University Lecturers' Strike

[Serial_Apologist]

The whole question of university finance has become hugely more complex in an age when it has seemed right to end a system whereby 'your' 'ruling classes' were the beneficiaries, cementing their position.

Rather overstating my case there, ff!

[Dave2002]

Which is precisely what the experts advise people not to do. Should Dad pay off my debt? He can pay it off in full if he wants want to, but the likelihood is he will be paying off unnecessarily what the graduate will never need to. But, hey, what are Dads for?

The whole system works, intentionally, on the basis of reverse sliding contributions, from graduate 0%/government 100% to graduate 100%/government 0% depending on the graduate's 30-year earnings. (In fact the very wealthiest pay off slightly less than the fairly wealthy because they pay off before the interest rates kick in.)

EA has a point about a radical change of policy, though the chance that this would affect graduates under the 2009 or 2012 schemes is unlikely. When/If those changes are made, that would be the time to go to the barricades.

For most of us you are right. Some people seem to earn too much to care - which may be a problem for very few ex students. With the GDPR coming along I'll not write any more!

I haven't done any calculations recently, but someone I know did a while back and reckoned that HMG was not really keen on people paying back their loans, as they have been designed on the basis that they represent a further 9-10% "tax" for those who are earning - or maybe I got the figures wrong. In the early days there was discussion about whether it was worth paying off the loans, but that was when they were only of the order of £1k. Now for people who are working, and may be lucky enough to have a mortgage and a reasonably well paid job the decisions are:

Pay off student loan (whole or partly)
Faster repayments on mortgage - or even pay off completely if they can
Put money into pension funds
Put money into savings or shares (perhaps not a good option for the latter right now - though the depressed prices may present an opportunity)

These are decisions/problems which many of the less well paid younger members of our society would perhaps be glad to have - or at least think they might.

[Dave2002]

Is there evidence for this flight ?

Probably not much. Some people do "escape" for a while, but if they come back to the UK and try to get work - which is probably desirable for them and for the country, the repayments do kick back in again. My guess is that very few people really want to stay out of this country for long enough to avoid paying. I was up for it - though not to avoid paying, but rather because at times I preferred other countries - but like many of my friends who left, have ended up back here.

[french frank]

Rather overstating my case there, ff!

Actually, it was only your terminology I was nicking. I agree with the case!

Apart from funding, there is the problem that wider access (Radio 3, are you listening?) means dropping standards. In particular because, like it or not, public and independent schools give damn fine educations for the money. State comprehensives do less well generally because of their broad intake.

We could return to a competitive system, cutting the available student places (and many universities would close), and with the brightest kids winning university places on their merit. And guess which bright kids would win their places? One of the ideas of the coalition (and I won't specify which part!) was that extra funding was needed (the so-called 'pupil premium') in the schools to ensure that the disadvantaged could be given an extra chance to catch up with the rest.

One of the benefits of a broadly well-educated population is the advantage that parents can give to the next generation, because children who have poorly-educated parents will struggle. So many social problems to solve.

[teamsaint]

The loans system currently:

Makes graduates hugely indebted ,which both costs them financially, and affects their ability to raise a mortgage.

Fails to address issues of access to the universities most valued by the top tiers if society.

Encourages students to recklessly borrow as much as possible in regard to their living expenses.

Is structured in a way that means that many loans will never be repaid.
]
Adds to the growing income divide between increasingly well off pensioners, and those of working age.

Create very high marginal tax rates, that no other group in society would tolerate.

Creates financial uncertainty for graduate as governments continue to change rules and interest rates.


It may help a lot of people go to university, ( as per the report quoted by FF and HD) but that really is only part of the story.

[french frank]

I disagree with most of that and feel it's almost as if I've explained nothing. Or nothing has been understood. The most peculiar assertion is that it's 'structured in a way that means that many loans will never be repaid'. Yes, it is. Intentionally. Because the result is that the government contributes a variable proportion of each graduate's liability - earnings dependent: the less you earn, the more the goverment contributes. What remains unpaid is the government's contribution.

What do the students think now?

The loans system currently:

Makes graduates hugely indebted ,which both costs them financially, and affects their ability to raise a mortgage.

Fails to address issues of access to the universities most valued by the top tiers if society.

Encourages students to recklessly borrow as much as possible in regard to their living expenses.

Is structured in a way that means that many loans will never be repaid.
]
Adds to the growing income divide between increasingly well off pensioners, and those of working age.

Create very high marginal tax rates, that no other group in society would tolerate.

Creates financial uncertainty for graduate as governments continue to change rules and interest rates.


It may help a lot of people go to university, ( as per the report quoted by FF and HD) but that really is only part of the story.

[teamsaint]

FF , I've read what you said , and ( some of ) the research that you quoted.

But we have very different perspectives ( I suspect),and I disagree with you

My point is that it is a system which fails in the several ways that I outlined, including the issue of government spending. It does well in producing large numbers of graduates who have long term higher tax repayments.

That isn't good enough as an outcome in my opinion.

[french frank]

Let me go back to some of the assertions then - if I may:

1. Makes graduates hugely indebted ,which both costs them financially, and affects their ability to raise a mortgage.

As we've discussed, student debt is mostly illusory: when it comes to weekly, monthly, yearly, finances, the size of the debt is irrelevant. The sense in which it 'affects their ability to raise a mortgage' only refers to the mortgage lenders' concept of 'affordability'. If there are also outstanding credit card debts, other loans, hire purchase agreements, the loan repayment is thrown in. If you're repaying a lot on your SL, you're also earning a lot. One fact that doesn't seem to get mentioned is that as the repayment threshold has been raised, so the length to pay has increased - from 25 years to 30. This has its affects, but one is that younger graduates have longer before they have to start paying, though at the other end of the scale the older ones pay for longer. In other words, it tends to shift the burden somewhat from the younger to the older - those who have houses, children left home &c..

2.Fails to address issues of access to the universities most valued by the top tiers if society.

I apologise. I don't know what that means. Second thoughts: do you mean Oxbridge access? I don't know why the finance scheme should be expected to do that.

3. Encourages students to recklessly borrow as much as possible in regard to their living expenses.

Well, larger maintenance loans are available, yes; but whether that is active encouragement to be reckless, I'm not sure. But in any case, it's all added on to the debt; it doesn't affect the monthly income-related deductions - though it might leave the government with a bigger tab to pick up which the graduate is deemed not liable to pay.

4. Is structured in a way that means that many loans will never be repaid.

Agreed. Part and parcel of the progressive system. The bigger the unpaid debt, the bigger the bill for the government/taxpayer - which considering that many who are against tuition fees want the government to pay the whole lot, shouldn't worry them. The tax burden will fall on the better off which is surely as it should be?

5. Adds to the growing income divide between increasingly well off pensioners, and those of working age.

I'm not sure what proportion of pensioners are classed as 'well-off'. Do you have any figures?

6. Create very high marginal tax rates, that no other group in society would tolerate.

First half true, a top band of the income (as we saw, £5,000 of it if you earn £30,000) is liable to reach the top rate earlier than for other earners. But then, there seems to be no dispute that graduates are going to be better paid because they have degrees. Looks like a Catch-22 situation. Would they prefer to earn less, as non-graduates, and pay less tax? One of the tiresome things about being well-paid is that you have to pay more tax.

7. Creates financial uncertainty for graduate as governments continue to change rules and interest rates.

Most of the changes have improved the finances, notably the threshold increases. But that kind of uncertainty isn't limited to graduates. What about pensioners who find that the tax relief on their ISAs are to be abolished? Or that VAT is to be … oh, well, maybe not bother with VAT as its future may be uncertain

8.It may help a lot of people go to university, ( as per the report quoted by FF and HD) but that really is only part of the story.[

Yes, it's only part of the story (and that report also concludes that the students are the biggest beneficiaries of the scheme). But as alluded to, the benefits of a well-educated population have been demonstrated. One might, for example, think of the women graduates who never earn enough to begin to repay their loans (marriage, family coming first) which may seem 'a waste of a degree'; but, for a child, being brought up by a well-educated mother has enormous benefits.

These answers may not satisfy you, but I can't resist trying to construct answers

[ardcarp]

I had decided to back out of this discussion. (My OP was about the lecturers' strike.)

But this has brought me back:

Encourages students to recklessly borrow as much as possible in regard to their living expenses.

It rings very true, as students tend to borrow from sources other than the SLC in order to live [what they see as] a reasonable life. It's happening within my family. Youngsters go out into the (albeit student) world (a) with very little idea of the value of money and (b) with the idea that loans (and credit cards ) are somehow sanctioned by today's society. Being intelligent in an academic sense does not necessarily make students worldly-wise. All too often my generation mutters that we lived in freezing garrets on five pounds a week, and half a pint in the pub on a Saturday would last all evening. Maybe there was still an element of war-time austerity instilled by our parents, but who's to say we wouldn't have done the same as today's students given easy access to loans and credit?

I would mention too that Halls of Residence...which most first-year students occupy....charge huge fees, usually about the same amount as one year''s maintenance loan. So what they are supposed to live on, buy books, catch buses, etc, is anyone's guess.

I am impressed by FF's closely argued rationale for the current system of university and student finance. But I would not like to be among this cohort of students as they emerge with debt other than their student loans, and with the nagging fear that (as has been stated more than once above) that the official Student Loan system may be subject to retrospective rule changes.

[teamsaint]

FF, I'm not going to reply right now, point by point. I don't have your energy for detailed discussion at this point in the week .
But just to re emphasise the point about perspective, I do think that ones own situation and experience of discussion with others who have in some way experienced the system(s ) are really very important.

One might, for instance consider the situation of parents who spend a great deal of money in order to minimise their children's debt,and give them the same life chances as they themselves had, and still see them paying high rates of deductions , and another barrier put in the way of home ownership.

[french frank]

I am impressed by FF's closely argued rationale for the current system of university and student finance. But I would not like to be among this cohort of students as they emerge with debt other than their student loans, and with the nagging fear that (as has been stated more than once above) that the official Student Loan system may be subject to retrospective rule changes.

I wouldn't like it to be thought that I'm much enamoured of the system as it is. There must be easier ways of ensuring that the government/taxpayer chips in substantially to supplement students' university careers. Abolition of fees is simple but regressive. Ironing out some of the inequity before people get to university has to be a good thing: so much of it is fostered in the home. Why is it that Scotland (and Northern Ireland (?) have a tradition, even among the seemingly 'disadvantaged', of valuing a good education, and England doesn't?

[french frank]

I didn't see your reply when I started replying to ardcarp.

FF, I'm not going to reply right now, point by point. I don't have your energy for detailed discussion at this point in the week .
But just to re emphasise the point about perspective, I do think that ones own situation and experience of discussion with others who have in some way experienced the system(s ) are really very important.

One might, for instance consider the situation of parents who spend a great deal of money in order to minimise their children's debt,and give them the same life chances as they themselves had, and still see them paying high rates of deductions , and another barrier put in the way of home ownership.

[Belgrove]

To return to the OP, yesterday's Sunday Times reports that students in some institutions are demanding fee refunds and compensation, it will be interesting if this catches on across the sector. University management have adopted a model that regards the students in their institutions as customers and the performance of lecturers is increasingly assessed in terms of student satisfaction. These managers also regard their institutions as businesses (hence the justifications Vice Chancellors make for their remuneration packages, including enhanced pension deals, when comparing institutional turnover with business), relinquishing revenue through refunds would hit them hard and present them with a dilemma. There is a herd mentality among university management and they will undoubtedly come up with a unified rationale for denying the claim for refunds. But it would show that the model of students as customers is bogus, as is known full well by those who deliver the day-to-day activity of a university rather than manage it.

[french frank]

that the model of students as customers is bogus

It certainly is. Unfortunately, it seems an inevitable consequence of introducing competition for limited revenue and associating prices with a commodity. I don't believe that began with management.

[ardcarp]

But it would show that the model of students as customers is bogus

It certainly should be bogus.....but I wonder if there is an increasingly strong element of commercialism in the...ahem, how shall I put it?...more recently founded universities? Apparently unconditional offers are on the increase. If that practice is a bona fide attempt to give places to those who have not had good educational opportunites, then all well and good, but.......