If the Prime Minister hoped that the Augar review of post-18 education would deliver a nicely packaged retail offer on higher education student finance that could help the Conservatives win back the youth vote at a future general election, she must be disappointed.
The panel recommended that the repayment salary threshold – currently £25,000 – be frozen, only increasing in line with inflation once it is roughly equivalent to the median income for a non-graduate. At the same time the repayment period after which the remainder of the outstanding loan would be written off would be increased to forty years. Recommendations to cap the overall amount repaid to 1.2 times the original loan amount and to retain the sliding scale of interest charged depending on salary represent an attempt to create as close a correlation between lifetime earnings and overall contribution as possible.
The total cost of the proposals has yet to be determined given the developing methodologies for calculating students loans for the public accounts. London Economics has done detailed modelling for us elsewhere on the site about the likely winners and losers of the proposals. But the overall effect is likely to be that at least some graduates will end up paying more than they would under the current system.
There has been some debate over whether these proposals represent a progressive or regressive solution to student finance: fee cuts are broadly regressive in benefitting well-off graduates while interest rates make the system somewhat progressive as higher earners contribute more. No doubt the debate will continue, but if the evidence published alongside the review is to be believed, it might not matter.
Bitter to the taste
David Willetts, the universities minister who oversaw the design of the current system of student finance and is a prominent defender of it, has been clear that a successful student finance system must be politically palatable as well as exhibiting elegance of design and general fairness. The charge that the current system is poorly understood is usually defended with the case that there is no evidence that it has deterred students from seeking entry to higher education (a claim that would be more credible if the breadth of post-18 options were better understood, an issue that is further explored in one of the evidence reports accompanying the Augar review).
One of the recommendations is the rebranding of the system to move away from the language of fees and loans in favour of the language of graduate contributions, designating the system a Student Contribution System. The problem with this idea, as David Willetts has astutely pointed out, is that it’s not really in the power of government to control the branding of policies. The poll tax was called the poll tax no matter how many times politicians painstakingly referred to the “community charge”. The claim that student debt is burdensome, problematic, and unfair has been repeated so many times that it may no longer matter if it is a reasonable claim – the perception becomes the reality.
What is incredible is that research on attitudes towards the student finance system in England finds that people are so persuaded by the idea of high student debt as burdensome that they are prepared to trade a decrease in the overall volume of debt for less favourable repayment terms that are likely to lead to many graduates paying more overall – and the panel accepts this as a legitimate basis for proposing changes to the system. This holds true when the opinions of higher education applicants, students and graduates are surveyed and when parents and the general population are surveyed.
Adventures in policymaking
If you start with the assumption that you are politically agnostic about the overall fee level and the specifics of the repayment terms but you want to make sure that any reforms you make play well on the doorstep this evidence is absolute gold. At one stroke you can reduce the burden on the taxpayer while responding to the demands of graduates for a lower burden of debt (even if your reforms make the debt arguably more burdensome).
But there are legitimate ethical concerns, or at the very least questions. The first is about the credibility of the research. It is methodologically sound on its own terms but deals with relatively small sample sizes – around 1000 each of students and graduates, and nearly 500 higher education applicants, and around 1000 for the general population sample (which includes 131 parents of prospective students). Within these samples the preference expressed for lower fees/debt over favourable repayment terms was not a majority view. And these questions are explored as part of a wider study on perceptions of the system that also evidences the scale of confusion and limits of detailed knowledge of the system. At best, these findings are indicative and warrant further examination.
This government, perhaps more than any, should be aware of the risks involved in taking the results of a non-binding survey of opinions as the uncontestable will of the people. Augar has done better than the famously scrappy survey that backed up the Browne Review recommendations, but not by much.
Likewise, the second question relates to the role of policymakers to act in the interests of those on whose behalf they are making policy – or if they plan to act against those interests at least to be upfront about it. But who can reasonably define what is in graduates’ best interests? Does the confining of interests to financial interests not suggest a rather narrow view of the concept? We have tended to scoff at the idea that student debt could have a detrimental effect on general wellbeing but if graduates tell us it does, who are we to say that’s not a rational view? But I’d want to be assured that policymakers had made efforts to make sure that people knew exactly what they were asking for before basing the rationale for reform on their responses.