This is a serious situation, but the answer is not for the Government to give higher grants. It currently pays tuition fees for each student as well as providing means-tested grants. So students on a three-year course are picking up a subsidy from the taxpayer of at least pounds 2,300 in comparison with their classmates, who left school at 16 or 18 and who get nothing. And that subsidy will help to improve their earning power for the rest of their lives. Both expense and inequity suggest there should be no return to the past.
The Government's policy of making students pay back some of the costs themselves is, in principle, sensible. Students can at present borrow from the Student Loan Company at extremely low interest rates and defer repayment until they are earning more than pounds 15,000. In future, the Government wants to shift the emphasis away from this agency towards the high street banks, by giving the latter subsidies so that they can lend directly to students. Of course, banks will want considerable insurance against the risk of default. Meanwhile, students will need to be protected against sudden and inconvenient demands from banks for higher levels of repayment.
Any form of loan like this raises problems in the way it affects student attitudes. Many students are clearly stressed by the prospect of thousands of pounds of debt hanging around their necks. It makes them less likely to go into relatively low-paid fields such as teaching. And those who come from low-wage families may find that the idea of large debts puts them off university altogether.
One way round these problems would be to change the repayment mechanism. A graduate tax rather than a private loan repayment might be less of a disincentive for teenagers pondering college for the first time. An extra 2 per cent on your future salary, for example, sounds a lot less daunting than starting work with a debt of pounds 10,000 - even if the sums add up in the same way. Using the National Insurance system as a mechanism to collect the money would avoid having to establish a parallel bureaucracy.
The principle is clear. So long as people are not discouraged from low- paid work or from going into higher education at all, students should pay part of the cost themselves. And the savings should go to expand educational opportunities for the 70 per cent of teenagers who never make it to university and who were forgotten in yesterday's march.Reuse content