Two years ago, the Government revealed that UK universities would be subjected to an £800 million reduction in funding – a fall of 82%. The hike in tuition fees quickly followed suit as universities had to compensate for the shortfall. Although the sharp increase in tuition fees immediately alleviated some of the monetary pressures on universities, looking at the state of the higher education sector, it is clear that universities face enormous financial challenges in the future, if the sector remains unreformed.

As further government cuts become an ever increasing possibility, combined with the effects of the core and margin system and the unsustainability of the student loans system, universities are anxious to find possible answers to the flaws in the higher education sector.

The core and margin system is the arrangement through which universities can recruit as many applicant students as they wish who achieve grades ABB+. Yet, any previously accepted students who have achieved grades lower than ABB and have been lost to other universities with lower boundaries, cannot be replaced. This leads to a loss of essential income for those universities asking for grades ABB+.

Before this year’s Spending Review was released in June, many universities attempted to provide the government with viable solutions to address these recognised failings. Policies such as a reduction of the repayment threshold at which to pay back student loans are being actively lobbied by the heads of many Russell Group universities, as a solution to the increasing financial burden on higher education institutions.

Despite being a member of the Russell Group, the University of Nottingham’s (UON’s) Communications Office stated that UON was in fact not aware of any lobbying and that they do not actually have any involvement with the issue.

However, universities such as the London School of Economics (LSE) and the University of Manchester do seem to be actively involved in government lobbying, and in favour of the reduction. The current repayment threshold is £21,000, but it has been suggested that this amount should be reduced to £18,000; a sensible idea considering that many students will never repay the full amount, due to acquiring a substantial volume of debt whilst studying at university.

According to Professor Nicholas Bar who works at LSE, the reduction in the threshold to £18,000 would only mean an increase of about £22.50 a month and therefore this would seem to be the most obvious solution.

Nevertheless, this option is regarded as controversial by many. Critics argue that with the shifting of the current deficit to future graduates and tax payers, reducing the threshold will burden forthcoming generations with additional and extensive debt.

There is already ample inequality inherent within the student loans system, with poorer earning graduates repaying around £30,000 more than those graduates on a higher salary. Therefore, requiring payments at a lower threshold would not sit well with those who are opposed to widening inequality.

Against Professor Bar319px-LSE_Logo.svg, is LSE’s own Students’ Union. It affirmed that ‘it would be a regressive step and would place a greater burden on students from the day that they leave university’.

Moreover the Students’ Union of Southampton University not only agrees with LSE, but has gone as far as to say that the current student loans system ‘does not make economic sense’. They have argued that the current deficit is being made worse due to the fact that students are not going to be able to pay it all back – an estimated loss of around £9 billion.

Yet to reduce the threshold would not provide a suitable solution, it would merely plague future generations with greater debt. Southampton University’s SU claim that the answer lies with the introduction of a different system, specifically one that does not rely on the ‘inappropriateness of fixed money loans’.

This view is similar to the one taken by Professor John Holmwood (Department of Sociology and Social Policy, UON). He maintains that there is a need for ‘a broad-based movement, outside the main parties and against inequality’ and that the campaign for public universities provides many of the answers to the problems that the current higher education system is facing.

Public universities would mean that higher education would become an accessible, social and public good through tax contributions. Thus it would seem that there are other solutions which can and should be considered, and which would perhaps be seen as less controversial.

Looking at the release of the Government’s most recent spending review in June 2013, it is clear that in spite of the lobbying undertaken, no elaborate differences seem to have been contemplated.

Consequently, the lack of security featured in the student loan contract, the continuous need to reduce the deficit, as well as the active lobbying of many Russell Group universities suggests that the reduction in the repayment threshold may nevertheless become a favoured and actively sought solution, after all.

Amy Hall

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2 Comments

  1. September 24, 2013 at 10:55 — Reply

    I think the admin of this website is truly working hard in favor of hiis web page, for the reason that here every material is quality based data.

  2. October 5, 2013 at 14:51 — Reply

    The student loans system is a joke. It’s advertised as a loan, but if 90% of students won’t pay it off in full, then for the majority it’s a tax.

    Difference being, if you’re going to introduce a tax, you design it as such, and you budget to invest in the HE system, whereas this government does not.

    You then end up with a situation where they plan on selling the student loan book to regain some of the loss made, including a sweetener for whichever bank ends up getting it, probably resulting in students paying a higher interest rate, having lower repayment thresholds, or removing the number of years before it’s wiped off.

    Of course, the government didn’t listen to students’ proposals of a graduate tax, and they’re unlikely to go for free and open education any time soon, so we’re stuck with this system of dodgy accounting for years to come.

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