Tuition Fees … not so clear cut

Listening to Labour's call for a reduction in level of tuition fees chargeable by Universities, one must question the philosophy that lies behind tuition fees. It would seem rational that if the graduate is going to gain a benefit in terms of earning power that he should ultimately bear the cost of his training, but is this really that straight forward?

If this logic is right why not apply the same principle to all education?

Or consider the effect if, because of tuition fees, no one decides to go to university. No more doctors, lawyers, teachers or engineers…. we would all suffer.

We really look to universities to generate the people who will be the engine of future growth for the economy.

It is clear to me that not all university degrees are going to create the same or even similar earnings potential and one must question the equity of a system that is going to place the same tax burden on people with disparate incomes.

When we look at universities, we see certain benefits in proportion of their income being generated from fees charged to students, as this makes budgeting and planning a lot easier than being dependent on the whim of politicians. However in the route we have selected, with the level of fees being defined by politicians we have not freed the universities from the whim of politicians. 

Labour's stance seems to make even less sense when all we see is an increase in funding from government (through an increase in taxation) but still maintaining a fee basis. After all they are saying we will reduce the fees to £6000 and top up with a contribution from government, they are simply playing with politics.

The real issue with tuition fees is that it is simply a means of delaying when we show the cost of government support to universities as a liability to the taxpayer … an accounting trick more than anything else, allowing the government to reflect a lower deficit than reality. Treasury figures show that almost 40% of student loans will be borne by the general taxpayer rather than the student.

The general granting of the loan only repayable when and if income exceeds a threshold does bring university education closer to being within the means of all. However, when one considers the total cost, including board and lodging as well as books, it is apparent that the actual level of debt incurred by someone who is not at least partially subsidized by his parents is extremely high. Probably more important than reducing the Tuition Fee would be to encompass the ancillary costs into the same loan/repayment structure.

When we consider that part of what we are looking for, out of university education, is the preparation of young people to become the future driving force of growth in the economy, we could of course turn this on it's head and consider instead that the fees are a loan to universities to be repaid out of the excess taxes collected from their graduates over the average. The algorithm for this calculation could take many factors into account, as it is clear that all graduates are not automatically going to earn more than averages. By doing this we would be asking the universities to keep closer to the work place ensuring that their graduates are adequately prepared to supply the needs of the economy.



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