University students get a fantastic deal.
Outside of the various grants, subsidies and scholarships available, all of our tuition fees can be paid for by a government loan. The interest rate on the loan rises only with inflation, and the loan only requires repayment when the graduate earns more than £15,000 per year. A similar loan is available for living costs.
This means that in the very worst scenario, somebody with no money can study on the back of a guaranteed loan. Should they be unemployed when they graduate they will not have to pay the money back; should they earn the minimum wage after graduation, they will not have to pay the money back; should they earn £15,000 after graduation, they will earn approximately the minimum wage. Furthermore, these fees do not cover the cost of providing the education that the student receives; the deficit is balanced from charging higher prices for international students and from the public purse.
In short: before the degree their potential options were earning nothing, the minimum wage, or if they manage to get a better job – more than the minimum wage. After graduating their potential options are earning nothing, earning the minimum wage, or earning more than the minimum wage. There is no situation where somebody will end up earning less than the minimum wage due to loan repayments.
Furthermore, it would be somewhat difficult to convince a minimum wage earner that he ought to pay more in taxation so that a university course can be run: particularly when the course is either a technical or vocational course, of people who will likely be earning far more than him long term, or a more abstract course, of people who (at very worst) will end up in the same situation that he is in.
What then, is all the fuss about? Opposition by the National Union of Students appears to be nothing but inconsiderate looting at the expense of others; how is this justified? How does a group of people from predominantly middle income families justify giving themselves yet another free ride; not even the altruist’s favourite concept, necessity, applies to this situation.
It is important to note that the policy decision is not to raise tuition fees to £9,000 – but to move the government cap on tuition fees up from £3,290 to the new £9,000 mark. At present, although the £3,290 figure is only a maximum cap, it is the de-facto rate as it is held below the cost of providing the education: there is no room for institutions to negotiate at a price held so artificially low. Similarly, if the price of cars was capped at £1,000, but the rest could be made up from the public sector, all cars would cost £1,000 at the point of sale; yet if the cap was £100,000, the price of most cars would remain the same, as it is within the area of potential negotiation.
The real opposition to the change in policy is not the actual figures, but the very fact that this might lead to a variety of fees across different institutions, and perhaps even different courses within institutions.
Labour’s university spokesman, Gareth Thomas, warned that “students will be forced to choose the cheapest courses, not the one that suits them best”.
Gareth Thomas’ opposition can be summarised as “there will be competition and people will have to choose”; but this shows a fundamental misunderstanding of the market structure. Market incentives, when markets are unregulated, are always two-way. It is not just the student who must try to get the best value for money, but the university who must try to get the best students. Nowhere in history is there an example of a situation where when prices were allowed to fluctuate and competitors were free to set prices the overall availability of the product went down.
Almost every product or service we purchase is delivered outside of government price-fixing constraints; yet the history of this system is that more and more people are able to afford more and more products to create better and better standards of living.
The real travesty in the government’s proposals is that there is any limit at all. Why artificially hold the institutions at £9,000? It would be far better to remove the constraint so that universities have to compete properly.
If this means that Oxford, Cambridge and the universities of prestige, which is often a vastly over inflated concept, end up charging £50,000 for tuition… then they will have work pretty hard to maintain that “prestige”.
The struggle for fairness isn’t against the fees charged by institutions, it is against the deceptive haze that hangs over the education market. Universities are not rated as any other products, their competitiveness is contingent on prestige earned by long-dead academics and the degree to which the inefficiencies of their management is shielded from market scrutiny by the public purse. Let the universities compete, and let the ones that can’t keep up fail – no substitute is “fair”.
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