Tuesday 23 November 2010

Follow-up on tuition fees: What politicians need is a new frame of reference

Over the past few weeks I have had a number of conversations with people coming from various viewpoints on the issue of HE financing. When I have criticised the proposed system I have been challenged in two key areas: How would I propose universities be funded, and Why should taxpayers subsidise universities anyway?

On the question of how to fund higher education, I believe it is a matter of priorities. The government undoubtedly needs to cut expenditure, but has a number of options for doing so. For example, we should prioritise funding universities ahead of replacing the Trident missile system. I would favour full funding for a smaller number of University places, awarded on the basis of merit, over arbitrary targets for the percentage of people starting degrees. Many school-leavers may be better off getting vocational work experience than learning an abstract academic discipline.

There is a broader, more philosophical, question about whether it is fair that taxpayers support a student’s education. One strong argument in response to this is that graduates who benefit financially from their degree (e.g. going into banking, law or medicine) pay higher tax through the existing income tax regime, thereby giving back to the Treasury. This does not apply, however, to graduates whose earnings are in line with or less than non-graduates. In this case, they may be seen to have enjoyed a few years of relative leisure being subsidised by hard-working taxpayers. When described in this way, I realise that this scenario looks unfair. But only with the benefit of hindsight can we know which graduates go on to be financially successful (and pay loads of tax) and which go on to earn relatively little.

The fundamental problem with an increase in tuition fees is that it will affect people’s decisions in a negative way. The tuition fees question is being approached purely from the perspective of economics, when what policy makers need to consider is the psychological effects tuition fees will have. People who ought to go to university won’t. Graduates who ought to explore career paths based on their passions will instead go into low-paying but safe jobs. I sincerely hope that politicians realise this before voting on the issue.

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