Is Cutting Tuition Fees Fair On Current Students?

[Ellipsis]

Labour promises to cut tuition fees to £6,000

http://www.bbc.co.uk/news/education-31640592
"Ed Miliband says Labour would cut university tuition fees in England to £6,000 per year from autumn 2016."

If this happens, this will mean that tuition fees went 3000->9000->6000, meaning that a typical three year course would incur a loan of £9000, £27000 or £18000 respectively.

How are the students with the £27000 loan supposed to compete in the future job market, when candidates with the same degree both older than them and younger than them will be able to accept a lower wage (or derive a greater net income from the same wage)? Should Labour be backdating the £6000 pa to 2010? And why is it waiting until 2016 to bring the fees down, rather than doing it in 2015 if they get in?

This matters to current students. It's not nice for them to know that, for the course they're on and paying £27000 for, students a few years before them paid £9000 and students a few years after them will be paying £18000 should Labour get in, and that this will reduce their competitiveness in the job market.

[Svejk]

And he's pinching the money to do it off the pensioners. That wont go down well around here.
It is all academic, anyway. They have zero chance of winning an election.

[Ellipsis]

The 3000->9000 is bad enough, but at least over time that differential should disappear. The problem with reducing it again is that the current batch of students is left high and dry with more debt than anybody else.

[jim360]

If a system is bad, it should be changed. If that means that there's a small period of students that suffered the bad system, then so be it, but it's no reason to say that everyone else in the future has to suffer.

Mind, I'm not all that convinced that the modern system is particularly bad. The headline debt figures may be shockingly high, but the repayment method is not exactly dreadful, and really it is that which matters far more than how much the fee actually is, at least as far as students are concerned.

The main problem with student debt isn't so much that it locks students into debt, but rather that a lot of the loans never get paid back entirely.

[youngmafbog]

Exactly Svejk, looks like Millibean has chucked the grey vote out the window. And any sensible hard working person.

[Ellipsis]

Jim, consider 3 candidates for a job. They all have a maths degree from Cambridge. The job pays £52K per year.

Candidate A has debts of £9000.
Candidate B has debts of £27000.
Candidate C has debts of £18000.

How much less net income would candidate B receive, compared to

i) Candidate C
ii) Candidate A
?

[jim360]

It's somewhat naive to think that candidate A has debts of £9000. As one such example, my total debt is actually well above £30000 (I've stopped thinking about it) -- because it includes not just tuition fee loans but also maintenance loans. The new system adjusts those, too, making a direct comparison rather tricky. Depending on how Labour's system affects other matters, such as the payment threshold etc, will also change the answer to the question. Which answer I can't say I know off the top of my head.

[Prudie]

The whole system stinks anyway. Labour should have promised to bring it back to £3000 or remove it if anything. However, although it is very unfair on those students caught up in the 3-6-9K fiasco I see absolutely no reason why it has any effect on their competitiveness in the job market.

[SirOracle]

At the risk of being accused of changing the topic slightly,I would like to point out again, that England are out of step with Scotland and the rest of the EU,where university fees are free.

[Ellipsis]

> I see absolutely no reason why it has any effect on their competitiveness in the job market.

OK, using the student loan repayment calculator and assuming £8000 per year maintenance fees and a £52000 starting salary gives the following:

£9000 fees
------------
First monthly repayment: £210
Repayment start date: April 2019
Time to repay: 11yrs 7mths
Total amount borrowed: £51,000
Total amount repaid: £81,992
Average monthly repayment: £589.87

£3000 fees
------------
First monthly repayment: £210
Repayment start date: April 2019
Time to repay: 8yrs 4mths
Total amount borrowed: £33,000
Total amount repaid: £47,793
Average monthly repayment: £477.93

£6000 fees
------------
First monthly repayment: £210
Repayment start date: April 2019
Time to repay: 9yrs 11mths
Total amount borrowed: £42,000
Total amount repaid: £64,151
Average monthly repayment: £539.08

So somebody paying £9000 pa fees is paying £112 per month more than somebody on £3000 pa fees, and is paying back for three years longer. This means they need a higher salary for the same net income, making them less competitive in the job market.

[Prudie]

I sort of know how it works, I have a daughter currently repaying a £30K loan. Although unfair it still has no effect on their competitiveness and what job they go for from your examples. The repayments required are on a percentage scale of income. If you get a job at a lower salary you pay back less at a time. That has no impact on what job you go for and accept.

[jim360]

At the risk of showing how naive I really am about such things, why should the amount to be repaid have any effect on the salary the employer gives the respective candidates? I would have expected them to give me as much as the next man, and I'd just have to lump a higher repayment figure.

[Ellipsis]

Prudie, if two people are going for the same job at the same time, with different loans, they are going to receive different net incomes should they be successful in getting the job.

[dannyk13]

Only if Mr Ed promises to recompense the other students with the difference in the fees.(Like that would happen)

[Ellipsis]

Jim, it's the other way around. It's not what the employer will pay, it's what the employee expects/needs/deserves.

Note the question - would it be fair if a cohort of graduates had much higher tuition loans than all those that went both before and after them? I'm questioning the fairness of Labour's policy when considering its impact on current and recently qualified students.

[New Judge]

None of this is fair. Life's not fair and the sooner students realise and accept that the better they will get on. I once paid a mortgage rate in double figures. Now it is about 1%. Hey ho, that's life.

What most certainly is not fair is to expect taxpayers to fund degree courses for 50% of school leavers when only 10% at the most of jobs in the UK require degree level education. Four out of five graduates end up in jobs which they could have done at 18 or younger without incurring any debt. If they want the luxury of a degree then they should pay for it.

[Ellipsis]

Then presumably, New Judge, you agree with me that it would not be fair to reduce tuition fees now?

[ludwig]

It's like anything. If you buy something this week for £500 and then next week they put the same items in a sale at £250, it's just tough really.

[Ellipsis]

Yep, but it's a Labour policy. They don't seem to have considered the unfairness. They even leave it a year after they (supposedly) get in before changing anything.

[mikey4444]

Was introducing £ 9000 per annum Tuition fees fair on any students, past or present ?

[Prudie]

"Prudie, if two people are going for the same job at the same time, with different loans, they are going to receive different net incomes should they be successful in getting the job."
Ellipsis this is pretty much what I was saying, they will get different net incomes but that doesn't make one more competitive in the job market than the other.

This topic has come up before and I'm of the same lines as new Judge I think. Grants should be returned and those going to University should be reduced to max 10% of school leavers - those who are actually capable of getting decent academic degrees.