Since university tuition fees were introduced in 1998, the issue has become a political flashpoint for successive governments, and Theresa May's embattled administration has been no different. High fee levels and rising debt have become an issue of 'intergenerational fairness'. The current generation of young people enter the workforce tens of thousands of pounds in debt, facing a labour market characterised by flatlining wages and increasing levels of precarious, low income and casualised work. The consequences of this fracturing of the social contract between generations has reignited student finance as a political issue.
While October's announcements that tuition fees would be frozen at £9,250 and the repayment threshold increased to £25,000 will help graduates, it is clear there is an appetite, both amongst the public and in Westminster, for deeper reform. There are two principles that should drive any system of higher education finance: fairness in access, and fairness in contribution. Financial barriers to young people from all backgrounds having equal opportunities to see the benefits of higher education should be minimised, and the costs of that education should also be borne across the population in an equitable way. While, over a period of thirty years of repayments, the current system begins to approximate fair contribution, this is not enough. Fairness must be embedded from the beginning.
The numbers of young people going into higher education, including those from disadvantaged backgrounds, has continued to rise but there remains a stubborn socio-economic gap in access. The most disadvantaged remain four times less likely to attend university than their better-off counterparts, and the gap in participation rates was the same in 2016 as it was in 2006, despite extensive outreach efforts by universities.
It is a challenge to discern the role that tuition fees have played in the persistence of this gap. However recent research has demonstrated that aversion to debt is higher among those from lower class backgrounds, that this is having an effect on planned university attendance, and that the problem is getting worse. In fact, annual polling carried out by Ipsos MORI for the Sutton Trust has found that intentions to attend higher education among 11-16 year olds have been declining since £9,000 fees were introduced in 2012, reversing a long-term trend.
As the average debt spirals towards almost £50,000, something clearly needs to be done. October's reforms, while low-key, will cost £2.9billion per cohort of students, and while saving graduates £8,000 in repayments, will mean over four fifths of them will never pay their loans back. These changes have the appearance of a short term political sticking plaster, and fail to address the deeper issue of a system built around high debt and high levels of non-repayment.
It may seem simplistic on its face, but there is a straightforward response to a system that is predicated on imposing vast amounts of debt which will never be paid back, and that is to reduce the amount of debt in the first place. Tackling levels of debt by eliminating fees entirely for those from the least well-off households, and putting in place a sliding scale for those on middle and higher incomes would have a dramatic effect on student finances. But on its own, this is not enough. The day-to-day costs of university are just as, if not more, important to young people, and maintenance grants, abolished in 2016, should be restored to ease the burden for those who need it most.
Analysis conducted by London Economics shows that these two measures would cut overall student debt in half, and by three quarters for the least well-off. This would mean the poorest students would no longer graduate with the most debt, as they do now. This could be achieved at a cost of up to £3.2billion, virtually the same as October's policy change, and at a substantially lower cost to the taxpayer than full abolition of fees, which could cost over £5.5billion (including grants). It is far from clear that abolition is the most effective use of education budgets, at a time when the early years sector is struggling, and would effectively mean huge subsidies for those from the richest backgrounds. Means-testing may not be a fashionable term, but, in an environment of severe economic uncertainty, it remains an important way of delivering public services progressively according to ability to pay.
A system of stepped fees and restored maintenance grants would reduce average levels of debt substantially, and clear fee debt entirely for those from low income households, at a more moderate cost to the taxpayer. This would significantly lower financial barriers to participation, while nonetheless sharing the cost between the taxpayer and those with the greatest ability to pay. Young people deserve a fairer deal, and genuine reform of student finance would be a good place to start.