Tuition fees: let’s have a rethink

It is shocking that peaceful and legitimate student demonstrations have been marred by violence. Violence is never a persuasive means of making an argument. It serves only to tarnish the reputation of the overwhelming majority of students around the country.

The Government is committed to the principle that going to university should depend on ability – not the ability to pay. Our proposal is for a system of graduate contributions that is fair for all.

During the first student demonstrations in London, I was concerned to hear one of the young people interviewed say that higher contributions would make it impossible for her to fulfil her ambition to become a teacher. She explained that she could no longer afford to pursue that worthwhile career. This is not the case, and I do not want anyone to be put off from going to university because they have misunderstood our proposals.

Let’s use the example of this young woman. First, she will not have to pay any tuition charges until after she graduates and is earning an income.

Second, as a newly-qualified teacher, she will repay less per month than recent graduates currently do. The starting salary for a newly-qualified teacher today is around £21,500 (outside London). Someone on this wage would make monthly repayments at the rate of 9p in the pound, but only on income over £21,000 (the current threshold is £15,000). This would mean repayments of less than £4 per month.

Graduates who earn more will repay more each month, so the system is fair and affordable; and those who enter a more lucrative profession will pay a higher rate of interest, and ultimately contribute more to the cost of their university education.

Monthly repayments depend on income alone, so if graduates leave the labour market, their repayments will stop until they’re earning again.

And third, the Government is introducing a range of support for students from less affluent families for which she may well be eligible. These include more generous living grants and a new £150 million national scholarships programme, which could offer a free first year for students from the most disadvantaged backgrounds.

As a result, we estimate that around one quarter of graduates on the lowest incomes will actually pay back less than under the current system. We also expect around one million students will be eligible for more help with their living costs than at present.

We are not, therefore, placing a heavier financial burden on people least able to afford it. On average, a university graduate earns £100,000 more during his or her lifetime – net of tax – than someone who leaves school at 18.

And besides our desire to make the finances of universities more sustainable than they are now, we are just as committed to improving students’ experience of university.

Under the new arrangements, more university funding will be in the hands of students. Their choices will actually shape higher education as institutions have to work harder to attract them, offering the knowledge and skills that students need to get ahead.

Universities that offer the best teaching arrangements and facilities – and can demonstrate that their graduates are successful – will themselves be more successful at recruiting applicants.

Furthermore, any university charging graduate contributions above the basic level must show how part of that extra money will be used to attract and support applicants from disadvantaged backgrounds.

The course of action that the Coalition is taking will not please everybody. It is, however, necessary, fairer than the current system and it will improve the experience of going to university.

### Student finance Q&A

**Q – I’m already in debt from my first year at university. Will the additional fees mean I won’t be able to complete my degree?**

A – The fee increases do not affect existing students. Those already at university will continue to pay the current tuition fees (£3290 per year) until they complete their courses. The new funding arrangements only apply from September 2012.

**Q – Will the changes to higher education funding mean I can no longer afford to go to university?**

A – It’s important to remember that tuition fees do not have to be paid up front. You only start to repay your tuition fee loans when you are in work and earning £21,000. Help – in the form of loans or grants – is also available to help cover living costs. This means that under the new arrangements, most full-time students should have the same amount of financial support available as current students. And students from lower incomes will actually get more non-repayable grant towards living costs than they do now.

**Q – Will I be saddled with a lifetime of debt as a result of the changes?**

A – A graduate earning £25,000 per year would repay their loan at a rate of £6.92 per week. If earnings fall, then the repayments will fall as well graduates won’t have to pay back anything until they are earning more than £21,000 a year. Any outstanding payments will be written off after 30 years. If you are in lower paid work or even unpaid work (which may include time bringing up a family) won’t be asked to make a contribution.

**Q – There’s no point in getting saddled with debt, there are no graduate jobs in the first place!**

A – The current jobs market is a tough one. Having a degree improves a graduate’s chances of getting a job and they will earn more than non-graduates in years to come. Research shows that graduates are more likely to be in a job than those with lower qualifications. On average, a university graduate earns £100,000 more during his or her lifetime – net of tax – than someone who leaves school at 18.

**Q – Does paying back higher fees mean I’ll never get a footing on the property ladder?**

A – The Council for Mortgage Lenders advise that a student loan is very unlikely to affect your ability to get a mortgage. Mortgage lenders are usually most interested in your monthly income and under the new scheme students have a higher monthly income as they will be making lower repayments for their loans.

**Q – I start university in September 2011 and I’m confused about what I will have to pay**

A – Students starting courses in 2011 will pay the existing tuition fees (£3,290 per year) and will continue to pay at this rate until they complete their studies. The new fees and repayment arrangements only apply from September 2012.

**Q – Aren’t we just paying more, but getting nothing in return?**

A – All universities and colleges, whatever they decide to charge, will be expected to publish transparent information about their courses, including details such as contact hours and the employment outcomes of graduates, this will help to identify the impact of poor quality provision. This will drive up quality.

**Q – I’m worried the course/university I want is going to be axed because only the most popular choices will survive**

A – Students will decide which courses are offered due to demand – where there are courses that attract students they will run – there is already a very diverse choice of courses and there is no reason why this will not continue.

**Q – I’m considering doing a part-time degree, but a friend doing a full-time course has told me it isn’t worthwhile. Is that true?**

A – Part-timers will have access to loans for the full cost of their tuition costs and will not have to pay fees upfront. The new system of support will be available to more part-time students than the current sysytem of means-tested fees and course grants.

**Q – You’re encouraging a class-based education system, with universities out of reach for students from poorer communities**

A – Many students from poorer households will be better off under the new system, with additional support available through grants and loans. The National Scholarship Programme also aims to encourage more bright students from poorer communities go to university.

—

_David Willetts is the Government’s universities minister._