Four in five young people who go to university will end up repaying 9p of every pound they earn over £21,000 for 30 years. Little wonder that university funding has become such a charged political issue. A new review of university funding will be published in the coming weeks. Some of the proposals reportedly include the idea that universities will only be able to charge £6,500 a year for cheaper-to- provide courses, whereas for courses such as engineering and medicine, they may be allowed to charge over £13,000.
If the main losers from the tripling of the tuition fee cap were students, the main beneficiaries were universities; after they defied ministerial expectations and charged the then-maximum of £9,000 for almost all courses, they saw their average funding per student instantly jump by a fifth; real resources per student have increased by almost 60% since 1997. The 2012 reforms also left a gaping anomaly: universities broadly receive the same funding for all courses, despite the fact some are much more expensive to provide than others, creating a financial incentive to run cheaper courses. The 2012 changes were poorly conceived but the purported options for reform do little to address the fundamental questions: is university funding from taxpayers and students at the right level or would some of it be better spent elsewhere in education, given that the 2012 jump in funding was not planned and given also the swingeing cuts in further and adult education? And why is the funding universities receive unrelated to the costs of running a particular course?
The income-contingent repayment system means that cutting all fees to £6,500 would only benefit the highest-earning graduates. Charging fees based on how expensive they are to provide could put poorer students off science. Scrapping tuition fees altogether, as Labour pledged, would cost £8bn a year and would benefit the disproportionately affluent group of young people who go to university. The priority shouldn’t be turning a £23,000 subsidy for young people who go to university into a £50,000 one, but extending that £23,000 subsidy to the predominantly working-class young people who don’t go to university and who get nothing of the sort spent on their post-18 education.
Reform of university funding should respect two principles: the funding they receive for each course should reflect the cost of putting on that course, and the contribution young people make after graduation should be related to their earnings and richer students should not be able to pay it off early. A graduate tax fits the bill perfectly.
