the UK are at or near the highest levels”, whilst “young people from disadvantaged areas in England are almost twice as likely to apply as they were in 2004.”[1]

With regard to the idea of being lumped in debt, let’s not make out the student loans system to be a government-backed Wonga-wannabe – the Coalition’s reforms mean that students only start repaying their ‘debt’ when they earn over £21,000 and even then they only repay 9% of what they earn over that level – if their wages fall, or they take a year out of work, their repayments will stop. Unlike traditional ‘debt’, there is no fixed date you have to repay by, and there are no bailiffs involved – in fact, after 30 years any repayments outstanding are wiped.

This is not, in the commonly used sense of the word, debt. In fact, the terms and conditions are so generous any bank offering such a loan would most likely be inundated with applications. This ‘demonisation’ of fees is simple fear mongering – and, ironically, brings about the situation opponents complain about. By systematically referring to the horrors of student ‘debt’, opponents are reinforcing the notion that tuition fees are as dangerous as an unarranged overdraft on a credit card, when the clear reality is that they are not.

The second common argument trotted out is that society at large, and the economy, benefits from graduates. But consider this – would the system be viable if study for a degree meant graduates were materially worse off, but society would benefit? Of course not. One of the main motivations for getting a degree is the expected increase in income – Professor Ian Walker and Dr Yu Zhu estimate the benefit to graduates as £168k for men and £252k for women over an average lifetime compared to not graduating. [2] As such, expecting those in society who do not have a degree – cleaners, bin men, bus drivers – to pick up the tab is essentially asking the poorer in society to subside the costs of boosting your earnings –that is a truly perverse policy.

So, tuition fees are essentially a system whereby a premium is attached to the increased earnings that lead from a graduating, covering the cost of your education, with repayment based on personal financial ability. So what are the alternatives to student fees?

The first is free education for all – but again, paying for higher education would place an enormous demand on general taxation and simply shift the cost of education, and the cost of boosting graduates’ salary, from the individual to society.

The second is the graduate tax, whereby you repay the cost of your education based on the amount you earn. This idea was the panacea to tuition fees offered by the National Union of Students (the union nobody ever asked you to join, but you’re a part of) and the Labour Party. The problem is, very little difference exists between the system of tuition fees and a graduate tax – a fact that money expert Martin Lewis acknowledges. [3] Both systems allow education to be free at the point of consumption and require you to pay back a fixed percentage of your income when you earn over a certain amount. It almost makes you wonder if the NUS knows what it’s campaigning against.

In fact, in many respects a graduate tax is worse; with tuition fees there is a clear link between the cost of your degree and the amount you repay, whilst under a graduate tax this link is broken and people may repay far more than their degree cost – thus the graduate tax becomes a tax on success. Additionally, a graduate tax would take more money from those who are successful due to factors other than their degree; I have a BA in International Relations and Politics – but if/when I become a world famous Beyoncé impersonator, earning millions, the ‘graduate tax’ would be in effect despite the fact my income had nothing to do with the cost of my degree. The fact I am earning more money than those poor souls with a philosophy degree is inconsequential. If you want to tax graduate’s increased income beyond the cost of their degree, you can – via income tax. In contrast, a system of tuition fees means that I simply repay the cost of my degree, the good I consumed, whilst also contributing to the exchequer via income tax based on the success of my career.

Thus, student fees are a fair and effective way of making sure that those who benefit the most from a university education, the students themselves, pay for it. Although, it’s advised not to say this out loud in the SU – next year’s prospective officers need something to campaign against.

 

References:

[1] http://www.bbc.co.uk/news/education-25964111

[2] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229498/bis-13-899-the-impact-of-university-degrees-on-the-lifecycle-of-earnings-further-analysis.pdf

[3] http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes