“I really regret going to university and taking out a loan. I remember thinking it wouldn’t have a big impact on my monthly salary and I wouldn’t even notice it. I notice it every month.” These are the words of just one of nearly 50,000 anonymous graduates submitted to the Treasury Committee as part of its inquiry into the student loan system.
Earlier this year, I predicted that the debate over student loans would not go away, no matter how much ministers wanted it to. There have been some developments since Rachel Reeves changed the terms by freezing repayment thresholds in her November Budget. insisted the system was “fair and reasonable”.
First, new poll from Ipsos found that public sentiment on the issue is shifting in favor of young people taking out loans to invest in their future, with a majority concerned about the level of debt graduates are incurring and the terms of the loans. Then in March, The Treasury Committee announced its investigationcatapulting this issue to the parliamentary agenda. The committee released the results of its call for submissions last month, which was well received serious questions as to whether the teenagers who took out these loans properly understood the termsas well as providing evidence of the impact repayment has now had on this generation. The commission is currently holding hearings, with ministers from the Treasury and the Department for Education due this week, and its report on the subject is expected later this summer.
All this is to be welcomed. But alongside questions about the financial product itself (and the ethics of a system where the government can retrospectively change the conditions under which unsuspecting 18-year-olds are enrolled), there’s a wider debate to be had: what college is for, who benefits, who should pay, and how we ended up in this situation in the first place.
That’s what a new report from think tank Policy Exchange tries to do. Tarnished Towers: Fixing England’s Broken Higher Education System is an in-depth analysis (over 100 pages long) of everything that has gone wrong in the university system, from loans and fees to admissions, academic standards, exclusivity, research, government and even campus culture.
Policy Exchange is an unapologetically right-leaning institution (it was one of David Cameron’s think tanks, at the time), and its recommendations will not be to everyone’s taste. The way it’s promoting the report is clear: the press release touts the proliferation of “low-value” degrees, noting that “only 57 percent of graduates are in full-time employment 15 months after graduation” and that “in nearly half of subjects, the bottom quarter of graduates earn less than the minimum wage five years after graduation.”
One of its key recommendations is to cut the number of university places by 30 per cent, implying that almost a third of students would be better off not going to university at all. It has been endorsed by Tory shadow education secretary Laura Trott, as well as education reform spokeswoman Suella Braverman and Blue Labor leader Maurice Glasman, who says his only concern with the report is that it does not go far enough and reiterates his call for half of universities to close. Needless to say, this is not exactly what most activists who decry the injustices of the current system have been asking for.
But reading beyond the provocative main lines, I think the report is an important contribution to the debate for three reasons.
First, while the call for courses will undoubtedly get the most attention, especially in the right-leaning press, this is not one of those interventions in university debate that demonize students for asking for snowflakes. There is a whole section on fees and debt, which notes the punitive interest rate and aims to argue that this could in any way be considered “progressive”. “While there is a fair case that graduates should make some contribution to the cost of their degree – the benefits of a degree being shared between the individual and society – it is much less clear why any graduate should be required to pay back much more, in real terms, than they borrowed,” he argues. The standard argument heard so often in recent years — that young people rightly shouldn’t expect the state to pay for their degrees and should stop complaining — has fallen apart. The fact that this assessment comes from an institute on the right is even more convincing.
Second (and related), it would be hard to find a more stark denial of the reforms imposed in 2012. According to the executive summary: “We have a funding system that does not enjoy public confidence, that perceives it as usurious and unfair – both absolutely and intergenerationally – and yet is unsustainable and subject to universities from real year to year.”
These reforms, let’s not forget, were brought about under a Conservative prime minister (albeit in coalition) and sustained under successive Conservative governments – governments in which both Braverman and Trott served. Yet here they are, putting their names to a report that is downright harsh for a Conservative Party policy plank at the time. Braverman has since switched parties, but Trott is on the Tory front bench and has advocated closing 100,000 higher education places. The Conservative Party, meanwhile, has taken up interest issues, with Kemi Badenoch calling for the “unjust debt trap” to be lifted.
You don’t have to subscribe to the idea of cutting seats to see the significance: the political dynamics on this issue have changed. One of the supposed successes of the 2012 reforms was the subsequent increase in young people going to university, especially from disadvantaged backgrounds. This was often held up as proof that rising rates and changes in credit terms were nothing to worry about, as they weren’t affecting the numbers. The fact that the party that brought about these reforms is now back and actively seeking to reverse that “success” suggests that something has gone very wrong.
Which brings us to the bottom line: how did we get here? Two ideas have been key to the composition of the current system: “expansion” (more countries) and “marketization” (more choice). The report states that “Although the former is more associated with the left and the latter with the right, in practice both together have dominated policy choices throughout the 21st century whichever party has been in government.” He argues that the expansion – as endorsed by Tony Blair – has been a disaster, lowering standards and resulting in people who would have been better off going straight into the workplace or vocational training rather than pursuing low-value degrees.
But it is also anathema to the supposed trade-off so favored by conservatives. “The Higher Education sector, as it is currently constituted, is not a market,” it says bluntly. The inter-course competition promised by the proponents in 2012 never materialized. The consequences for providers whose courses fail to deliver for students who take on tens of thousands of pounds of debt are virtually non-existent. There is little transparency or accountability – both essential to a functioning market. Turning students into “consumers” and trying to recruit as many as possible for an ever-expanding sector would always foster perverse incentives. Now the consequences of that inevitable failure are falling on a generation of young people who feel not only disappointed but betrayed.
“This is not the future I thought I was signing up for until I was 17 and there’s a generation of people in my boat,” reads another from excruciating responses to the Treasury Committee. If we are going to fix the system, we need to understand the philosophy behind it. This philosophy invented the illusion of a market to drive massive expansion, financed by the dreams of aspiring teenagers. Any prospect for a better system begins with accepting this grim reality.
(Further reading: Will high school graduates ever be compensated for their student debt?)
