Poorer Students Will Be Worse Off Under The New Fees System: The Numbers Behind The Headlines

This post was written by Richard on February 11, 2011
Posted Under: Education

Guest post by Hannah

The admission that I did not pay any form of fees to attend university frequently confuses my peers. I watch their quizzical expressions as they try to ascertain if I’m a secret thirty-something. It seems there’s been a collective forgetting or ongoing ignorance of the fact that until recently many undergraduates from poorer backgrounds were exempt from fees. We really need to be aware of how much the university system is changing, even in its most dull and bureaucratic details.

Cambridge students fighting for free education

In this post, I find out exactly what the financial impact of the proposed new fees system would be on students from the lowest income backgrounds. I’m no mathematician but even with some simple sums there is unequivocal evidence that poorer students will be worse off under the new fees system despite (or even because of) attempts by universities such as Cambridge to lessen the cost for the less well-off. A closer look at the numbers also reveals the increasing yet largely unspoken of disparity between the financial situation of poorer students attending rich universities and those at less wealthy institutions.

Let’s start with the whole ‘no fees’ thing. Fees were first introduced in 1998 (hence the fee-free thirty-somethings) but as late as 2005, the year I began university, the £1000ish annual fees were paid by Local Education Authorities for students from low-income backgrounds. With an annual family income of below £25,000 I received no bill for fees, a full maintenance loan from the Student Loan Company (approximately £14,850 over three years), a £1000 annual bursary from the government and an additional £1000 bursary from Cambridge University, leaving me with a net debt of -£8,850, excluding student loan interest.

The controversial introduction of £3,000 top-up fees in 2006 was widely lauded by many universities as a move that actually made low-income students better off. Poorer students were no longer exempt from paying fees, but due to the provision of £2,906 annual busaries from the government and £3,400 annual busaries from Cambridge University, had I begun university one year later I would have left with £3,108 less debt.

Comparison of fees and maintenance costs for poorer students before and under the £3000 top-up fees system

Yet this does not give us the full picture. As observed by the Sutton Trust’s recent survey, students from low-income backgrounds are signifcantly underrepresented at Britain’s wealthiest universities. Under the current fees system had I instead attended, say, Kent University, which provides a £1000 annual bursary to its poorest students (£200 more than average), I would have been £7,200 worse off than an equivalent student at Cambridge. This disparity in financial circumstances was already in existence prior to the introduction of top-up fees, but under the current system has more than doubled.

Comparision of fees and living costs for poorer students at Cambridge and at a less wealthy university before and under the top-up fees system

Clegg in his recent defence of the £9,000 fee hike spoke of an existing ‘two tier’ system, yet the above manifestation of inequality is rarely acknowledged. Great emphasis is placed upon trying to increase the access of disadvantaged students to the most elite institutions: yet what of ensuring the financial viability of studying at any university, not just those with eight-hundred year-old endowments to hand?

Returning to the title, will poorer students under the new system be worse off? Simply, the answer is yes. Students from low-income backgrounds (below £25,000 per year) attending Cambridge University will up to £7,391 worse off than their peers who are already there under the current system. This is based on the assumption that a student receives both Cambridge’s promised annual £3,000 fee discount and £1,625 bursary, in addition to £3,000 from the government’s proposed National Scholarship Programme, a scheme which may not even be in place in time for the first batch of £9,000 fee students.

Comparison of fees and living costs for poorer students at Cambridge under £3000 fees system and £9000 fees system

Both the coalition government and the elite universities have tried to reassure us that access and provision for poorer students will not be compromised: however there is no doubt that poorer students will be at considerable financial disadvantage in comparison with the current system.

Through letting the wealthiest institutions frame the debate on fees and funding we also leave room for the disparity between poor students at rich universities and those less privileged to increase yet further.

The two recent shifts in tuition funding demonstrate a changing relationship between poorer students and fees: while under the first fees regime the poorest students were exempt, under the £3,000 top-up system the poorer students were responsible for paying fees, yet from some universities received such substantial bursaries that they were in effect fee-free. Cambridge’s current plans shift money from bursaries to fee-discounts, therefore replacing the emphasis on supporting poorer students with penalising them just a little bit less.

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Reader Comments

The net debt in your charts is just a theoretical amount that a graduate owes the government. Their debt will be paid off for them after 30 years, and given the increase of the amount you earn before starting to repay is increasing to £21000, this means most graduates won’t pay their net debt.

So the net debt isn’t the cost of an education unless you go on to earn a good salary after your studies.

This webpage gives a better picture (although bursaries aren’t included so the situation from poor-background students is better than projected):
http://www.savethestudent.org/student-debt-calculator

In the end the key difference is that a student debt to the government is nothing like a commercial debt to a private company. With the latter, if you don’t pay it off you end up with CCJs and bailiffs at your door. But with the former, the government gives you a nice risk-free deal, because in the end, governments want your vote every 5 years.

#1 
Written By Duncan Stott on February 11th, 2011 @ 2:19 pm
Kath

Thanks for this Han, I have never had the time or the knowledge to do the sums – it’s much easier to be certainly angry when you have the numbers!

#2 
Written By Kath on February 11th, 2011 @ 6:27 pm
Captn Tripps

Don’t force yourself to into hate, Kath. Look beyond the raw numbers and read Duncan’s comment and you’ll find nothing worthy of getting up in arms about.

The disinformation from some corners is utterly depressing sometimes.

#3 
Written By Captn Tripps on February 11th, 2011 @ 10:28 pm
Micke

A brief thought: On the surface this doesn’t make sense. Duncan’s remarks appear to be correct, leaving a right wing government in a dire economic situation making a much more generous offer than they can afford in a way that looses them political capital.

On the other hand a years worth of housing benefit and JSA for an under 25 living in cheap commercial accomodation costs around £20280 a year. Job prospects for both non graduates and graduates are bleak. For the past two generations it has been assumed that it is economically worthwile having a university education because of the better job prospects when you leave, even if your degree has no relation to what you then go on to do.

Our reasons for wanting free education are not primarily economic but social. If capitalism needs highly trained engineers then it will pay to train them, and if it has blundered into a situation where it has nothing to do with them once they are trained then that’s not our fault and our position on the funding of philosophy departments doesn’t change. Having said that, if the economic aspects of education are just taking the piss we do need to look at that.

Disclaimer: As Ken Ham would say, this is just a theory. I may be completely wron about the numbers and the governments motivation. If so, then the situation is still wierd.

#4 
Written By Micke on February 12th, 2011 @ 11:20 am
Micke

Correction, that’s £20280 for three years JSA + housing benefit.

#5 
Written By Micke on February 12th, 2011 @ 11:27 am
Bill Miller

The fundamental point for me is that everything is paid back later and only if you can afford it. (And on a substantially reduced basis than currently)

So you could say the poor substantially benefit from this because they, with identical income later in life will be paying back far less than an otherwise identical person.

#6 
Written By Bill Miller on February 14th, 2011 @ 9:57 pm

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