Government suffers policy and publicity failure on tuition fees

UCAS, the Universities and Colleges Admissions System, is an organisation familiar to all university students like myself, through which all applications for studying at university are made. Recently, UCAS has released statistics regarding the applications for study at university beginning in autumn 2012. The figures make damning reading, with a 7.7% drop in applications for 2012 compared to 2011. This is contrary to claims made by the Education Secretary, Michael Gove, that the fees would not put off students who would otherwise intend on applying to university. That this seems not to have been the case requires analysis. But criticism must also come for the way in which the government has handled publicity surrounding the fee rise.

As a current student, paying a little over £3,000 in tuition fees per year, I have an awareness of how the system works. Student Loans are designed to make money issues as little a factor as possible when students are deciding whether or not to apply for university. Tuition fees are paid in full, and this money does not even come through the student: it is paid directly to the university. This has not changed, in spite of the rise in fees. Students additionally receive a maintenance loan. This is assessed bearing in mind parental income amongst other things, but there is a minimum amount of money that every student is entitled to. Students from the lowest income households also receive a maintenance grant, which does not have to be paid back. As household income increases, the grant decreases, but the loan partially makes up the shortfall. Once the grant entitlement for a student reaches £0, the loan entitlement begins to decline, until it reaches the basement level. Importantly the amount of maintenance loan/grant that a student is entitled to, and the amount that a student would need, has not changed. Hence, if a student were to get into ‘real’ debt whilst at university, this would be no different than had they gone before the hike in tuition fees.

I use the term ‘real’ debt with care. For many students, particularly those who receive little or no parental support whilst at university, the maintenance loan/grant does not cover expenditure. The overdraft remains the most common form of loan utilised by students (and student accounts come with free overdrafts as standard). However students can find themselves in sticky situations due to credit or other loans and debt. This is a problem of funding, but it is not affected by tuition fees.

The money received by students as loans (i.e. tuition fee loan and maintenance loan, but not maintenance grants) are to be paid back when a student has graduated and has begun earning. When tuition fees were increased, the government increased the income level at which repayments must be made from £15,000 (the level at which I will be expected to pay) to £21,000. Additionally, it acts more like a tax, coming straight out of the loanee’s wages. Herein, therefore, lays the first of the government’s failures. Student loans do not act like a ‘real’ debt until they begin being paid back. Hypothetically, as they are paid back in proportion to the wage earned, they should not be cumbersome to the payer. And if a graduate does not begin paying within 30 years of graduation, then the loan vanishes.

The government would have done well to publicise these facts. In theory, the system is designed to make it possible for all to attend university. It is certain that the tuition fee rise itself should not have a direct effect on this. The point of the system is that repayments are only made when the graduate is in a position where they are financially able to do so. Instead, the government has cowered in the face of scaremongering. It would have been wiser to come out fighting using the tangible evidence of the Student Loans system. It is not perfect, but it is no worse for new students than it is for those who have already begun university study at lower tuition fee rates.

The tuition fee hike turned out to be a public relations debacle for the government. Had they calmly put across the arguments I have outlined above they may have gotten away with it. I am certainly not in favour of the tuition fee rise. But the government have allowed people to wrongly believe that it will have a significant adverse effect on their studies and post-graduate finances. The figures released by UCAS are merely the icing on the cake, confirming the ineptitude with which the change has been implemented. Arecent Guardian article correctly stated that the drop in applications cannot be definitively attributed to the tuition fee hike. Factors such as the recession may also be included, but I believe it is wrong to say that the drop is only down to the rise in students applying in previous years.

The legislation was only passed in November 2010, after students who made up the 11.6% rise in applications for 2010 had started their courses. This rise from 2009 was only marginally greater than the rise in applications from 2008 to 2009, at 9.7%. These applications came well before the General Election (in fact the majority of 2010 applicants would have applied before the election too). That there was a rise of only 1.4% from 2010 to 2011, despite it being the final year for lower fees, has not yet been explained. A significant rise would have been expected due to numbers of students turning down gap years to avoid paying the higher fees. Perhaps it was down to misinformation, with students unaware that applying in 2011 they would not pay the higher fees. This is merely speculation, as there is not definitive answer, but it would be in keeping with the government’s poor handling of the situation.

Clearly, then, the government’s policy has not worked. They intended to raise tuition fees, but did not expect it to have an adverse effect on applications. Though there cannot be definitive proof either way, it would be the most optimistic of observers who could find a more reasonable explanation for the significant application drop-off. This in turn was a significant publicity blunder. Had the government been able to get the message across that, in real terms, students applying from 2012 onwards would be on average no worse off than their predecessors, then maybe the figures would not be so damning. As it is, the government must look back on its errors and fix them for coming intakes of students. Otherwise, it must lament its failings, in particular the Liberal Democrats whose decision to turn back on their manifesto promises was responsible for the this debacle in the first place.

For students thinking about applying for university, or who have already applied for 2012 entry, Martin Lewis’ website MoneySavingExpert has a great 20 point guide to finances for students. Point 7 is of particular relevance for this article.