Cutting tuition fees won’t help poorer students – reduce interest rates instead

The government’s university funding review must not cut fees – that would damage teaching and help only richer students

Graduates leaving the Great Hall at Birmingham University.
 ‘If half of students won’t ever fully repay loans, then reducing the size of the loans will only benefit those who would have paid up by the end of the 30-year cut off – the future higher earners.’ Photograph: Alamy

Recent research has shown that higher education students from wealthier families are paying off tuition fees in England upfront, in order to avoid debts and “sky-high” interest rates. The findings, from the Intergenerational Foundation, showed that the “bank of mum and dad” was once again intervening in a world of deep inequality and unfairness.

The thinktank called for changes to the current fees system – however, this is unlikely to benefit those being disadvantaged by it.

After the 2017 general election, the government launched a review, led by Philip Augar, into the future funding of higher education. This was initiated in part because the Conservatives feared that their poor performance among young people was due to Labour’s promise to abolish tuition fees (though, in fact, the Tories did no better among young voters not in higher education).

The review was given a frankly impossible task: find solutions that would be attractive to existing and future students – without incurring any extra government expenditure.

Leaks from the review suggest that Augar will recommend a cut in the current annual fee of £9,250 for domestic students attending university in England. Estimates have put the cost of such a cut at about £3bn – if true, the impact on teaching would be devastating.

Meanwhile, the government has established the teaching excellence framework – its overarching intention to improve the quality of teaching and emphasise student experience at university and their employability. You couldn’t ask for a more contradictory set of policies. Paradoxically, the result will be to reassert the primacy of research over teaching.

If half of those taking out student loans won’t ever fully repay, then reducing the size of the loans will only benefit those who would have paid off the money in full by the end of the 30-year cut off period – that is, the future higher earners, and so it is of no benefit to those who most need it.

Once a cut is made in tuition fees, universities will get substantially less money for teaching; and lower earners gain nothing as they continue to pay at the existing 9% of their income for the foreseeable future. Disillusionment sets in all round.

However, a reduction of the 6.3% interest payments on these loans would not only be beneficial for those repaying – but it would also increase the likelihood of the total amount being repaid over time.

Simply cutting the tuition fee would not help the bulk of poorer and medium-income students in later years, while it would simultaneously damage the quality of our university system.

Some blithely suggest that many courses should simply go to the wall. This is often the line of those who benefited from good quality higher education – as they expect their children to. Yet the so-called “Mickey Mouse” courses, as described by those with an elitist tendency, would not be the ones to go, as they are often the cheapest to deliver: they also tend to cross-subsidise the more expensive academic and vocational options.

So, I say to Philip Augur, before he releases his recommendations, please, unless you have a cast-iron Treasury guarantee of new money, don’t reduce fees yet. Otherwise you will manage the trick of helping very few, while damaging the interests of everyone.

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