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'If no-one will fully repay £9,000 student fees, how is the system sustainable?' blog

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This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.




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  • Lokolo
    Lokolo Posts: 20,861 Forumite
    Part of the Furniture 10,000 Posts
    Good Article :) my thoughts exactly.
  • Mrs_Arcanum
    Mrs_Arcanum Posts: 23,976 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    The question then becomes - what will happen to the courses that result in jobs that are below or barely above the re-payment threshold. Careers that are still necessary and worthwhile but not well paid?
    Truth always poses doubts & questions. Only lies are 100% believable, because they don't need to justify reality. - Carlos Ruiz Zafon, The Labyrinth of the Spirits
  • wozearly
    wozearly Posts: 202 Forumite
    Part of the Furniture Combo Breaker
    The question then becomes - what will happen to the courses that result in jobs that are below or barely above the re-payment threshold. Careers that are still necessary and worthwhile but not well paid?

    For graduates, these courses are slightly more attractive than they are presently - the lower salary expectation means that they will pay back less than someone with a comparable loan but going into a higher paid job.

    ...although it doesn't necessarily make the career itself more attractive compared to better paid alternatives on earnings alone, because earning a higher salary is of more financial benefit to a graduate than avoiding the marginal increase in loan repayments that this triggers.

    For the government and universities, this would only be a bad thing if they start assessing the funding of courses based on the repayments they get from students who take those courses (e.g. courses leading, on average, to lower paid work are essentially subsidised by those leading to better paid work). They don't currently do this, and I can see all sorts of problems with trying to, so its unlikely.


    My assumption would be that they won't see any real benefit or drawback under the new model...assuming that the students who would normally apply for them aren't put off by the primarily psychological barrier of the large amount of loan and low salary expectations, ignoring the actual amount that they'd have to repay...
  • NRTurner
    NRTurner Posts: 36 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Just got a comment about the teaching grant. At present it is paid with conditions - the student has to attend all of their exams and hand in the coursework on time (unless there is a valid reason) - and I think there are some other conditions as well.

    This means that HEFCE - the Higher Education Funding Council for England - is able to get out of paying money for students where they miss an exam, for example.

    I'm not sure how this would affect your analogy but I do know that a London university was initially paid money for students that had missed assessments (but otherwise passed) over a period of several years, and that when this money was clawed back it was to the tune of several million pounds.

    What the new system has done is meant that students enrolling on courses costing £9000 (and I work for in institution charging this amount) is that they expect around three times the value - i.e. £9000 worth of benefits rather than £3375 as now. Whereas, as you correctly point out, the university actually doesn't really receive any extra money. Trying to create that extra value with no extra money is hard!
  • melancholly
    melancholly Posts: 7,457 Forumite
    1,000 Posts Combo Breaker
    http://www.hepi.ac.uk/files/White%20Paper%20analysis%20summary%20report%20-%20Final.pdf

    this is the 'short' version of a HEPI report reviewing the implications of the white paper. they expect there to be a shift in uni fees due to government influence, which is likely to increase (and regardless of any financial implications, that's an implication i don't really like for the long term - the palava over the push for 'big society' research by the AHRC indicates there is already a move towards uni finance being biased by government policy which i'm uncomfortable with).

    it's not an 'easy' read but they do predict that there will be a cost to students, institutions and the treasury (and that cost is in disruption as much as in financial terms). i don't think i can face the full report!
    :happyhear
  • I'm really struggling with this. It seems obvious to me that a typical student with loans totalling, say, 45K when they graduate is unlikely to pay the full sum back, unless they happen to secure a very high graduate salary pretty quickly. Initially, the SLC (government) pay the sum to the university on the student's behalf, under the (probably erroneous) assumption that the student will, eventually, pay the sum back. If they're not paying it back, how is this not resulting in a loss for someone? Sorry guys, I'm no economist as you can no doubt tell, but this doesn't seem logical to me....
  • I'm really struggling with this. It seems obvious to me that a typical student with loans totalling, say, 45K when they graduate is unlikely to pay the full sum back, unless they happen to secure a very high graduate salary pretty quickly. Initially, the SLC (government) pay the sum to the university on the student's behalf, under the (probably erroneous) assumption that the student will, eventually, pay the sum back. If they're not paying it back, how is this not resulting in a loss for someone? Sorry guys, I'm no economist as you can no doubt tell, but this doesn't seem logical to me....

    You are right in your conclusion. If ML is right then it won't get paid back. However, in 30 years time, the MPs who voted this through will mostly be dead so they won't have to worry about it :cool:

    It's just yet another unfunded government liability - like public sector pensions, PFI, etc. More intergenerational theft. :(
    A journey of a thousand miles begins with a single step

    Savings For Kids 1st Jan 2019 £16,112
  • Lokolo
    Lokolo Posts: 20,861 Forumite
    Part of the Furniture 10,000 Posts
    I'm really struggling with this. It seems obvious to me that a typical student with loans totalling, say, 45K when they graduate is unlikely to pay the full sum back, unless they happen to secure a very high graduate salary pretty quickly. Initially, the SLC (government) pay the sum to the university on the student's behalf, under the (probably erroneous) assumption that the student will, eventually, pay the sum back. If they're not paying it back, how is this not resulting in a loss for someone? Sorry guys, I'm no economist as you can no doubt tell, but this doesn't seem logical to me....

    But would you rather the government pay out £100million and get none back (no student loans).

    Or would you rather they loan out £100million and possibly get £50million back?

    They are just trying to reduce the outgoings into university education, by hoping to get some back.
  • BACKFRMTHEEDGE
    BACKFRMTHEEDGE Posts: 1,294 Forumite
    edited 26 August 2011 at 3:52PM
    Lokolo wrote: »
    But would you rather the government pay out £100million and get none back (no student loans).

    Or would you rather they loan out £100million and possibly get £50million back?

    They are just trying to reduce the outgoings into university education, by hoping to get some back.

    Most of us want a government that just spends what we've got and stops spending what we we don't have.

    Of course I'm happy to let you pay this bill :) as you will still be a tax payer in 30 years time whereas I will be retired. So thanks for offering to pay the extra £50 million.

    Generation Y sure is generous. smiley-wink.gif
    A journey of a thousand miles begins with a single step

    Savings For Kids 1st Jan 2019 £16,112
  • Lokolo
    Lokolo Posts: 20,861 Forumite
    Part of the Furniture 10,000 Posts
    Most of us want a government that just spends what we've got and stops spending what we we don't have.

    Of course I'm happy to let you pay this bill :) as you will still be a tax payer in 30 years time whereas I will be retired. So thanks for offering to pay the extra £50 million.

    Generation Y sure is generous. smiley-wink.gif

    haha :D

    Yeh see I want a fair government as well as one that doesn't spend just for the hell of it.

    p.s. I won't be working for 30 years.... well hopefully anyway ;)
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