With record numbers of students being accepted to university this year, during the summer thousands will be turning to student finance and going through the standard website procedures to attain student loans for September.
At the moment, with rising numbers of students attending university, the number of universities that are charging blanket £9,000 tuition fees for all undergraduate courses rose by 50 percent this year, which comes after the unpopular changes in 2011 that involved tripling tuition fees for students. This is shown by figures from a study by The Complete University Guide that found that 75 percent of institutions were imposing the maximum possible fee for every course in September which is up from half in 2013. This will be the third year that universities have been given powers to levy fees of up to £9,000 despite many institutions claiming that the current system is unsustainable.
The most expensive course is the masters degree in finance at the London School of Economics where students will be expected to pay £28,656 whilst the most expensive course of any kind for British students is at Oxford’s MBA, the master of business administration, where fees stand at £42,640, as the university insists it is on par with costs at competitors in the US and Europe. Overall, fees for postgraduate courses this year have gone up by an average of 1.2 percent, which is less than the rate of inflation. Meanwhile, students outside the EU will have to deal with a sharp increase in the undergraduate and postgraduate fee level where costs have gone up by around five percent overall.
Additionally, Professor Andrew Hamilton, the Oxford vice-chancellor, also said that fees should be closer to the £16,000 a year that it currently costs the prestigious university to teach the average undergraduate. However, the overall rise in charges has caused repeated claims from leading figures within the higher education sector that the existing fee structure was damaging universities.
Sir Christopher Snowdon, the president of Universities UK and vice-chancellor of Surrey University, said the £9,000 cap was “simply not sustainable” and “can’t remain frozen forever”. A group of MPs, the Commons business committee, that are in charge of scrutinising university policy has found that the entire student loan system is nearing a point where it is financially unworkable, calling for an urgent review of the system after predicting that government is heading towards a multibillion-pound black hole in the funding of universities. Whilst there are growing fears among academics about the student loan system, the committees discovery that found plans to lift a cap on student numbers may make the funding gap worse, and the report that Vince Cable, business secretary who oversaw the introduction of the higher tuition fee system from 2012, had stalled on the sell-off of the student loan book due to fears that it would not raise the amount of money predicted, it seems that there is very little confidence in the current student loans system.
The MPs questioned whether the sale of the loan book actually leads to a good return for the taxpayer since the government’s analysis revealed that it would raise only £2 billion rather than the £12 billion that was originally expected, adding that this would be “an unusual and potentially costly deal made to protect the private investor.”
Adrian Bailey, chairman of the Commons committee, stated that: “The financial funding system for higher education is looking increasingly fragile, coming under the strain of unfunded commitments and poor debt collection. The student loans system needs urgent attention and it’s vital that BIS [the Department for Business, Innovation and Skills] doesn’t further undermine the viability of the system by selling off the income-contingent loan book at a knock-down price.” He continued to propose changes that would lead to an improvement of the current situation, stipulating that: “With the prospect of a large potential black hole in the government’s budget figures, the government need to get its act together and properly calculate how much of these student debts are ever likely to be paid back. The government needs to set out a clear timescale for pushing ahead with a review of the overall student loans system because the alternative is an unfunded model which would leave students, universities, and taxpayers with a very raw deal indeed.” Currently, the student loans system for students in England causes the government to lose about 45 pence on every £1 it loans out.
Back in March, glaring issues were noted when the Conservative universities’ minister refused to rule out raising tuition fees for students after the next election despite warnings from Labour that the current system was a “financial time bomb”. At the time, one of Willett’s former political advisers, Nick Hillman, called for a rethink of the student loans system, admitting that the government got its maths wrong by overestimating the amount of graduate debt that will be repaid. Ministers assumed in 2010 that the taxpayer would have to provide a subsidy of 28 percent of the total loan book, but since then needed to rethink this after growing estimates of debt that will never be repaid.
Currently, students start repaying loans once they are earning more than £21,000 at a rate of nine percent of their salary above £15,000. A notable consequence from the rise in tuition fee loans can be seen with the effect that it has had on the Liberal Democrats’ support after they abandoned their election pledge to scrap tuition fees once they went into coalition. They have not been able to regain their large loss of supporters.
At the time, BBC reported that around 45 percent of university graduates will not earn enough to repay their student loans, calculating that the government will lose more money than it gained by increasing fees in England to £9,000 a year, thus revealing the severity of the blunder that a rise in fees would cause.
Another consideration is whether the rising tuition fees have even improved the current state of education at universities and the unsatisfactory response many have felt, which may also contribute to the issue of struggling to find a job after graduating.
In my personal experience, noting that I was in seminars and lectures with third years paying a third of the price, I realised that there was absolutely no difference in what we were offered in our education – the only difference was the price of loans a student who started in 2012 was borrowing.
Sources:
http://www.theguardian.com/education/2014/jul/22/student-loan-system-financially-unworkable-mps
http://www.theguardian.com/education/2014/mar/23/tuition-fees-catastrophe-lib-dems-labour
http://www.bbc.co.uk/news/education-26688018
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