Monday, 7 March 2011

Following yesterday's blog...

The following is my reply to Tim's comment on yesterday's "social engineering is good" blog. Since his comment was bigger than my initial blog, and it raised a number of points which I hadn't raised, I thought it would be better to deal with it by writing this blog.

If a majority of universities do charge £9000 (still a big if) then that will have the positive effect of funding the development and expansion of those universities to a greater extent - surely a good thing. Tim says that the effect "will be to divert money away from wealth creating businesses and into the pocket of the universities themselves" but neither education nor the economy are zero-sum games (i..e games where if one group wins then another has to lose). In general, if we improve education then we improve the economy, and vice-versa.

He says that we "may very well not live for another 30 years - so again, this has the impact of costing the exchequer more over the medium term than the current system of up front payments for courses". I hope that everybody reading this blog will in fact live on for much longer than that, but even if we do not, I also hope our government can be generous enough to absorb the occasional "loss" that arises from this mortality. The "loss", such as it is, is actually minuscule compared to the gain that comes from having a well educated populace, one better educated on the whole than would have been the case if all payments were required up front.

I've glanced at Tim's blog, and seen how he argues that "universities get the money now, of course, not as the students pay it back, so it needs to be found from somewhere". It is true that the government needs to find money now, to pay for universities' current expenditure, and that is a liability. However, it is not an *unfunded* liability. The enormous problem facing the government now is the deficit, which consists of *unfunded* liabilities, things like civil servants' pensions, which will have to be paid out, but for which no special fund has been set up. That is what the government has to tackle, if it is not to drown in debt. In the case of student fees, there is a promise to pay. The promise may not always be fulfilled, for instance in the case of early deaths or where a student never earns enough to repay, but in general there will be repayment. And that is all that money is: a promise to pay. These promises are as real as any other money, so they can be placed in the assets column, balancing the ledger. Okay, the debt doesn't disappear entirely. It does get placed on the shoulders of individual citizens, but those citizens only have to pay what they can afford, when they can afford it, and they get an education in return which they might not otherwise have had.

I've not looked at the specific effect of the government's proposals on the O.U. yet. I will do so at some time, but in the meantime I'm not sure why they should affect the O.U. adversely, or what makes the O.U. different from any other educational establishment in that respect.

From all this, you might think that I see the government's current proposals as ideal. I don't. I'd still prefer to see fees abolished, and hope that we will be able to do so in the not too distant future, However, I don't see how it can be said that the coalition plans don't encourage people to go to university, or that they don't address the deficit.

Change the world


  1. Hi Michael,

    Thanks for engaging in such a positive way in this debate. I had started to put together another (very long - sorry) comment in response earlier on this morning, but my browser appears to have eaten it! I'll try and re-create it when I get home from work.


  2. Hi Michael,

    This is what I wanted to say earlier before my browser messed up!

    The inaccuracy I referred to in my comment about your original post was your assertion that the increase in tuition fees would help to tackle the deficit. However, the government’s own office for budget responsibility forecasts that if average tuition fees are £7,500, then it will cost the taxpayer £2.4bn a year more to fund tertiary education by the end of the current CSR period in 2015 because of the way these loans will need to be funded. Of course, if the average fees rise to £9,000, then the additional cost to the taxpayer will be even greater than this.

    My point about taking money out of the economy was not well made and I put it down to not being properly awake on a Sunday morning when I was typing it. What I meant to illustrate here was that the way longer term repayment of student loans will affect the economies of the places where graduates live after leaving university – by diverting funding from those areas to universities and (perhaps) the university towns. It is social engineering all right – but not the sort that (for example) rural or urban areas without a university will appreciate.

    The issue of mature, part-time students is something that seems to have been neglected to a large extent in the debate so far. At present, OU students like me who can afford to, pay up-front course fees (Those who can’t are sometimes eligible for grants or loans – and one good thing that the implementation of Browne does is to provide equal access to most part-time students). At the moment, it is unclear if up-front payment will still be possible under the changes being proposed. Of course, if loans become compulsory for students like myself then it adds still further to the burden on the deficit and taxpayer, rather than having the effect of reducing it.

    The “30 year” rule for writing off student debts is also something that is of particular interest to OU students, especially ones (like me) who are somewhat more mature in years than the stereotypical student. For example, one of my current OU student friends is in their late 70s and that is by no means exceptional. It will lead to more student loans than at present never being paid off – unless, of course, the government is intending to introduce a duty on the deceased person’s estate to pay off the remainder of the bill. Again, in the unseemly rush to be seen to be ‘doing something’ on tertiary education, no-one in government has yet said what the position will be. At present, debts are written off if the graduate dies before full repayment, but this has been a trivial sum to date. It potentially becomes far less trivial when you bring part-time mature students into the net. (continued ...)

  3. (continued from previous comment)

    The OU is under threat as an institution because of the changes being made. It already suffered disproportionately under Labour as ELQ funding was withdrawn – and many OU students are like me – they are retraining and taking equivalent or lower qualifications to their original ones. On top of this, the tertiary education funding changes being made by the coalition disproportionately affects universities that primarily teach, rather than do research. Some establishments will be able to potentially keep fees lower than others by cross-subsidising teaching with research monies – but the OU will not be one of them. An increase in OU fees that brings them much closer to the equivalent ‘brick’ university rates will undoubtedly damage the number of students it can attract. (At the moment, the cost for 120 credits of modules – the equivalent of a year at a brick uni – is around £1,500 – less than half the fees). For the OU, having to make their fees far closer to a brick uni would be serious, as it is the cost of creating and updating the courses it provides where the majority of its funding goes, rather than on expensive campus-based facilities. A reduction in student numbers would have this effect. The ‘hobby’ student market is a significant source of OU funding at present – a potential tripling of fees backed up by a compulsory loan would inevitably damage this market, leading to increased fees for everyone else who studies at the OU. Surely we should be encouraging universities like the OU that have this kind of efficiency of delivering high quality teaching, rather than potentially penalising them and threatening their existence? We should also be encouraging the ‘hobby’ student to go there too, as it helps keeps costs down for others in the specific case of distance learning courses.

    I’ve taken up enough of your comment space and I really do hope things will be better for the OU than I fear. As a fellow LibDem, I want to see us put clear water between what the Conservatives want for higher education, which is a privatised model along the lines of the US and what I as a LibDem have always argued for – “freedom from ignorance, poverty and conformity” – through a well funded education sector that has to include universities. I do not believe that the current proposals are good for either students or for the general taxpayer.

  4. Hi Tim,

    Maybe the OU is under threat as an institution, but if so I'd expect an enormous hue and cry to be raised, and condemnation from the O.U. in particular. On searching the internet, I don't find it. Instead, I find statements like the following, from

    "The Open University has warmly welcomed the proposals in the Browne report relating to part-time students. (See 7.46am.) This is from Martin Bean, the university's vice-chancellor.

    This is a landmark day for part time higher education in England. The Browne Review marks the end of a two tier system which until now has disadvantaged part-time students. It signals the start of a new, modern era of higher education which promotes opportunity, flexibility, quality and the crucial role of part-time in delivering future economic growth and social mobility.

    Under these recommendations the four in ten students who study part-time will have the same support for the cost of learning as full-time students for the first time."

    The Wikipedia entry on the Open University suggests that it has been a net beneficiary of cuts rather than a victim, saying "While most of those studying are mature students, the reduction in financial support for those attending traditional universities has also led to an influx of young undergraduates to the OU."

    And while it is true that the OU is planning to end its "Investigating the psychological world" module, which is compulsory for anyone wanting to study postgraduate Social Sciences, they also say (at )
    "The Faculty of Social Sciences is currently reviewing its postgraduate curriculum with a view to launching a new programme in the near future. We are not able to provide any further information at present but we will publish details on this website as soon as our plans are confirmed."

    While planning to bring one programme to a close before its successor is firmly in place may cause some problems, the overall message seems to be one of reorganisation rather than of savage cutback. There will still be postgraduate Social Science, just not in its present form.

    I agree that there is a danger, and that we must be vigilant, but I am not convinced that the future is necessarily as bleak as you paint it. The OU might damage itself irreparably by a too-steep increase in fees, but that outcome is not compulsory. Remember too that there are Lib Dems in government. Although they cannot have everything their own way, I do not think they would stand idly by while the university system was demolished.