Tuition fees should be cut, but let's make students pay them up front

Three years ago, I made the decision to undertake my bachelor's degree abroad. Put off by the prospect of lingering debt post-graduation, I opted to study at the University of Maastricht, in the Netherlands, where my entire three-year course came to about the same cost as a single year at a British university.

As my friends from sixth form began their higher education, I couldn’t understand why someone would pay such extortionate fees when they could receive the same quality of education abroad for a fraction of the cost.

It wasn’t until I took my six-month Erasmus period abroad that it began to click. Studying in Germany during this time, where education is wholly taxpayer funded (bar a couple hundred euros for a semester ticket), it seemed odd to me how many of my peers were in their fifth, sixth, or even seventh year of their undergraduate programmes.

But then, why wouldn’t you stay a student for as long as possible?

As an undergraduate in Germany, I received subsidised housing, food, and even free transport within the entire state of Hesse; all covered by the Steuerzahler. Free tuition may have made university far more accessible to young Germans – the issue is getting them to graduate!

This very same moral hazard currently exists in the UK. Paradoxically, the exorbitant tuition fees here detach students from the actual cost in very much the same was as taxpayer support does to German students.

After all, you likely won’t have to worry about your student debt for at least a couple years after graduation, so why not take out a loan and enjoy the student life? In fact, almost half of all UK students do not believe they will pay back their student loans in full, and most will reach the 30-year point after which much of their debt will simply be written off without having done so.

Separating students from the economic burden of their education in this way distorts the view of higher education as an investment. In doing so, the incentive to study worthwhile degrees is somewhat undermined, leaving universities free to offer expensive but ultimately useless degree programmes.

Offering “free” university tuition, as Labour leader Jeremy Corbyn has promised to do, would thus do nothing to remedy our higher education system of the real problem. The cost is not the issue here, but for the programmes they’re paying for.

An ideal solution would be to re-establish the link between students and their fees. This is something I witnessed functioning rather well in the Netherlands; while tuition was far cheaper (around £1,900 per year), it still represented a cost burden to the students, who would often have to foot this bill themselves or through an academic scholarship (loans do exist but are often targeted towards low-income families, rather than as the norm as in the UK).

Students are incentivised to seek a return on this investment, as they either bear the burden directly or are liable to a scholarship provider.

There are two obvious ways in which the state may achieve this. The first would be simply to follow the Dutch model and reduce tuition fees (likely through subsidies), but also limit the availability of student loans.

This way, university education would remain widely available and accessible, but the moral hazard would be removed. Because the (much lower) fees are paid by the students themselves (or a parent or scholarship provider), rather than a faceless loan, tuition becomes an investment.

Demand for undergraduate programmes thus shifts from prioritising personal interest to future utility and career prospects, since it is these programmes which offer the greatest potential for a return on investment.

Alternatively, policy could focus instead on one-year programmes or university apprenticeships which emphasise teaching applicable skills. Tuition fees and student loans could hypothetically stay as they are here, with reforms focussing on streamlining education for career prospects, eliminating the need to pay for three or four years.

In any case, offering free education to students will do nothing to remove the moral hazard currently plaguing our universities. Unless university programmes and tuition are reformed to emphasise career prospects over interest, British students will continue to be mis-sold degrees. “Free” education would simply shift the burden to the taxpayer, and would do nothing to improve the prospects of graduates.

Let’s look for sensible reform to the real problems affecting our universities, and avoid falling into the old trap of “let the state pay for it”.

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