Scrap fees — Education should be for all who can benefit
Support the Pension and Pay strikes
The Tories’ announcement on 19 November that they were looking into Higher Education funding is an admission that their policy of overpriced undergraduate fees and high-interest loans is unpopular and unsustainable.Their motive is self-interest. Greening and May have not suddenly discovered the downside of their own policies. But at the last election, by championing the abolition of fees and the return of the maintenance grant, Jeremy Corbyn’s Labour Party nearly stormed to victory.
So rather than dismantle this corrupting edifice, the Tories will tinker around the edges. Within a few years of the fees-and-loans market being set up, Vice Chancellors are now completely financially dependent on it.
The Willets Plan
In 2010, Conservative HE minister ‘Two Brains’ David Willets had a plan. The first element was scrapping the old £3,000 fee, and replacing it with a new fee of up to £9,000, backed by student loans of a special type. These loans were unlike normal loans (including those previous Student Loan Company ones). These would have a high rate of interest (3% above RPI), but were treated more like a tax than a loan. Special terms could be attached to the loan – not having to pay it back until wages reached a certain point, not counting towards credit scores, and so on. But the high rate of interest means that if you are expecting to earn above the threshold, the quicker the loan can be paid off the less you pay. And if you are wealthy, it is better not to get the loan at all.
The loans programme is unsustainable. The Treasury has hidden the debt mountain from public statements of government borrowing, and created special rules to support it. Already the predicted rate of return is around half – so half will be paid by taxpayers anyway. It is becoming more expensive, not less, for the taxpayer.
Willets always intended that universities would set up differential ‘market’ fees, and there would be price competition between universities.
This is an idea the ‘Free Market’ Tories are now revisiting, but instead of universities setting the price, the Tories are toying with the idea that their new Quango, the Office for Students, will do it. Continue reading