Infographic on Fees: Facts and Figures

The CDBU has published an infographic on tuition fees and student debt (downloadable here as PNG or PDF: Print-Ready format or Hi-Resolution format). Please publicise this: print it out, display it, and send it to your friends. 

This web-page provides a more detailed discussion of the facts and figures underlying the infographic.

 

University tuition fees in England are now, on average, the highest in the world.

As everyone knows, some private universities in the US charge headline fees even higher than English universities now do, sometimes much higher, and so do flagship public universities for out-of-state students. But over two thirds of Americans study at public colleges and universities, which on average charge much less. According to the most recent figures provided by the US National Center for Education Statistics, the average ‘list price’ for tuition in the United States for full-time, full-year undergraduates at all types of institution in 2011-12, was $12,502 (or £7,814 at the 2012 exchange rate). In England, by contrast, the average tuition fee for undergraduates beginning their course in 2012 was £8,414 (or $13,462 in 2012 USD).

In both countries, these figures apply to the ‘list price’. Calculating what students actually end up paying is more difficult. Many English students will not pay back this tuition fee in full, and the same applies in the US. Many Americans are not even charged the full ‘list price’ for tuition in the first place, since the most expensive US universities often ‘discount’ tuition fees and other expenses substantially in order to attract well qualified individuals. Moreover, the price actually paid by the student is substantially lowered by federal grants, which do not have to be repaid. Again, according to NCES statistics, these grants cover, on average, of 22% of tuition fees in public colleges and universities and 36% in private non-profit ones.

 

Fees in England are nearly four times higher than in Ireland and seven times higher than the next most expensive country in the EU, the Netherlands.

According to the Complete University Guide, Ireland’s ‘student contribution’ was €2,250 (£1,900) in 2012–13 and set to rise to €3,000 (less than £2,200) by 2015. In the Netherlands, EU students pay an average of €1,700 (£1,240) in tuition. In Austria, Denmark, Finland, Germany, Norway, and Sweden, EU undergraduates pay no tuition fees whatsoever. In most other EU countries, tuition fees are, on average, less than £1000 per year.  According to the latest OECD figures (for 2010-11), the world’s other expensive public universities systems – Australia, Canada, Chile, Japan, Korea, and New Zealand – all charge fees for first-degree programmes below the Irish level.  Higher private tuition fees boost overall averages in Japan, Korea, and Slovenia, but not to anything near US and English levels. See the Table B5.1 from Education at a Glance for 2014.

 

English students now graduate with over three times more student debt than the average American student.

In 2013, 31% of US students graduated debt free. The other 69% carried an average student debt of $28,400. That means that the debt load of the average American student at graduation is $19,600, or less than £13,500. The average debt load of English graduates from 2015 onward is estimated at £44,000. That’s 3.26 times the US average. Despite this relatively ‘low’ level, the explosion of student debt in the United States is regarded as dangerous and hugely destructive, even in such business-friendly magazines as Bloomberg Business, The Economist, and Forbes.

Why is American student debt so much lower than English debt is now destined to become? Partly this is thanks to the greater variety of institutions, grants, and discounts available in the US. Partly, it is due to tax breaks available to parents contributing to their children’s university bills (another major indirect government subsidy). Partly it is because more students work part-time while studying.

It is important to note that the terms and conditions of these loans vary in important ways.  Graduates in England currently face relatively low interest rates; their repayments are income-contingent; and unpaid debts will be written off thirty years after graduation. But remember this: the government can change the terms and condition of English student loans at will, and is seriously considering raising the interest rate (above the current maximum of 2.5%) or lowering the repayment threshold (from income of £21,000), or extending the repayment period (beyond 30 years). So no one knows how heavy the burden of student debt may become for today’s students during the thirty-year lifetime of their loans.

US student debt currently carries higher interest rates (e.g. 4.66% on Stafford loans), must be paid back regardless of income, and is not written off after 30 years (although the majority of American graduates manage to clear their debts in half that time).  However, the Obama administration is moving to write off tens of billions of dollars of student loans, to peg repayments to graduates’ income (as in England), and to write off unpaid balances in as little as ten years (one third the English period).  If these changes go ahead, English students will be, on average, by far the most deeply indebted on the planet by any measure.

 

By 2046 collective unpaid student debt will be £330 billion in today’s money.  Today’s students will be the taxpayers who will have to repay the unpaid balance on their own student loans.

According to Universities Minister David Willetts’s statement to the House of Commons on 18 July 2014, total outstanding students loans will reach £1000 billion in 2046-47, which is £330 billion in today’s money. That means English student debt will be over 2.5 times as large, relative to the UK economy, as the $1.2 trillion in current American student debt is to the US economy today. In thirty years’ time, today’s students will be at the height of their earning potential, so their taxes will have to rise to pay off the balance of their student loans, so that the older generation can keep their taxes low now.

 

Students have been told that the state will pick up the unpaid debt, but by the time this happens, they will be the taxpayers who fund the state. Thus the current fees system shifts the entire burden of funding undergraduate education from older people – whose university years cost them comparatively little or nothing – to the next generation.

David Cameron, Nick Clegg, and Ed Miliband paid no tuition to attend Oxford and Cambridge between 1986 and 1992.  An older generation of taxpayers paid all their tuition for them, as well as much of their living expenses while at university. By accepting that benefit from the older generation, they obliged themselves to pass on a similar benefit in turn to the younger generation. Yet no sooner have their generation assumed power, than they have reneged on that obligation.

 

The current government plans to make matters even worse by selling student debt to banks and pension funds at a knock-down price.  The aim? To fund tax cuts that help older people even more.

One way to reduce the national deficit while cutting taxes on pensioners and high earners is to sell public assets, such as Royal Mail. The debt owed by students is one such asset which the government has been planning to sell for years. But to get banks and other financial institutions to buy it, it needs to be sold for less than it is worth, or on terms and conditions which make students pay more. Either way, the objective is to let government spend now some of the money which today’s students will still be paying off in thirty years’ time, while the rest of that money goes to bankers, pension fund managers, investors, and pensioners. Does this sound like a good deal?  Of course not, which is why the government has been trying to keep it secret.

 

Most students and parents in Britain, from all backgrounds, agree that the majority of higher education costs should be paid by the state.

When questioned on behalf of the Browne Review (which proposed uncapping fees altogether in in 2010), ‘most full time students and parents believed that the government should pay at least half the cost of higher education’ and most ‘believed the current system [in which students paid a little over £3000 in tuition] to be fair.’

 

Many lecturers and professors agree that the current system is unfair, irresponsible, and unsustainable.

This is the most unpredictable election in years.  Students could swing many marginal constituencies. 

Students get a raw deal because politicians think you won’t vote.

The deadline for registering to vote is 20 April.

Register online today: https://www.gov.uk/register-to-vote

Vote on 7 May.

 

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