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We Need A Radical Re-Think On Who Pays For Tuition Fees

Should employers be helping to foot the bill for university education?

Emeka Forbes

@emekaforbes

Naked Politics Blogger 

When the Labour party announced plans in their 2017 manifesto to axe tuition fees for students in England and Wales, there was an understandable wave of excitement from a generation of young people let down by the burden of crippling student debt. New figures out last week from the Institute for Fiscal Studies (IFS) have indicated that graduates from the poorest backgrounds can expect to be left with an average of £57,000 to pay back – an eye-watering amount by any measure. It’s worth asking two questions about Labour’s plan for zero-fees; firstly is it possible, and secondly, is it enough?

The idea that we should go back on our foray into an Americanised system of personal liability for the cost of education and use taxpayer cash to wipe out fees for new students is certainly worth considering. Michael Gove took a break from his new portfolio of Environment, Food and Rural Affairs to reminisce on his time as education secretary last week. He stressed that it’s unfair for people who don’t directly benefit from university to have to pay for others who do. Far from stating an original argument, Gove’s comments come as the latest rehashing of Margaret Hodge’s old argument that “the dustman [shouldn’t] continue to subsidise the doctor”. A well-articulated rebuttal published in the Guardian argued that since teachers, doctors and other professionals working in the public sector all have to study at university, the claim that only graduates themselves benefit from a degree is nonsensical – in fact, every student benefits from their teacher’s own education, and every patient from their doctor’s training.

This point brings us neatly onto a key question in this debate; if graduates themselves aren’t the only ones to benefit from university study, shouldn’t the burden of fees be split between those who do?

Take the example of a newly qualified engineer working in the aerospace sector. Over a period of many years, they study diligently, take on enormous debt, and finally manage to attain a degree. In their first graduate job, their employer puts them to work right away making use of their degree and saving time and money they would have otherwise had to spend on more advanced on-the-job training. Before long, the company is profiting from the graduate – and by extension, the skills and knowledge they’ve gained at university. Anyone keen to argue that only those who benefit from a university degree should have to pay towards it will surely ask whether the employer ought to make some form of contribution as well.

As for the state, it’s a well-established fact that a highly educated workforce is important for economic growth, so it makes sense for the government to contribute towards tuition fees as well.

This leaves us with a dilemma. If we accept the premise that a) beneficiaries of a university degree should foot the bill for tuition, and b) that the graduate themselves, their employer at the time, and eventually, the state are all beneficiaries, it leads us to conclude on the need to split tuition fee repayments between each of these three parties rather than exclusively saddling students with ever increasing amounts of debt.

The case for ‘employer student debt contributions’

It’s fair to say that the Government already invests in students to an extent by providing low-interest loans that can be written off after 30 years. The fact that student debt is only repayable once a graduate is earning more than £21,000 is also an important fact to consider – although refusing to raise the threshold in line with inflation is evidently grossly unfair. As opposed to offering a blanket subsidy for every student regardless of household income, the opportunity for the state to pay its fair share towards the cost of studying at university comes in the form of reinstating maintenance grants. As it stands, students from the poorest backgrounds will have to borrow more money to get through the cost of studying and will consequently be left with a higher sum of debt to pay back. Means-tested grants were a lifeline for many students struggling to afford university and the Government was wrong to axe them.

We’re left now to think about how employers might pay their fair share – and thanks to the workplace pension scheme, we’re offered an obvious solution. We need a system of employer student debt contributions, where businesses pay a proportion of student debt for graduates in their employment. This doesn’t mean that a new graduate can expect to start a job and get a lump sum from their employer to cover half of their debt repayments, but it does mean that much like a pensions contribution, an employer would pay a small amount each month directly back to the state on their behalf.

In practice, employer student debt contributions would match the monthly repayments made by graduates themselves (which average around £30 per month for those earning £25,000 according to Which?), a small price to pay for an employer benefitting from three-or-more-years of robust education but a big deal for students who wince at the thought of paying off university. There’s also a chance that unemployed graduates could see the offer of student debt contributions as an incentive to get back into work which would have broad economic and social benefits. Importantly for the Government, employer student debt contributions would also drastically cut the time taken to claw back cash invested in tuition costs and reduce the proportion of debt that has to be written off.

The notion of axing tuition fees altogether is tantalising because it appeals to common sense and to tradition. Why should millennials have to pay to study when their parents had the chance to attend university for free? Sadly, this argument misses the point that with more and more young people choosing to study at university, the rising cost of funding and the immense pressure on universities seem to necessitate fees at some level. What’s more, axing tuition fees today may help the students of tomorrow but what about all those who have already taken on huge loans to cover their fees – will they be reimbursed?

Now is the time for a radical rethink not just on fees, but on who pays them back. Our current system disadvantages students from low-income families, squeezes the middle class and left unchallenged, turns our universities into mere venues to buy an education rather than the havens for academic thought, development and reflection we so desperately need to preserve.

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