Why lowering tuition fees may not be the answer

Last month, former Universities Minister John Denham addressed the Royal Society of Arts, saying:

“I don’t know of any progressive principle [in] which it is a good idea to induce people, generally from lower income backgrounds, to take on huge loans, demand big payments and then to tell them they don’t have to pay after all.”

On first reading, the argument seems a persuasive one. It’s consistent with Higher Education being a public as well as a private good. It acknowledges the significant additional debt we’re asking younger generations to take on. And it points towards broader cost-sharing mechanisms being more equitable.

The problems raised by Denham’s position aren’t to do with hypocritical fiscal policy, as Conservative Home lamely claim. But there may be some unintended consequences to an otherwise refreshing intervention.

First, Denham talks about “turn[ing] our backs on the ideology behind the high fees system.” He wants to reduce the average total fee for a three-year degree to under £10k (“the same as when Labour left office”). Let’s spend more on teaching and less on debt cancellation, he says.

This will come as a blow to those at elite universities looking to ramp up their charges further and may strike the ‘squeezed middle’ as a step in the right direction.

However, those graduates who’d benefit most from the proposed cut would arguably be those who on the highest salaries. Fewer non-repayment concessions would kick in for lower-earning graduates, and an important progressive feature of the current system would be lost.

Second, Denham moots the idea of two-year courses (£5k in total) and encouraging more students to attend university while living at home. The UK HE sector increasingly accommodates both, and this flexibility is welcomed by many undergraduates.

However, the danger is a two-tier system, in which three-year degrees in arts and humanities subjects become the preserve of a wealthier élite and cheap n’ dirty degrees are rolled out for the masses.

That’s fine if you’re a fan of price discrimination and a heavily marketised HE system, but not so great for long-term social mobility and equity of opportunity.

Denham wisely notes that university finances are “sliding off a cliff”, a point that needs to be made more forcibly (and acknowledged more openly) by politicians on all sides. “Despite steady progress in widening participation,” he says, “we are still miles away from a genuinely meritocratic, lifelong higher education system.”

I agree.

A strong case is also made for further partnership between universities and employers, and the point that £6 will be spent on debt cancellation for every £1 spent on teaching, though contested by some, is a powerful one.

However, the most obvious solution – cutting fees – isn’t necessarily the best. The headline £9,000 figure seems not to be deterring lower-income applicants and the long-term issue is probably more with an unsustainable repayment structure.

The current system is often described as a graduate tax even though the very highest earners actually repay less than middle-income graduates. Denham does allow for the option of a genuine graduate tax, but this seems more a concessionary afterthought than a firm policy recommendation.

Perhaps the most progressive principle of all would be to have those who gain most from HE cough up a little more.