A bizarre silver lining in the tuition fees cloud
Today’s Independent reports:
A £1bn-a-year “black hole” in university funding means the Government’s new £9,000 fees regime is in danger of costing taxpayers more than the old system.
A report by the Higher Education Policy Institute (Hepi), a highly respected think-tank, says the Government has “seriously understated” the cost of its higher education reforms…
There are three reasons why the new system will cost at least £1bn-a-year more.
Firstly, the average fee is £8,234, not the £7,500 predicted. This forces students to take out higher loans.
Secondly, the Government estimates that it will not recover 32 per cent of debts. But the IFS reckons this should be 37 per cent because a civil service assessment of future salaries is over-optimistic, meaning more graduates will not have to repay their loans.
Thirdly, the repayments will put 0.2 per cent on the Consumer Price Index – triggering higher benefit payments and pensions.
Two things worth mentioning in particular about this. First, predictions attempting this sort of level of accuracy decades into the future are prone to significant margins of error. The one thing we can be almost certain of is that estimates such as precisely what percentage of people will be repaying loans in 30 years time will turn out to be wrong. But what is clear is that the risk looks to be pretty heavily loaded on the ‘it’ll cost more than you expected’ rather than ‘it’ll cost less than you expected’ side.
Second, that bizarre silver lining. By adding 0.2 per cent to the inflation measure used for calculating benefits and pensions, the tuition fee scheme will push up benefit payments for millions of people – most of whom won’t be part of the tuition fees system and so will simply be getting a benefit of extra money.
Yes, this occurred to me too!
Err… that and it goes to show that the raising of the threshold and index link of that same threshold is actually doing what it was supposed to do, which is reducing the amount people who are on lower incomes have to repay. I'd call that evidence in support of the fact we got the better of the Tories. You can damned well be sure they did not want to pay extra, and wanted to pay less.