After the announcement of a modest increase in tuition fees last November, calls for their abolition were once again heard. But scrapping tuition fees would imperil the quality of British universities, do little to make university more affordable, and be socially unjust.
Economically, the British (excluding Scotland, given its different approach to tuition fees) student loan system is the best of both worlds. As the Financial Times journalist Martin Wolf has pointed out, European countries that primarily fund universities via taxation (such as France or Germany) tend to spend a smaller share of GDP on higher education than countries that rely on tuition fees (such as Canada, the US, or the UK). Given how British public services are faring (even as tax take is at a 70+ year high), a switch to state funded higher-education may result in universities receiving inadequate funding.
On the other hand, a system in which individuals borrow from the market saddles those who financially gain the least from university with the highest debt, as they cannot pay it off. Without collateral, banks demand stringent conditions, for instance American restrictions on discharging student loans in bankruptcy. The Institute for Fiscal Studies (IFS) estimates that (under the current, post 2023, system) students will repay on average 1.85% of their lifetime earnings, not an unreasonable amount. Only those who earn enough to pay do so. The recent increase in fees would only affect the estimated 65% of students who will earn enough to not have their debt written off. The British loan system is therefore a good compromise, avoiding the pitfalls of public funding but protecting students from the vicissitudes of market lending.
But more importantly, moving away from tuition fees would not be socially just either. Graduates earn more than non-graduates, so abolishing tuition fees would benefit a better-off group at the expense of everyone else. The IFS estimates that, at age 25, one in seven people do not have good GCSEs (grade C (or equivalent) or above). This group would receive virtually nothing from reducing tuition fees but would face the additional taxes and/or cuts to public services that would fund them.
This points to a limitation in using university for social mobility: much is set by age 16, before higher education can make any difference. The IFS notes that “only 8% of young people who were not meeting expectations in reading, writing and maths at the end of primary school went on to achieve pass grades in GCSE English and maths”. We would better tackle inequality by increasing funding to primary and secondary education, before irreversible disadvantages set in. Using tax revenue to reduce tuition fees instead of this would be a middle class cash grab.
The options for raising revenue to pay for state-subsidised higher education look poor. Alongside raising a larger amount of tax than for decades, the British tax system is notoriously complex compared to peers. Some have hoped that a wealth tax might solve the problem, but studies and commentary on a British annual wealth tax have been less than lukewarm and wealth taxes elsewhere have had a poor run.
Britain was one of the hardest-hit countries in bond market convulsions at the start of this year, with the 10-year bond yield reaching its highest since 2008; the 2024 Autumn Budget forecast a debt servicing bill of £126 billion in 2025-26, more than the defence budget. Increasing public borrowing to fund tuition is not a realistic option (and borrowing to fund day-to-day spending is anyway unsustainable). Regardless of whether we believe the UK can realistically raise the funds, are there better ways to spend the additional budget than on abolishing a just and effective system? The rise in British child poverty, among other problems, might suggest so.
Critics of the current system are right to highlight the problem of insufficient maintenance loans. Indeed, the Department for Education’s “Student Income and Expenditure Survey 2021 to 2022” reported that mean full-time student expenditure is more than the maximum (outside of London) maintenance loan, plainly putting poorer students at a disadvantage. However, while maintenance loan amounts do present a very real challenge to poorer students, tuition fees do not: British students do not have to pay them before studying and might never pay them back in full. While the idea of a “student loan” and headline fees would understandably worry an 18 year old unfamiliar with the system, better information about the costs and repayment process would be a vastly more efficient manner with which to tackle this concern compared to scrapping fees.
None of this implies that we should endorse an anti-intellectual populism which sees university education as profligate and unnecessary. We all benefit when everyone, no matter their background, has access to education and is able to put their talent to the best use possible. The modern world would not function if it was full of either graduates or non-graduates. More importantly, education and the pursuit of knowledge are things which we ought to promote and treasure: they make us human. But we must also be clear-eyed about who benefits financially from university education. Abolishing fees would bring little of the beauty of knowledge to those without good GCSEs. It would harm students, the taxpayer, and the goal of equality.
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