Thursday, 21 January 2016

Hysterical Nonsense on Tuition Fees Again

Iain Macwhirter has pushed my rage buttons (The Herald). Every single one of them.

This piece he's written for The Herald is completely and utterly hysterical about how tuition fees are a dreadful idea that should be opposed regardless of context.

He would do well, of course, to take a look at this very blog, in which I showed three years ago now how a student finance system that includes a fee component can actually lead to poorer graduates paying less and richer graduates paying more.

But let's deal with some of the specific nonsense in his Herald article today.

"Of all the injustices perpetrated by my generation on young people in the UK – absurd house prices, job insecurity, stagnant earnings – the worst is probably the imposition of unsustainable debt through university tuition fees."

Yes, because the exponential growth in house prices relative to general inflation and earnings isn't as bad as a student finance system that has increased admissions, increased maintenance payments (above inflation) and reduced lifetime contributions for the lowest earning graduates. Okay, Iain. If you say so.

"I keep being told by university figures that free tuition is unsustainable and that Scotland is somehow out of step with developed countries. This is not the case. In countries like Norway and Denmark universities are tuition-free, and elsewhere in Europe fees are mostly minuscule. England is alone in Europe in imposing fees of £9,000 (and rising)

Germany, that great industrial powerhouse, has just scrapped university tuition fees altogether. The Germans believe higher eduction is too important to leave to the private sector, and that the system the UK has been trying to import from America is ruinous for students and society alike."

Right, but you're not comparing like with like. These other countries do not have as high University admissions rates as we do, nor do they have the same kind of maintenance support. Those that do, do so at significantly higher cost to the public purse. Is Iain suggesting that we should cut the number of University places available to school-leavers or that we should cut maintenance payments? Now those measures really would hurt access for the most disadvantaged!

"Indeed, in America, where student debt is now $1.3 trillion, there has been a widespread reaction against the very policy Labour and the Conservatives introduced here. Hilary Clinton has made debt-free tuition the centrepiece of her campaign for the Democrat presidential nomination."

This is a non-sequitur straight out of the NHS school of lowest common denominator debate. The US system of student loans is completely different from the one in the UK. Repayments are not connected to earnings, there is no write-off period, and you can be sued for non-payment. As countless external commentators have pointed out about student "debt" in this country, it functions much more like a time and contributions limited graduate tax than it does any "loan" anyone will be familiar with in the conventional sense. When Hilary Clinton starts talking about "debt-free tuition" she means that the disadvantaged won't have to take out a commercial loan to pay for college. Commercial loans for tuition is something that has never even been remotely contemplated by the governments in the UK that have charged tuition fees.

"The rest of Europe rightly believes education is a public good and should remain so. Yet in Scotland there has been a strand of right and left-wing opinion that has argued vociferously that free higher education is wrong and regressive: that tuition fees are a middle-class subsidy; and even, following the arguments of the educational blogger Lucy Hunter Blackburn, that students are worse off in Scotland than their counterparts in England.

This argument is based on a false assumption that, through maintenance grants and bursaries, poorer English students somehow are compensated for the debt they take on in fees. The former NUS President, David Aaronovitch, has even claimed that poor students in England don't pay fees at all. This is nonsense. All students south of the Border pay tuition fees though, as in Scotland, some can apply for bursaries and scholarships, which may defray some of the cost."

Something can be a public good without being funded entirely out of general taxation. This is meaningless rhetoric. Indeed Lucy Hunter Blackburn made many of the points I made three years ago. It is specifically lower earning graduates in Scotland that are worse off than their English counterparts. At the time I wrote the piece, 3 years ago, the repayment thresholds were such that those with lifetime inflation-adjusted average earnings of £28,500 or less would be worse off under the Scottish system than the English one. That will have fallen slightly with subsequent threshold changes, but not hugely.

Macwhirter is also straw-manning the argument about maintenance grants and bursaries. This is a misunderstanding that has led to similarly hyperbolic language from Labour with respect to the Tories cutting grants and bursaries. Some grants and bursaries, it is true, are, under the old Coalition model, funded out of part of the fees that Universities charge and are supplementary. They were, however, never the major change that "compensated" for the fees though. The increase in general maintenance payments was the major change, which for the poorest students almost doubled. It meant that they had a much larger disposable income while at University, which is the main obstacle for those from disadvantaged families going there. What the Tory government is doing now is replacing the grant component with a loan component. This is actually very similar to what the SNP did in the last couple of years.

This is neither a fantastic idea nor a dreadful one. It's a very simple trade-off that says the more of maintenance that takes the form of a student loan, the more money you can give students up-front when they are studying. The students that end up "paying the price" of this shift to loans and away from grants are, because of how student loans are repaid, the higher paid and those later on in their careers. The impact of this is only felt when they make larger contributions later on in life.

"But student debt is vastly higher in England because of tuition fees, and is growing so fast the Government is in a panic. Repayments have been dwindling, which is why the Conservatives have just broken their word and abolished maintenance grants for students from low-income families. Undergraduates have to finance their higher education living costs and tuition fees entirely from loans.

Students in England face emerging from university with debts of around £55,000. They will spend the rest of their lives with this ball and chain, the burden of which will be most acute just as they are trying to start a family and buy – or rent – a home.This will have profound economic consequences as student debt crowds out consumer spending."

Yes, the UK Government is in a panic. Because the gamble they took that graduates would be earning a lot more than they actually are hasn't paid off. So in effect, we have more, direct, state-funding of Universities and students because they'll never repay all their debt. How is this any different from a government having to pay up-front? At best here your complaint is that the UK government is only asking high earning graduates to pay more and that there aren't enough high earning graduates. This is absurd.

It's also total nonsense that "this burden is most acute just as they are trying to start a family and buy - or rent - a home". This deliberately misrepresents how student loans are repaid, which is a flat percentage of your income over a threshold. It bites least severely when you are earning less. Moreover, as has constantly been pointed out, student debt is not taken into account by a mortgage lender as an existing credit risk, like any other debt would. It is merely treated as a deduction from gross income, just like income tax is.

"However, it can only be a matter of time before students realise what is happening. Some have been deluded into believing they can avoid debt repayment by keeping their earnings below the repayment threshold of £21,000. After 30 years, the debt is extinguished. But they are in for a shock.

The Government has already lowered the threshold for repayments by breaking another promise to raise it annually in line with inflation over the next five years. The forecast is that a majority of those entering higher education in England will still never repay their debts, the interest on which rises each year. This cannot be allowed to happen, so there will inevitably be further fiddling with thresholds to increase debt repayments."

No this is total nonsense. Students aren't deliberately trying to keep their income below £21k. This is like saying that people deliberately try to keep their income below £10,500 so they don't have to pay income tax. This is stupid. Stop it.

It is true that the Tories have welched on the undertakings made by the Coalition about the threshold for repayment. Advocates of the Coalition system like Martin Lewis have been very critical of this recent change. However, any change to the write-off period would require legislation, and may encounter legal challenges for representing retroactive changes to the terms on which someone took student support. As we have seen, though, the dangers of thresholds being fiddled with is hardly unique to a system in which tuition fees are charged. The Scottish Government let the repayment threshold for our students consistently lag behind inflation until relatively recently, and it was only dealing with maintenance debt.

It was anticipated early-on, even before the changes the Tories are proposing to make now, that "the majority" would never repay their debts in full. That was actually the point of the system. The real question here is how much the UK Government is willing to underwrite. This feeds back to a much simpler and more fundamental question about government and it is "how much money are you prepared to spend on the higher education system". This is a question you have to confront regardless of whether or not you ask for some sort of graduate contribution. And since the type of graduate contribution England has is one that asks more of high-earning graduates than low-earning ones, it's not an aberration.

"And it's not only the threshold that is being raised; so are the fees themselves. Oxbridge colleges have been lobbying hard to charge “the market rate”. The new vice chancellor of Oxford, Louise Richardson, formerly of St Andrews University, appears to want see the American system introduced in its entirety, with no fee limit. In America, fees of $40,000 or $50,000 a term are not unusual."

This is scaremongering. There are no plans to do this. The Browne Review recommended that this should be possible. The Coalition said no. Emphatically. Where is your evidence that the Tories are seriously contemplating this?

"Why are universities so keen on fees? Essentially, because many vice-chancellors are attracted to the idea of universities being run on the model of private schools. Many already regard their institutions as private, which is one reason they are so opposed to the Scottish Government's Higher Education Bill that asserts, rightly, that they are public bodies dependent for their survival on taxpayers."

This is baseless. Where is your evidence that Vice Chancellors think this?

Universities are not government bodies. They are supposed to be autonomous places of learning. If governments want to support a large proportion of the students that want to go to them for a public interest reason, that is entirely their prerogative. The objections Universities have to the HE Bill is that the Scottish Government is effectively proposing to subordinate Universities to governmental, not public, control. The Bill included provisions that would have weakened the authority of University Rectors (something Macwhirter should be aware of given he used to be one), the individuals elected by the student population to represent their interests, and would have allowed the Scottish Government to set the rules for election to, and decide who gets to sit on, the governing bodies of Universities. Opposition is not some private sector conspiracy; it is opposition to an attack on autonomy in the public sphere.

Conclusion

Please, Iain, try to approach this with even a semblance of a level head. You have singularly failed to do so in this piece.

5 comments:

  1. I must admit I'm with Ian. When I went to university in 1973 you gor there because you had good highers and when you did that all fees were paid and all you paid for were living expenses, either by your parents if they could afford it, or by grants. I, and ten kids from my street of 20 council houses, were examples of social mobility. Go back there now and none of the kids are going anywhere.

    I got a grant based on my folks' earnings and when my dad died in 1975 I got a full grant. I also always had a part time job. The reason they can't afford to do that now is because they have expanded the courses with noddy subjects that were previously provided by tech colleges or apprenticeships. Communication, media, retail, event management - perhaps they should be paid for and courses on science, engineering, medicine etc should be free. That might encourage kids to strive for better school qualifications so they can get into courses that give worthwhile jobs and are vital to the country.

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