LONDON — Ruth Sparks says her hope after spending three years at Cardiff University earning a bachelor’s degree in psychology was a career in academia as a researcher while working on postgraduate degrees. But no one would hire her as a researcher without at least a master’s degree, says Sparks, who hails from Tunbridge Wells in southeastern England.
Today, the 24-year-old works as a claims adviser for a health care company. “I enjoy the work, but I didn’t need to go to university to do this job.” Sparks now says it was a mistake to take out loans to pay £27,000 in tuition for a degree she may never use.
Sparks is not alone. Surveys of English graduates and students in recent years indicate that around a third express “buyer’s regret” over having taken out loans to earn degrees they now doubt will propel them into financially rewarding careers. A YouGov poll from last June, for example, found that 35 percent of current students and graduates felt their degree wasn’t worth the cost.
Twenty years after a center-left Labour government first installed tuition at most British universities, it remains a contentious political issue, particularly now that annual fees at English schools have soared to £9,250, or about $12,950) — the highest of any country worldwide, including the U.S., where the yearly average is $8,700. (In the United Kingdom, where most undergraduate degree courses last three years, tuition policies vary by nation. Welsh colleges charge tuition of £9,000 a year, while in Northern Ireland the rate is £3,925 for residents. At Scottish universities, tuition is free for residents of Scotland.)
“Many students feel the fees are too high, and so the loans are too high. I agree,” says Nicholas Barr, an economics professor at the London School of Economics, who advised the former Labour government when it overhauled the fee system in 2006. “We’ve got the right system, but the wrong parameters.”
Conservative Prime Minister Theresa May recently acknowledged that tuition charges for some degrees “do not relate to the cost or quality of the course.” Last month, May instigated a year long study on tuition and university funding, but few experts doubt it will result in a major overhaul of the system. Meanwhile, the Labour Party, now led by Jeremy Corbyn, an old-school leftist, says it will bring back free tuition if it recaptures Downing Street. That’s a pledge that’s popular with young voters, but economically may be hard to pull off.
When tuition was first introduced here in 1998, the yearly amount was just £1,000, or $1,400. In 2006, the fee jumped to £3,000, interest on student loans was set at the rate of inflation, and borrowers paid back 9 percent a year once they began earning £15,000 a year. Any debt unpaid after 25 years was forgiven.
A Conservative-led coalition government, however, tripled the fee to £9,000 in 2012. But while it raised the amount borrowers had to earn before repayments kicked in to £21,000, it also increased interest to the rate of inflation plus 3 percent (so, currently, it’s around 6 percent), and extended the payment period from 25 years to 30. Last fall, the tuition rate inched up to £9,250. For now, it’s frozen at that level and the government increased the earnings level for repayments to start to £25,000.
Today, the Institute for Fiscal Studies, a research group based in London, calculates that the poorest graduates will leave college with total debt of £57,000, or nearly $80,000, once maintenance loans, allowances that cover the cost of living, are added in.
Critics say the huge jump in fees in 2012 was actually a bit of budgetary sleight of hand. That’s because the money the government loans students to pay college fees doesn’t contribute to the deficit until the unpaid amounts are written off after 30 years. In the meantime, the huge amounts of cash the government funnels to universities through student loans don’t appear in its annual budgets, which wouldn’t be the case if government paid the schools directly.
“The system seriously lacks transparency,” says Andy Green, a social scientist at University College London.
Last year, money paid to schools from tuition loans to full-time English students totaled £8.4 billion, or $11.76 billion. The IFS says that at the current fee level, 83 percent of graduates won’t fully repay their loans, and the government will eventually have to forgive 45 percent of money loaned to students. “It’s not likely I’ll ever repay the full amount, not ever,” says Sparks, the claims adviser.
Accordingly, Green says, the government’s share of unpaid debt will hit £1 trillion by 2040. “So it’s still a cost to taxpayers.”
Bringing back free tuition is politically feasible if a Labour government identifies a source of money to pay for it — which is the hard part, explains Tim Bale, a politics professor at Queen Mary, University of London. “There would probably be no guaranteed source of income, and when money’s tight, historically, higher education has suffered.” That’s because it then competes for funds with bigger priorities, particularly the National Health Service and primary schools.
A handful of countries around the world do offer free tuition, including Germany, Ireland, Denmark and Mexico. But many in England say it’s only fair that college students should pay for at least a portion of the cost of an education most will benefit from. Despite the complaints about lack of value by a large minority, one government study found that, on average, most degree holders will earn significantly more money over their lifetime than will their peers who didn’t go to college.
Relying entirely on taxpayers to cover all the costs of free tuition usually shrinks the size of a higher-education system, which can diminish quality and access, making it more elite, Barr contends. English universities, for instance, tend to be more highly rated than their German counterparts, and while around 49 percent of young people in England enroll in degree programs — and enrollments have continued to increase despite the tuition hikes — in Germany the rate’s only around 27 percent.
It’s arguable that too many English students go to college, and some would be better off in vocational-education or apprenticeship programs. But, Barr says, further education, as opposed to higher education, gets little government attention and is poorly funded, which is a mistake. “Ours is a system that says without higher education you are a failure — that’s a hangover from our class-based culture.”
Meanwhile, Green and his UCL colleague Geoff Mason say there’s another option to fund higher education: a graduate tax. In a paper released last fall, they argue for a 2 percent tax on all graduates once they start annually earning £21,000, rising to 3 percent for those whose gross income exceeds £45,000. The tax would apply to all graduates — even those who graduated before tuition existed — and those who now have loans would have their entire debt written off in exchange for paying the tax.
They calculate that all students now repaying loans would pay less in annual, extra taxes under their plan. The tax, they estimate, would cover about a third of the cost of higher education, meaning that the other two-thirds would come from general funds, thus bringing back fiscal transparency.
It’s unlikely that the May government will want to put any of the cost of higher education back on the books, Green says. “So there will be no change from this government.” And because Labour sees free tuition as a vote-winner, it’s not likely to embrace a graduate tax either, he concedes. At least not yet.
“But at some point,” Green says, “the reality of how hard it will be actually do it (reinstate free tuition) will hit them. Maybe then it will be a new idea that Labour might run with.”
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Debate Builds Over Mounting Student Loan Debt in the U.K. originally appeared on usnews.com
