Universities are not working, and we’re all paying
Higher education has become an unsustainable Ponzi scheme in need of a radical shake-up
On a recent visit to the barber, my hair was cut by a young man who told me he had graduated from Southampton Solent University with a degree in football studies. He was friendly, articulate and skilled in his profession, but I doubted whether he thought his qualification was worth the debt he will carry as a millstone around his neck for 30 years.
Today, hundreds of thousands of young people receive their A-level results, and it is difficult not to worry about their future. The fortunate among them – those studying at the best universities and taking the best courses – may go on to prosper. But those who choose the wrong institutions and courses will see little benefit, while those who do not go to university – still a majority of young people – will be neglected.
This is because successive governments have pursued a higher education policy based on a mistaken assumption. Ministers have argued for years that more people with degrees means more economic growth: we need, therefore, more graduates.
But the evidence suggests they are wrong. There has been no improvement in Britain’s productivity as graduate numbers have increased. Many graduates work in non-graduate jobs, and many earn no more than if they had not gone to university at all. Certain degree subjects offer no return on investment, while studies show there are entire universities where average graduate earnings 10 years after study are less than those of non-graduates.
Tuition fees were supposed to make university funding fairer for the taxpayer, but more than three quarters of graduates will never pay back their debts. The Office for Budget Responsibility calculates that student loans will add 11.1 per cent of GDP to the national debt by the late 2030s.
We have created an unsustainable and ultimately pointless Ponzi scheme, and young people know it. With average debts of £50,000, graduates in England are the most indebted in the developed world. Even if they do not pay off the full amount, graduates face dramatic increases in marginal tax rates as their earnings increase.
It is not difficult to see why Jeremy Corbyn’s election pledge to scrap tuition fees and “deal with” existing student debt was so popular with young people. It might have been wrong and deceitful – funding universities through taxation would be regressive and lead to lower standards, while eliminating existing debts is unaffordable – but Corbyn identified an urgent problem.
But if we should not scrap fees, what should be done? Many favour a graduate tax, but that would still encourage people to take unproductive degrees and expect others to pay.
Much better would be radical change in tertiary education as a whole, including technical education and not just universities. As Professor Alison Wolf argues, sub-degree technical qualifications can have high labour market value and contribute to productivity growth. They are shorter and often cheaper. And they would serve many young people better than many of the degrees on offer today.
Ministers could accept Wolf ’s proposal for a single financial entitlement, held by the individual and spent whenever they wish on whatever kind of tertiary education they choose. Rather than forcing half of the population into expensive undergraduate courses, young people could choose the kind of study that suited them. Students would have an incentive to shop around for the best-value courses. Universities would be more likely to compete on price, rather than charge the maximum permissible fee. And the debts accrued – for the entitlement would be repayable – would be more affordable.
Ministers would need to introduce high-quality technical qualifications that have not existed since the decline of HNCS and HNDS in the Eighties and Nineties. They could cap the fees for these qualifications at a lower level than for undergraduate courses, making them more attractive. They should also restrict who is allowed to study for a degree: England is unusual in having no such restrictions, and students with lower qualifications such as BTECS now form a quarter of undergraduate entrants.
Finally, ministers should establish high-quality places of technical education. The Government plans to open new “institutes of technology”, although the budgets available mean they will be small in number or resources will be spread so thin that the institutes will fail. Ministers could avoid this by forcing the conversion of a number of universities into these new institutes, which could be modelled on the Dutch Hogescholen, German Fachhochschulen, or even the successful polytechnics that existed in this country until the early Nineties.
Well-paid vice chancellors will protest, but the gravy train exposed by Lord Adonis, the architect of tuition fees, must be stopped. Universities might be independent organisations, but many are charities that have lost sight of their charitable purpose. And they are wholly dependent on financial arrangements that are set by the government, underwritten by the taxpayer, and blight young people’s futures. Tinkering will not do: we need radical change.