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Students ‘ripped off by tuition fee system’

Emma Lunn
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Emma Lunn

University students in England are being ripped off by the current tuition fee system, according to the Centre for Policy Studies (CPS).

The think tank claims that universities are too focused on how many students they enrol, instead of the quality of the course being delivered.

It says the current system leaves the typical graduate with £45,000 of debt. However, 54% of the value of student loans are written off, the equivalent of an £8bn a year loss to the Treasury, giving graduates ‘a painful lifetime burden of debt often eventually paid for by taxpayers’.

In a report for the CPS titled The Value of University, Conor Walsh argues that while the university sector has expanded hugely in recent decades, increasing student numbers has been prioritised at the expense of quality of courses and employment outcomes.

The report looks at the economic returns of a range of university courses, and finds huge discrepancies in the amount of taxpayer money being spent on those courses which do not improve the lifetime earnings of the students.

For example, Creative Arts has zero impact on earnings for the average female graduate and a negative impact for the average male graduate, yet receives the largest subsidy of any subject, at £1.2bn. This works out as £37,000 per student, compared to £11,000 for engineers.

The report proposes a change to the way fees are paid that would ensure rewarding courses receive more investment from universities.

Walsh argues that the current system incentivises universities to keep increasing student numbers, as they will receive more government funding in the form of student loans. And while students are encouraged to load up on debt that stays with them, often throughout their working life, it is the taxpayer that ends up paying much of this off.

Instead of the government handing loans to the student, the CPS suggest that the government loans directly to the university, who then lends to their students. The students then repay the university who in turn repay the government an agreed fee. There should also be a cap on the amount the university can expect a student to repay in order to prevent a small number of high earners subsidising the rest of the cohort.

The CPS says this would make the system self-financing by pruning the courses which are offering students the worst returns. It says the plan could eventually result in £7bn of savings, much of which could be invested in technical education, offering school leavers a productive alternative to university.

Robert Colvile, CPS director, said: “We must find ways to incentivise universities to do the best for their students, rather than for themselves. These changes will encourage more students to take up courses that leave both them and the country better off.

“As well as adding to the workforce of engineers and scientists, it will reduce the number of students who default on their loans, potentially saving the Treasury billions of pounds that can be reinvested into the education system of the future.”