David Willetts has proposed that universities be allowed to take on some of the debt of students. Photograph: wikicommons
Prior to David Willetts’ shuffle off the frontbench, the former universities and science minister proposed that universities could benefit from buying up their students’ debts. He commissioned a preliminary report on the idea which has more recently been drawn up by officials at the Department for Business, Innovation and Skills (BIS) and sent to Greg Clark, the now minister for universities and science. The report proposes that universities would be able to take on some of the risk of their students repaying less of their student debt than expected. Universities could then make money if graduates go on to have higher earnings than expected.
According to BBC’s Newsnight, at least half a dozen top universities have expressed support for the proposals.
Those in favour of the proposal, such as Willetts, suggest that this movement would connect universities and alumni over a longer period of time - through the incentive to focus on graduate jobs, universities would work with graduates to ensure they have a successful career and offer them retraining if they change their career path during their working lives. This understanding would also lead them to design undergraduate degrees with modules more suitable for the skills needed in the workplace.
However, those against the proposal have suggested that the scheme would lead to polarisation with lesser known, less successful universities falling down the rankings. It would reward those that take on low risk students, those from wealthy backgrounds, as they would be more likely to get high-paying jobs and be able to repay their loans off more quickly. While at the same time the policy would penalise those universities that take students from non-traditional backgrounds who are more likely to stay within the region they study and go into lower-salaried graduate work. Furthermore, universities may feel they are entitled to raise their tuition fees, with those with the ability to pay able to go to a more expensive, and over time, more successful, institutions.
The proposal also raises the question of careers that are necessary for society, but not high-paying, such as teaching and nursing. Universities will not want to offer these subjects, so a deal between them and government would have to be met to keep them running.
Alex Andreou of The Guardian believes that the proposal suggests that education is viewed as a glorified form of job training and ‘relies on the idea that individuals are mere economic units, there to serve the economy, rather than the other way round. Education is no longer formulated as the question “what would you like to be when you grow up?” It is expressed as a requisition order by industry for x number of fully trained IT engineers or pharmacists.’ He believes that it’s worrying when the state wants people that can work, not people that can think, and doesn’t value education in fostering critical thought, tolerance and equality.
He notes that if the aim of the proposal is to reduce the burden on the taxpayer it sends the message that educating the next generation is a burden, rather than an investment in our future. It glorifies the individual act of a university as training individuals for competitive upward mobility, rather than to educate a generation for collective forward motion.
However, the Coalition is unlikely to take forward Willetts’ plan before the next general election. The Conservatives may regard the issue as too politically sensitive to include in their manifesto, and are likely to delay a decision until after the election, while the Lib Dems will not want to see university fees in the spotlight after their 2010 fiasco over tuition fees.
Labour, however, is determined to make tuition fees a key election issue. So far, they have raised the prospect of cutting tuition fees to £6,000 a year.
However, the proposal does bring up the issue over the high cost of fees to the taxpayer. The government confirmed in March of this year that the estimate of the portion of student loans that will never be repaid has risen to 45%. In this way, the trebling of fees has saved little, or no, public money with the revision occurring because of lower forecasts in earnings for less well-paid graduates. This debt risk would, therefore, be given away to universities with the taxpayer not having to foot the bill.
As it stands, graduates start repaying their loan once they start earning a salary of £21,000 or higher. After 30 years, any outstanding debt is written off.