Dbis tuition fee proposals 'benefit high earners'

12 Nov 10
Government plans to raise the cap on student tuition fees came under fire again today for being geared towards elite universities and the best-paid graduates

By David Williams

12 November 2010

Government plans to raise the cap on student tuition fees came under fire again today for being geared towards elite universities and the best-paid graduates.

Analysis released today by the Institute for Fiscal Studies compared proposals put forward by the Department for Business, Innovation and Skills and the findings of the BrowneReview, which reported last month.

The respected economic think-tank found that the ‘richest half’ of graduates would do better under Dbis’s plans than they would under Browne’s recommendations. This was because of modifications to the proposals for the payment of interest on student loads.

Under arrangements outlined earlier this month by universities minister David Willetts, graduates earning up to £21,000 would pay no interest on their loans. But that rate would increase on a sliding scale to 3% for those with salaries of £41,000 or more. The IFS said the measure ‘will penalise only a very small number of high-fliers at the very top of the distribution’.

The analysis said that lowering the top of the taper to £31,000 would mean less public subsidy, with above-average earners taking more of the burden.

Under Browne’s recommendations, the best off graduates would pay ‘unambiguously more’ than lower paid graduates, said the IFS.

The think-tank also said that ‘universities wanting to charge between £7,000 and £9,000 a year are the main winners’, as the government rejected Browne's recommendation for a levy on fees over £6,000.

Martin Freedman, head of pay and conditions at the Association of Teachers and Lecturers, told Public Finance that the £21,000 and £41,000 figures were ‘plucked out of the air’ and bore ‘no relationship to the real world’.

He recommended raising the lower interest payment threshold to £28,000–£30,000, to cushion graduates at the beginning of their careers.

Freedman also highlighted remarks made by Prime Minister David Cameron this week in China, in which he said the rise in fees for domestic students would help keep fees for foreign students ‘under control’.

‘If this is actually about cosying up to students from the countries we want to trade with, it undermines the whole purpose of this – which was to have a sustainable way of funding universities,’ he said.

Sally Hunt, general secretary of the University and Colleges Union, said it was another blow to the Liberal Democrats, who have been criticised heavily this week by student protesters for going back on an election pledge not to raise student fees above current levels. ‘The LibDems’ argument that their intervention has made for a fairer system already looked ridiculous... the findings from the IFS are cause for further embarrassment.’

Lee Elliot-Major, director of research and policy at the education charity the Sutton Trust, pointed out that universities were facing teaching budget cuts due to a fall in central government subsidy. ‘While the government’s response to the Browne Review might mean more taxpayers’ money for student support, at the same time we need to remember that there will be less state money for universities overall.’

He added that whether or not the government's proposals are more progressive than Browne’s will depend partly on whether the government succeeds in encouraging the top institutions to take on more pupils from disadvantaged backgrounds.

Did you enjoy this article?