Sometimes you need to take a deep breath and stand back from an issue to understand it.
Student loans are one such issue.
The reality of student loans is very simple: we don’t need them, they’re a purely political mechanism designed in no small part for the benefit of the financial services industry, and we can afford to educate all the young people who can benefit from going to university without having them.
That’s a big statement, I know, so let me justify it. I’ll start from the economic realities. These are:
a) We need to educate people if we are to be economically competitive;
b) All the evidence is we do not educate enough people to a high enough standard;
c) If we are to educate enough people then access to education has to be independent of means to pay;
d) As a mater of fact we have no alternative work for young people not in education to do — the young already have the highest unemployment rates and we are a very, very long way from full employment. There is no indication that will change.
e) We are, as matter of fact, supporting our population of university teachers now from the resources within society. They, like most people, spend most of their income on consumption. In other words, in economic terms rather than monetary terms the process of supporting them is a current decision that cannot be reversed once done, and no one is suggesting any change in their number or relative pay as a result of the decision to change student funding — they’re just suggesting a change in the way that this is paid for. I stress — ignore the finance: the reality is that the cost of these people doing their jobs is being borne out of current consumption now and will be in the future (just the same as will be true for students). That means no one is saying we can’t educate students. We can. All that is being argued about is how to finance it.
Never ignore the difference between economic substance and financial form is a regular mantra of mine. The economic substance is, as I note, that we can afford for students and their lecturers to be at university and this won’t change when the ConDems bring in their plans. So this is not about the economics of student finance — we are as a matter of fact able to afford that cost, and are going to continue to do so. This is about the form of the transaction.
That’s a really important understanding and I am both sure it is right and essential the well being of the UK.
In that case what are students loans about?
1) Trying to artificially cut the tax bill;
2) Trying to privatise education;
3) Ensuring students are so laden with debt they must become good, compliant employees — i.e. this is about suppressing the freedom to innovate, promote enterprise and to oppose by imposing oppressive burdens on those in work in the future;
4) Creating new securitisable income streams that can be traded;
5) Maintaining the position of an elite, traditionally afforded to them by access to education and now to be afforded by their freedom from debt. After all, for those who pay £30,000 or year to send their children to private school sixth forms — and that’s what it costs — university education is a snip. Their kids can come out debt free — whilst others have to then bow and scrape to them when in their employment to ensure they can repay their debts.
Is this therefore a deliberate construct by an elite designed to oppress? I think so. I can’t see another explanation. And I think they believe it will work for them, very nicely. That’s why students are right to oppose this.
And yes — I do believe Clegg is from the group in society and holds the mind set that would promote student loans for this reason.
I know this is controversial — but if you can offer another explanation when — as I stress — as a matter of fact we can afford this education in economic terms — then tell me what it is.
Politely.
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Here’s a thought…lecturers in the humanities and social sciences (not in economics of course) tend to be left of centre and there is quite a large number of these who hold ‘extreme’ feminist, Marxist etc. views. If you can provide a structure which will mean these people will be forced out of the university by 1) making students more demanding about course content and contact time, by 2) making it more difficult for less well off students to get past their PhDs, by 3) creating a public discourse of suspicion and intense dislike for humanities research (no-one does David Beckham studies or 14th century French-Swiss yodelling but you read such comments frequently in the comments after articles in the major newspapers): after all this you are managing to delegitimise subjects that have been at the core of the university since the Middle Ages.
People are forgetting that the hike in fees will be added onto student loans for maintenance. If you want to do a Masters how will that be funded and then a PhD likewise.
The Tories hate anything that doesn’t bear an obvious economic benefit even though many of them studied Classics, History, etc. It takes some intelligence to out-Philistine the Philistines but that’s what a good education allows you to do. Shame about all those left behind though but then it’s time to lift up the drawbridge as there are ar too many proles taking degrees!!!!
Richard you are spot on. It is very encouraging to see all these young people recognising and highlighting the big issue right now – tax. They get it. They have been betrayed by duplicitous Lib Dems who will never command the young vote again.
[…] all to ensure that the wealthiest stay wealthiest. It is hard to see it any other […]
I think this is a very good summary of the issues Richard – it would work really well as a Comment is Free piece on the Guardian website. Perhaps worth a speculative submission?
“as a matter of fact we can afford this education in economic terms”
Unfortunately you set the debate up on a false premise.
We cannot afford it.
Even Labour recognised that a decade ago. That is why they introduced tuition fees over a decade ago – and that at a time when the public finances were a lot more benign than they are now.
You can either have 50% going to university and charge fees/loans, or you go back to having 20% of the cohort going to university but everyone gets a grant.
There is no alternative.
I’ve pasted this on an e-mail to my local MP Norman Baker … at least, he won’t be able to argue that he is voting for these rises in ignorance.
Thank you for providing another ‘prong’ in the fight-back.
[…] all to ensure that the wealthiest stay wealthiest. It is hard to see it any other […]
so wrong. we used to have a system that rationed based on ability, but blair removed it (and also provided over breaking the system that measures ability), and encouraged everyone to “go to uni”. unfortunately when the brownie of “I have banished boom and bust” was shown to be false we (government) was left with a bill it could not afford – so the same lot commissioned a review to work out how to pay for it. simples.
you are right that we could return to a system where tuition is rationed based on ability and provided free to those that pass the mark. I would be in favour of that. But I can’t see it happening.
Making the students into ‘demanding consumers’ is a bit like the self service checkouts tesco and others are introducing. You go to university, presumably, to learn from people who know more than you. It seems to present the classic problem of asymetric information.
Another problem is that while there has been a historic graduate earnings premium, there is no guarantee that this will persist in the future. That the payback threshold seems to be below median earnings suggests this being factored in.
It’s akin to shorting against future graduate incomes.
So we can afford Trident but not well-educated citizens. It’s ALWAYS about choices. @Pat Lindon
Richard is so right about this. We can afford to educate our uni students if we decide to spend less money on defence and recognise in a a realistic manner our place in the world – we are no longer an imperial power. As a social science graduate and postgraduate I am deeply concerned about the cuts to the teaching grants for these areas. Of course if you are educated then you can analyse society and see where the power is exercised. Politics is about resource allocation and it seems that the ConDems would rather there be less scrutiny of their allocation. These parties should have been more honest during the election campaign – there is no real mandate for any of their policies.
Yes. All the government’s proposal does is to transfer public debt to the private sector. If the public finances can’t afford to pay for education why does the govenment assert that private individuals can?
Richard, whilst I agree with the sentiment you have against the rise in fees and such like, I do feel some of your points are slightly misrepresented:
‘d) As a mater of fact we have no alternative work for young people not in education to do — the young already have the highest unemployment rates and we are a very, very long way from full employment. There is no indication that will change.’ = as someone who has spent a significant period of my working life working with 16-25 year olds I abhor comments which say there is no alternative work for young people not in education to do. In fact this sort of comment is the very elitist attitude you seem to be so against. I worked with young people who have left full-time education at the age of 16, or even 18 and there are plenty of jobs available for them to do. And also alternative training, which is far more useful for the majority of them than an undergraduate degree. The record numbers of young people in unemployment has been bolstered in the past couple of years with record numbers of graduates who are now unable to find a job because the market is flooded with graduates…….. which brings us to another of your initial points:
‘b) All the evidence is we do not educate enough people to a high enough standard;’ – firstly what evidence? The evidence that record number of graduates are facing unemployment?? In fact in many sectors professional organisations are coming out and saying too many people are not benefiting from on the job training schemes, focusing much more on practical training that cannot be found in the traditional university. Take for example, veterinary nursing, where most veterinary surgeons believe those nursing students who have undertaken their training as a diploma style qualification have better skills than those who undertake the full three or four year degree. Many of the clients I used to work with in my previous job said that they are desperate for non-degree qualified people as they can get as many degree qualified employees as they like at the moment.
The problem with this is not we are under-educating students, its that we have pushed too many people into degrees and hence cheapened the university system in this country, seen in the growing number of students finding it necessary to continue to post-graduate level (myself having been one of them) to secure a suitable job.
I would challenge you, with these comments which infer a student without a degree is not suitable, as to whether by presenting this very construct you form part of the very elite you wish to bring into disrepute……
There is one consideration that hasn’t been accounted for. That the Universities have an incredible amount of staff that are under worked and over paid. I worked at a large University (in humanities) as an administrator. Salary circa £22K. For this I spend about 5 hours a day, browsing the internet, reading, even taking knitting and embroidery into the office to stave off the sheer boredom of having virtually nothing to do. Despite this I was constantly being told by my line manager that I was in an exceptionally busy post and chunks of the little bit I did have to do was taken from me (and others in the School) to create new jobs, involving bringing in another staff member to be paid circa £22K to sit and spend most of their day doing nothing.
Needless to say I left this job and ended up working in the NHS were for a paltry £15k I was doing more work in a week that I ever did in a day at the University.
The NHS has been forced to look at it’s staffing policies as a means of achieving efficiencies. Why can we not expect the Universities to do the same rather than keep demanding money to prop up a system that functions by rewarding those who build their own little empires, rather than directing the funds to the core business which is teaching undergraduates and directing research.
CORRECTION:
Needless to say I left this job and ended up working in the NHS were for a paltry £15k I was doing more work in a week that I ever did in a YEAR at the University.
That will teach me to proof read before hitting submit.
@Andy
Well, I stand rightly accused in a sense of being part of an elite: I am a graduate, professionally qualified, etc., etc., so of course the risk exists
And I am concernmed about the qaulity of degrees
But I want better degrees – not exclusion of students
But I also want first rate training for those who won’t want to do degrees
For example – I think there is a real need to reopen the route for non-graduate access to professional accounting qualifications
It does not need degree level education to do much of the job
So I agree with you
Of course the country can afford it. It is simply a question of how it is to be paid. The current Government choose not to pay for it out of the public purse. They prefer to maintain and enhance the privileges of being one of the elite. The previous Government went part of the way.
If not being able to afford it is the criteria to judge by, then why did we invade Iraq and then Afghanistan? Why are we replacing Trident? Why are we buying US made fighters and other weapons?
[…] Update 08/12/10: Just came across an article written by a tax expert, on the subject of student loans. The expert, Richard Murphy, disagrees […]
[…] Why the politicians are wrong: (pt 900,231,845) http://www.taxresearch.org.uk/Blog/2010/12/07/student-loans-we-dont-need-them-and-we-can-afford-to-e… […]
Jan G:
You are exactly the kind of selfless hero/heroine needed in the new economy our government seeks.
Fewer people doing more work for less money.
Unfortunately some people are not in a financial position to take a 33% pay cut in order to feel a greater sense of satisfaction.
Unfortunately, many people do not even have a well paid job to give up.
I worked with young people who have left full-time education at the age of 16, or even 18 and there are plenty of jobs available for them to do.
That may be your experience, and while there may be planty of jobs, there do not seem to be enough:
Those unemployed aged 18-24 have increased as a share of total unemployment since the turn of the millennium. As can be seen below, despite a declining overall unemployment rate and a declining rate for the young between 1993 and 2004, their unemployment rate has risen since then. Moreover, their share of unemployment has risen steadily from 21.7% in 1999 to 31.4% in 2008 but has fallen back a little at the end of 2009…..
…Of particular concern also in the UK is the high proportion of young people who are not in education employment or training (NEET). In 2009 Q3 there were 261,000 16-18 year olds and 933,000 18-24 year olds classified as NEET.
Its a good, clear paper, well worth reading.
[…] Update 08/12/10: Just came across an article written by a tax expert, on the subject of student loans. The expert, Richard Murphy, disagrees […]