A momentous shift occurred in British politics this week: the National Union of Students accepted the principle that graduates should contribute to the cost of their degrees. This U-turn is proof that the argument that graduates should pay for their tuition has at last been won, 11 years after the introduction of fees in 1998.
The system that existed before then, though routinely described as a badge on civilisation, was, in practice, deeply immoral. University education was paid for out of general taxation: the poorest in society were subsidising the education of those who would go on to be the richest. With the median male graduate earning £325,000 more in a lifetime than a non-graduate male (and a female £430,000), there is no justification for those who benefit from this experience not paying for it.
Despite the apocalyptic predictions that accompanied the introduction of fees and top-up fees (which allow universities to charge students total fees of £3,000 a year), the social spread of participation has not narrowed. After the 2006 introduction of top-up fees there were a record number of UCAS applications with an increase among the children of parents from every single occupational group.
Two thirds of vice-chancellors want to raise fees. Even including the government funding that universities receive on top of student fees, they are still losing money on teaching undergraduates.
With financial services and property extremely unlikely to drive growth as they did in the last decade — at least for the foreseeable future — bright, inventive, well-educated graduates and top-flight research are crucial to the country’s economic recovery. There is no way Britain’s universities can maintain their world class status — in the Times Higher Educational Supplement rankings, four of the world’s top ten universities are British, the other six American and there is no university from another EU country in the top 20 — if they have to bear such a burden for each undergraduate student they accept.
If one principle of funding must be that the universities are allowed to charge for the true cost of the education they provide, another must be that the education is free at the point of use to the student. Students must be able to borrow the full amount necessary for fees and living costs upfront, and then repay the money as graduates. In time we can expect banks to lend to students, perhaps linking repayment schemes to mortgages: those doing the best courses are, after all, a fairly good credit risk. But this will not happen until a reasonable flow of personal credit is restored and the student financing system has been shown to operate successfully. Until then, the government will have to play banker — something at which it is getting quite practised.
If the price of a year’s tuition at a top university rises to £20,000, there is a risk that some students from deprived backgrounds will be deterred from applying. But there are straightforward steps that can be taken to deal with this: the introduction of a large number of full scholarships, the promise that those who enter low-paying public service jobs will have their debts cancelled or reduced, and loan subsidies. What would really help poor pupils get into top universities is not subsidy of their prospective higher education costs, but a better state school system. Statistically, pupils with good A-level grades — three Bs or better — are all equally likely to apply to university, whatever their background. But the 7 per cent of children educated in the independent sector currently produce more pupils with three or more A grades than the entire comprehensive sector.
If the economy of the post-crunch future is to be based on knowledge, then Britain is in a strong starting position because of its brilliant universities. It now needs a more developed venture capital sector to harness their ideas. But if Britain’s universities continue to be underfunded, we will be squandering one of the nation’s comparative advantages in the emerging economic order — a miscalculation for which future generations will pay dearly.
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