A government review on university funding is due at the end of the year. This week we asked three people on different sides of the debate for their opinions. Here are their responses…

Nicholas Barr, Professor of Public Economics at LSE: Raise the cap on top-up fees!

I’m on the side of students, particularly those who should be students but because of impediments to access are not. Thus two core purposes are widening participation in reality (rather than posturing about it) and promoting quality.

It is widely argued that fees harm access. That view is mistaken.  In 2002, before variable fees, 81% of children from professional backgrounds went to university, only 15% of those from manual backgrounds – a shameful record.  Yet restricting the sample to young people with good A levels, the figure was 90 per cent for both groups. The policies that really widen participation are those that address inequality in schools, including higher quality and raising aspirations. That is a huge task – but the right task.

What about fees? The campaign against fees or against raising the fees cap must recognise that ‘free’ means ‘someone else pays’.  But the people who go to university are still predominantly middle-class (hence the NUS rightly criticises our record on participation).  Though richer people pay more taxes than poorer people, the evidence is unambiguous: ‘free’ higher education redistributes from poor to rich.

To argue that higher education should receive a heavy blanket subsidy is like arguing for subsidies for champagne to make it more affordable for poorer people.  If I tried that argument I would rightly be shouted down as looking after number one under the pretence of widening access.

Variable fees improve efficiency by bringing in more resources and, by strengthening competition, improve the effectiveness with which those resources are used.  Why the emphasis on competition?  The answer from economic theory is that competition benefits consumers where they are well-informed – hence competition between supermarkets, but less between hospitals or schools. With higher education, the model of the well-informed (or fairly well-informed) consumer broadly holds.  Thus competition, with suitable regulation, benefits the student.

In considering the future of the fees cap, there are two wrong answers – freezing it, or abolishing it.  The cap should be kept, but higher than the current figure.  How high is a matter of balance.  Access warriors should not perpetuate a mainly middle-class subsidy; market warriors should remember what happens when policy overshoots (hugely high fees in the USA), or loses political support.

In thinking about these things, beware of words the NUS uses to create an emotional climate, for example, ‘commercial interest rates’ and ‘free market’.  No sensible person recommends either.

Two final points.

• Loans cover fees and a good chunk of living costs.  Thus higher education is free, or largely so, for the student – it is graduates who repay.
• Those repayments are not credit card debt but a payroll deduction. Nobody loses sleep over their (or their child’s) future tax bill.

Aaron Porter, NUS Vice-President: The case for the Graduate Tax

The National Union of Students (NUS) will forcefully reject any calls for the cap on fees to be lifted, by greedy Vice-Chancellors or narrow-minded politicians. Yet we are very aware that many stakeholders within the higher education sector are already actively making the case for more money, and turning to students as the easiest targets.

Average undergraduate student debt is now just over £22,000, and the first cohort of students subjected to £3,000 a year variable tuition fees have just graduated into the bleakest employment environment for generations. Yet there has been no obvious improvement in the student experience, no noticeable injection in resources for students and overall satisfaction according to the National Student Survey actually fell this year in comparison to 2008 where students were paying considerably less.

Since 2006, it has been clear that the system of capped variable fees hasn’t worked both in practice and in principle. The system fails when it comes to delivering admission by ability, rather than the ability to pay. It fails in the allocation of bursaries, and it has failed because there is guaranteed debt but no guarantee of financial success post-graduation.

This is why NUS will be calling for a radical overhaul of the funding system. Any system which relies on fees or a market will never deliver the key priorities we need from a University system. This is why in addition to publishing a detailed critique of the current system, ‘Broke & Broken’ (September 2008), we have also constructed and published a fully costed alternative to the current system of tuition fees – a ‘Blueprint for Higher Education Funding’ (June 2009).

We recognise that the upcoming debate will be a question of how much student fees are going to be, rather than should they exist or not. In previous years, NUS have lost out in the debate because we have been blinded to the debate taking place around us. It is vital that we don’t make that mistake again, and that is why I am pleased we have prioritised engaging with the question in hand, rather than an imaginary question we would like to have been asked.

The key features of the NUS Funding Blueprint:

• Fees in their current form are scrapped altogether
• A contribution from former students will only be sought retrospectively, in a progressive fashion and only when there is clear ability to pay
• A monthly payment which relates directly to earnings achieved in that month
• Contributions linked to credits studied
• A more flexible system, which would allow students to come in and out of higher education or to change mode (full or part time)
• A more efficient system of loan distribution

Going into the 2009 review it is vital that NUS is at the centre of the debate, shaping the argument and helping to dictate the recommendations for the future and every student across the UK can help us by applying pressure and lobbying your local MP.

James Haywood: Scrap tuition fees – free education for all!

I am from the first generation of students who were told going into Higher Education would warrant tuition fees of up to £3,000 per year. We were told of a “University Funding Crisis”, that universities were “over-subscribed”. One Trident replacement and multi-billion pound bank bailout later, this has turned out to be a complete lie.  The money was there, the political will wasn’t. In a neo-liberal world where everything must bow to the free market (even when it spectacularly fails), the logic is to turn educational institutions into businesses. Supply and demand. Good universities charge more, poor universities charge less. Thus a two-tiered, class divided educational system is (re-)established.

The idea that this is a “necessary” measure to plug the “deficit” in higher education has now been proved to be nonsense. There is no money for higher education because the government refuses to allocate the money there, not because the world’s fourth largest economy has now run out of wealth. And of course business sharks are lurking round the edges waiting for the green light from the government to begin privatising off sections of Higher Education. At my university, Goldsmiths, a construction conglomerate by the name of INTO has already tried this with our international department. It took a fairly rigorous campaign from staff and students to remind management that universities are public services not ‘cash and carry’s for (not even educational) companies looking for a quick profit.

And this is why the NUS’s “grand plan” was dead before it was even born. Graduate tax does not challenge the free market logic of education, it just reinforces it. Why should education be “bought” like an item in a supermarket? Graduate tax would actually mean paying for the crime of doing a degree for the rest of your life.  It’s not just ideology that is the reason why services such as education and health are public. It is because they don’t make money! As much as the Mayfair and Whitehall elite try to kid themselves, education and health are for the good of people and don’t create profit. A brief glance at the numbers involved in New Labour’s disgusting Private Finance Initiative schemes in the NHS are evidence enough. We’re paying millions of pounds to subsidise businesses so they can make a profit off our healthcare!

We know the government has the money, exposed thanks to the City kids playing Las Vegas with our pensions and savings. So lets move away from that paradigm imposed on us by Vice-Chancellors and privatising apparatchiks over “funding crises” and look at the political motivations behind why money is poured into PFI and bank bailouts to keep the world of profit happy, but at the expense of us normal folk whose crime is to want a decent education without being plunged into yet more suffocating debts or, thanks to the NUS hacks, a fine on our pay checks for the rest of our lives.

How do you think Higher Education should be funded?

• Education should be free & funded by the government (45%)
• I agree with the NUS: the price you pay for your degree should depend on how much you earn in later life (35%)
• The government should raise the cap on fees and students should get loans to pay the amount universities want to charge (15%)
• Who cares about students? (5%)

Tags: education, education funding, free education, higher education, The Great Debate, top-up fees, tuition fees