students, through its annual grant to universities. This is equivalent to
about £5,000 per student per year.
• From 2006/07, universities will be able to charge students up to £3,000
per year. But no student (or their family) will have to pay anything while
they study. Payments will be deferred until after they graduate and will
then be repayable through the tax system.
Living costs
The most comprehensive survey of students’ income and spending
Patterns is the “Student Income and Expenditure Survey (SIES), it
estimates the average basic costs of living, including household and course
related costs as £3,665.
But average total expenditure, including entertainment and non-study-related travel was significantly higher at £6,897 in the 2002/03 academic year.
• Total average expenditure has risen by 15% since 1998/99 indicating a substantial rise in students’ standard of living.
• Living expenses made up the majority of student expenditure and had
risen by 20%. The largest increases were related to spending on
non-study related travel, including holidays, and personal expenditure
including mobile phones.
• Expenditure on entertainment which included sports, hobbies and
alcohol rose by 15% and was the most costly element of students’
living costs at £1,405.
What financial support does the Government provide?
The following table compares the proposed system from 2006/07 with the
existing system for full time students.
How much do graduates owe now?
There have been a number of unreliable and exaggerated estimates of
student debt
The most reliable estimate, based on SIES, is that the average student debt
from all sources among final-year students in 2002/03 was £8,666. Student
loans constituted 84%; overdrafts 11%; and commercial credit 3%.
This estimate is validated by a UNITE/MORI survey for 2003 which gave a
very similar figure of £8,816.
There are exaggerated claims made about the amount of debt
students can expect to face in future. Barclays have quoted a figure of
£33,000 for instance by 2010 – a figure which is entirely without basis.
Again based on the SIES data, the best estimate is that the average student
debt will rise to an average of around £15,000 for those beginning their
courses in 2006/07.
This estimate takes account of the following:
- the introduction of deferred fees, will increase the amount of money that students can borrow from the Government:
- where students do not qualify for the fee remission grant and choose to defer the full fee, their loans will increase by £3,000 for each year:
- but around 60% of students will continue to get some fee remission grant, and around 40% of students will also get some or all of the new HE Grant which can be offset against higher fees:
- and universities charging higher fees will provide bursaries for the
poorest students.
Is the investment a good one?
There is a lot of evidence to suggest that the returns to higher education
remain significant:
• Demand for gradates is strong. Research shows that 80% of the 2.1m
jobs expected to be created by the end of the decade will be in higher
level occupations - the ones most likely to be filled by those who have
been through higher education.
• Graduates are more likely to be in work and less likely to be
unemployed. On average, they earn 50 per cent more than non-graduates and over a lifetime, graduates earn £120,000 more than someone who goes out to work having got two A-levels.
• Around 80% of employed graduates undertake jobs that make use of their degree skills three and a half years after graduation.
What Students Believe
Surveys of student opinion show that they understand the benefits. The
UNITE/MORI student survey (2003) found that:
• 96 per cent of students believe that going to university is a worthwhile
experience
• 87 per cent of students consider the money they are spending on
higher education to be a good investment.
• 79% of students agree with the statement that “university has set me in
good stead for my working life”.
Paying back the debt
The key elements of the repayment package are:
- No-one pays anything until they are earning more than £15,000;
- repayments are then made at 9% of income above £15,000;
- if earnings fall below £15,000 at any point, then payments stop too.
- Graduates can take as long as they need to pay – the average
repayment period will be around 13 years, and they won’t be forced to pay more than they can afford in order to finish their payments earlier.
Other steps are also being taken to encourage more young people, particularly from poorer backgrounds to go to university.
These steps are based around the following key themes:
• Attainment – helping students from disadvantaged backgrounds get
the qualifications they need to go to university. This work begins with
Sure Start and continues through the Government’s strategies for
primary and secondary education. Young people who get 2 or more A
levels do go on to higher education;
• Aspiration – raising the sights of young people through initiatives such
as ‘Aim Higher’ supported by parents, friends and teachers, as well as
universities themselves. Evidence shows that the opinions of family
and friends are very important when deciding whether to go to university;
• Application – encouraging young people to be ambitious and apply for
the universities that are the best match for them.
Conclusion
The Government believes that their reforms, including a larger graduate
contribution will promote and not damage access because:
• Higher Education remains one of the best investments a young person
can make. Surveys of student opinion show that students accept this
and they vote with their feet.
• The abolition of up-front fees will remove a significant barrier for some
young people and their families, from lower and middle income groups.
• The Graduate Contribution Scheme allows graduates to re-pay their
loans on very generous terms through the tax system. No student
need ever be worried about a debt hanging over them because no real
interest is ever applied, and repayments are linked to earnings to
ensure that repayments are affordable.
• The student support package targets the most needy and debt averse
so that the combination of fee remittance, the new HE Grant and
university bursaries will mean that the poorest students need not
experience higher debt even attending the most expensive course.
