The current tuition fees system clearly doesn't work. Here's how we could reform it

Sean O'Grady
We should no longer have a bogus target for young people to go to university, which was famously set by Tony Blair’s government at 50 per cent of the age group: Getty

As someone – declaration of interest here – who benefited enormously from a free university education, I have always felt morally torn by the very idea of tuition fees. It’s the sense of pulling up the ladder behind you which feels painful to think about.

I remember well that, when I managed to get a place, I was a bit perturbed when I discovered the relatively modest size of the Leicestershire County Council’s grant: about £1,500 a year in 1981 – approximately £5,300 in today’s prices. How was that going to pay for the course and all those clever dons, as well as paying for books, digs and grub. And beer?

Greatly to my relief, I discovered that in fact I didn’t even have to know, let alone worry, about what my education was worth. Soon, I also learned that you could claim the dole during the vacations, including housing benefit, and that it wasn’t so difficult to get by with the help of an indulgent bank manager and some holiday work.

I think I emerged from it all with a £2,000 overdraft. I lived it up, you see.

I’m sorry to relate all that, especially if you’re currently in the looking-glass world of being a student in 2018. However, I think we can restore at least some that world and make higher education both fairer and of more use to the economy.

It basically means better, more vigorous degree courses, more fairly financed. But also fewer undergraduates, shorter courses and more vocational choices.

Here are 10 steps to reform.

1. For those who have already got “student loans”, end the current system of paying back an absolute amount of “debt”, which is almost entirely unrelated to an individual’s ability to pay. Keep the idea of a notional sum, but make the payback a branch of the income-tax system, rather than “paying back a loan”. This would automatically mean the system was made more progressive and less forbidding. It would also preserve the principle that people who do well out of university education do not end up being subsided by people who earn less and never had the opportunity to do so. This new policy would apply retrospectively to all those who currently have student loan obligations, as a more sensible alternative to simply writing off the whole lot, as Jeremy Corbyn has suggested, for example.

2. End tuition fees as they currently stand, with more flexibility to actually raise them for the most potentially lucrative courses, say in veterinary science. To balance this, reintroduce a means-tested maintenance grant, to be financed from (progressive) general taxation, including the new graduate income tax surcharge.

This would be a simple amendment to an individual’s tax code and would disappear when the notional cost of their education (fees plus living grant) has been reached, if ever. If you do a two-year “cheap” arts degree and swiftly go off to earn a pile in the City or the law, then it’ll be gone by the time you’re 30. If you become a vet, it may take a little longer. At any rate, at some point the notional debt may disappear.

That variation provides for a partial marketisation of the system so it becomes more responsive to signals from the labour market – favouring the sorts of courses that will deliver bigger wages – but doesn’t turn education into a rich kid’s game.

3. “Back-load” the graduate tax towards later life and higher earnings. Indeed, the present 30-year rule (after which the loan is “written off”) could be usefully ended so that, in some cases, a repayment could be taken from an estate, as a form of enhanced inheritance tax. Most graduates will acquire some assets over their lifetime whatever they do, if only by luck, and often enough far in excess of their nominal student debts. These, then, can paid after they die. Again, this would be broadly progressive, if a little ghoulish.

4. If you were really radical, then you could turn student debt entirely into a charge on the deceased’s estate, an inheritance tax surcharge, so that they’d never have to concern themselves with it until the afterlife.

5. In any case, retain the £25,000 threshold for paying anything back, and gradually raise it and/or make it start at, say, age 40.

6. Make the current interest rate lower on pragmatic grounds, maybe linked to the long-term real interest or growth rate of the economy. Say 2 per cent, or a bit below (so the nominal rate would be about 4 or 5 per cent now, rather than 6.1). Too high an interest rate means the debt becomes unmanageable, but the taxpayer needs to be protected against inflation destroying the real value of the obligation.

7. As with all other public spending nowadays, cash-limit the sums the Treasury would have to underwrite for higher education. The public needs to be satisfied about what it is costing the nation.

8. Then ration places on courses according to that limit, ie rationing by academic ability. Mandatorily require institutions to make adjustments to entry requirements to take account of social background; and encourage them to introduce more adventurous and effective schemes to make social inclusion and social mobility explicit aims of their work.

9. More two-year or even one-year courses, which save on maintenance and tuition costs. Abolish “long vacations”, which are a mediaeval throwback to the days when the young folk were needed to go and get the harvest in. Few make hay in the literal sense nowadays. Totally silly.

10. Bring back the polytechnic system, so that there is a clearer distinction between the more vocational and the more academic courses and institutions. There is no necessary reason why a “poly” is a second-class version of a “uni”.

At the end of all that what would we have? Honestly, probably fewer students on shorter courses but educated more usefully and sustainably. There would be fewer UK students and some universities and courses would necessarily shrink in these circumstances – though they could turn to overseas students instead, as they already do.

In reforming the system, our self-governing universities might start to work more efficiently and end the rackets that have built up during the tuition fees boom, most egregiously the obscene salaries vice-chancellors and others pay themselves. Incidentally, this might reveal some of the problems certain institutions might have with their own debts, which may not be sustainable. What happens when a university – a body independent of the state though publicly funded – goes bust? We may soon find out.

We should no longer have a bogus target for young people to go to university, which was famously set by Tony Blair’s government at 50 per cent of the age group. It is plainly arbitrary – why not 25 per cent, or 80 per cent, or 100 per cent? – and violates the old principle of widening university education that was embodied in the Robbins Report way back in 1963: it should be there for those who can make best use of it.

That too was a time of growing dissatisfaction about the way our then tiny universities served the nation. It was a truly elitist system, because in 1961 only 7 per cent of 19-year olds were studying for a degree, though up from 2 per cent in 1938 and 1 per cent in 1902 (and overwhelmingly male, too).

The subjects studied as well as the numbers taking them were inadequate in relation to the nation’s economic needs, and a major obstacle to raising UK productivity. And the system was heavily weighted to the already privileged, and served to restrict social mobility. Sounds familiar, no?

The old “Robbins principle” is well worth restating, as it is a starting point that would serve us well in the current debate: “Throughout our report, we have assumed as an axiom that courses of higher education should be available for all those who are qualified by ability and attainment to pursue them and who wish to do so ... It is a characteristic of the aspirations of this age to feel that, where there is capacity to pursue such activities, there that capacity should be fostered. The good society desires equality of opportunity for its citizens to become not merely good producers but also good men and women.”

We can do all that again, but not by sending everyone – or even 50 per cent – to university. It is not necessary to do that. The idea that every degree course in every university actually satisfies those criteria is wishful thinking. To be honest, too many university courses seem to be taken because it is “fun”, something to pass the time while you work out what to do with your life; so instead of three weeks partying in Magaluf, it’s three years partying in Manchester.

Higher education is not an extension of the leisure sector, and needs to be reflecting that.