Any current debate or commentary about the UK higher education sector is dominated by discussion of student loans and graduate ‘debt’. While it is true that the student loan system is systemically and grossly unfair, and penalises the worse-off, its impact on graduates pales in significance to its impact on the wider finances and structure of the UK Higher Education system. If this crisis is not fixed then whole departments, and even some universities will close, damaging one of the few sectors where the UK is genuinely ‘world-leading’ and robbing many of the opportunities higher education provides.
The current crisis has its roots in the 2011 removal of government grants and tripling of student tuition fees for students from England, a product of the coalition government’s vain and solipsistic pursuit of austerity. Initially, the upfront government expenditure on student loans would not count towards government spending because of the ambitious expectation that graduates would pay the cost back in full. The consequence of this indulgence in penny-pinching was that an ill-fitting marketised structure was imposed on higher education and most universities became completely dependent on students for income as funding was now directly tied to the number of students recruited.
More students meant more income and recruiting students became paramount. Universities spent more money on recruitment and advertising, accommodation, increased the number of foreign students (as overseas fees are much higher), and over-recruited to subjects that were cheap to teach and more resource efficient (such as Maths and Humanities) to fund more expensive subjects such as Physics and Engineering. Universities did this despite the fact that many STEM graduates do not go on to work in STEM jobs. Indeed, the removal of the cap on student places, announced in 2013, meant that Russell Group universities were able to recruit more of the economically valuable humanities students to the detriment of other universities.
Make no mistake, higher education is in a funding crisis and if this is not fixed it will detrimentally impact multiple generations. However, engagement with this, much like engagement with universities themselves, is still too often filtered through the prism of consumer self-interest. Even if the government were to switch to paying tuition fees with no obligation for graduates to repay them, which appears to be the implicit suggestion by tuition fees to be scrapped, this would not fix the funding model as funding would still be contingent on the number of students recruited.
This self-interest is a logical consequence of university funding being mediated as a question of personal income. The result is that discourse around how to fund universities is dominated by the issue of student debt to the point of myopia. This grumbling is not just limited to particular sections of the commentariat, most of whom are graduates, but has real political consequences. It is why the threshold on student loan repayments was raised under Theresa May, and why some internal Labour criticism of Keir Starmer’s u-turn on tuition fees focuses on the potential impact on Labour’s vote share.
While Keir Starmer has stated that Labour is “Looking at options for how we fund these fees… it doesn’t really work for students, doesn’t work for universities”, it is telling that this question is still being primarily shaped around the consumers, rather than the universities themselves. Essentially, the coalition government needlessly politicised higher education funding by making it an electoral issue and, thus, a hostage to short-term opportunism.
The emphasis on student loan’s impact on graduate finances is misguided. As a higher rate taxpayer and a university graduate, I pay the often cited fifty percent marginal tax rate (which most graduates do not fall into). However, the main drains on my finances, by far, are rent, energy, and food. These issues affect more than just graduates, but were they to be alleviated, say by rent controls, funding renewable energy and thereby increasing the UK’s energy security, and price caps on food, it is likely that the sting of a student loan induced higher marginal tax-rate would be greatly reduced.
However, the question of student loans is too often looked at in isolation rather than as a part of a financial whole, for either graduates or universities. It is telling that neither party has been able to propose a comprehensive plan for the future of university funding; for instance, by encouraging graduate employers to contribute to the training of their future employees. For those viewing a degree in purely instrumental terms, a university qualification would be less important if they had not become a means of regulating access to sections of the labour market which has resulted in many prospective graduates seeing their degree as a means to an end instead of an intrinsic and educative good. However, it is probably easier to reform the funding of higher education than it is the entire labour market.
If university funding is not corrected, then large parts of the higher education sector will collapse. The lazy response to this is that this will only affect middle-class adolescents; the more considered response recognises the importance of education and creative thinking and that many universities are vital social and economic anchor institutions in their communities. What is needed is a thought-out strategy for funding higher education centres and improving access to the job market. What we will most likely get is more short-term politics aimed at appeasing a growing electoral bloc that did not need to exist in the first place.