UK Student Finance
Since the trail and announcement of the review into UK tuition fees and financing arrangements, the news media and social media have been dominated by much debate.
As someone who spends a lot of time talking to young people about student finance, and who works with students considering options around the world, I feel that I am able to offer some light on this debate which should mollify nervous parents. With three young children of my own, financing their education is always in the back of my mind and I’m sure many of you will have similar concerns.
My main view of the current system is that it has a massive branding problem.
Referring to it as a ‘loan’ and saying that students are incurring ‘debt’ means that those who don’t fully understand the nuances of the system see a student loan in the same way as they would a loan for a car, or a mortgage. The reality is that the system functions very much like a graduate tax: the headline figure of what you ‘owe’ is actually not important. As Martin Lewis of Money Saving Expert regularly points out, with a Student Loan whether you owe £4,000, £40,000 or £4,000,000 is (for all but the highest earners) completely irrelevant: the total amount you owe is not used in calculating your repayments.
This is a problem, because typically students leaving school are not in any debt, so don’t understand the difference between a student loan and a commercial loan. In addition, those from the poorest backgrounds tend to be the most debt-averse, and thus the potential of significant ‘debt’ can be off-putting.
The reality is that, for students being charged the £9,250 tuition fee, university is free at the point of use. Those going into jobs which don’t command a salary over £25,000 will never repay a penny. It is a system which provides a good level of funding for universities and also allows everyone who wishes to access higher education.
On the other side, the issue of maintenance loans is more complicated, and this is where I hope the review announced yesterday makes a big difference. Grants would bring back a sense of equity to the university world, means-tested if needs be. The rate of interest is also something which I hope is looked at.
I’m also encouraged to hear that things like ‘commuter degrees’, the role of Further Education colleges, and another attempt to boost technical education, are all on the agenda.
Overall, the review is timely and should allow some of the negatives of the current system to be removed while retaining what I and many others who deal with a range of different university systems see as a pretty sensible and progressive way to fund university education.
If you still have questions, I’m here to help.