Different policies on how students pay have implications for universities, the government, and on students themselves. Let's consider each of these groups.
For students, as no-one is required to pay anything up-front for tuition under the current system or one with no fees, there will be no difference while they are studying. However, once they have completed their studies groups of graduates will be affected differently under a system with no fees compared with the current system of fees and loans.
For the lowest earning graduates, there is no difference between the two policies – under fees and loans, they will not earn enough for repayments to be triggered, and their loans are forgiven. High-earning graduates benefit enormously from no fees – while under tuition fees they would repay their entire student loans, under no fees they do not make any repayments. Removing fees benefits those who go on to earn the most, while having little or no impact on lower earners.
What about the impact of fees on whether to apply to university? Those in support of no fees often argue that tuition fees put off those from the most disadvantaged backgrounds from applying to university. However, the evidence does not support this argument. The evidence shows the 2012 increase in fees to £9,000 did not deter young full-time students from applying to university. In 2016, those from disadvantaged backgrounds were more likely, than ever before, to enter university. However, along with other factors, fee increases did impact on mature and part-time students applying, and there have been drops in recent numbers for older applicants. The impact of changes in fee policies on mature students therefore needs careful consideration.
The strength in the number of young-full time applicants from disadvantaged backgrounds may be closely tied to the removal of the cap on student numbers in England. Since 2012-13, successive adjustments have been made with the cap finally removed from 2015-16. The removal of the cap has given students more opportunities to study and widened their range of career opportunities – more graduates are in turn good for the UK's economy and in building a stronger society. More graduates are needed now, more than ever, as the UK prepares to enhance its competitiveness to face a post-Brexit world.
For universities, the priority is to ensure sufficient levels of funding are received to deliver a high-quality, world-leading experience for students. This funding could be received through direct grants from government (as would be the case under a system of no fees) or through tuition fee income. Under both scenarios, universities need to have sufficient income to meet student demands, remain internationally competitive, and continue to be financially sustainable.
For the government, a system of no fees compared with a system of fees supported by income contingent loans makes a difference to the public finances, and the overall cost to the taxpayer. The Institute for Fiscal Studies estimates that a system with no fees is more than twice as expensive to government in the long-term compared to the current system of fees and loans (£12.5 billion compared to £5.9 billion). The impact on the deficit also differs - under no fees, direct grants to universities count towards the government's deficit. Under fees and loans, funding of universities does not count.
The impact on the headline measure of the deficit and loss in expected repayments from students arising from a 'no fees' policy could motivate the government to make changes in other policies. These could include higher taxes or restrictions on overall student numbers to make a system of no fees more affordable.
As part of UUK's five priorities for the next government, we ask that it ensures universities can continue to provide quality teaching and a positive experience that all students can access regardless of their background. A 'no fees' policy makes this more difficult for universities due to affordability – would a government still be able to afford to support a system that does not restrict places, providing all those qualified with the opportunity to access higher education, and would it be able to maintain current levels of funding per student? If the answer is 'no' to both, then a 'no fees' policy would harm students – both in terms of the choices available to them for study, and what they experience at university. The most disadvantaged students could potentially be made worse off - they may not be able to get a place at university, and those who did would be no better off financially. Reductions in the number of graduates would also make employers worse off. Any government considering a policy of 'no fees' will need to consider the full impact to ensure a policy that is intended to help does not in fact prove harmful – not only to students, but to the UK economy and international competitiveness.
Thanks for publishing this! I only just tweeted at your handle the other day, asking if there was a publication clarifying Labbour's manifesto policy on free tuition for Uni students.
Under the current loan system in England, both tuition fee and maintenance loans have an interest rate applied to them from the moment they are taken out which will rise to 4.6% next year. Many graduates including those in the £30-40k income brackets face making repayments for many years which will do little more than pay off the interest that is being accrued. The fcat that tapayers pick up the tab for outstanding loans after 30 years is costly. Currently it is estimated that for every £100 lent, £30 will never be repaid. If wages continue to stagnate, write-off costs will increase.
Students from the lowest income households incur the most debt (there are no maintenance grants any more) and it is misleading to suggest that this makes no difference to them especially if they are thinking of studying part-time or entering higher education when they are older. Part-time and mature student numbers have declined significantly since 2012.
There is no evidence which links the deregulation of student numbers with the fact that there are marginally more young students from disadvantaged backgrounds entering university. All younger students who were qualified to study at university could get a place previously.
Universities will always need assurances that they are going to be no worse off if fees and funding systems change but Sweden, Germany and many other European states operate a 'no fees' system and their universities are well-funded by their governments. Whatever the merits or otherwise of a a change in fees polciy, there is a need to review the current funding system in England to make sure that it is sustainable and seen as affordable by both universities and students going forward. For more about this see the MillionPlus manifesto and my blog on the MillionPlus website - btly link here https://t.co/ABDnHiUP6W