Monthly Archives: November 2015

Government goes back on its word regarding tuition loan repayment threshold

About four years ago when the new fees regime and related changes to student finance were being announced we took part in a BBC Radio 4 Money Box special edition. One of the other guests was Martin Lewis, money saving expert and, at the time, front man for the government’s campaign to inform the public about the forthcoming changes.

I argued that the changes to student finance were one thing but the payment terms that students would enjoy for the thirty year period after graduation were quite another. It seems that the government has taken the first opportunity it could to go back on its word and amend the terms of repayment and they have backdated these changes to affect everyone who has one of the new loans, even those who have already graduated. Mr Lewis has already made his opinion clear on this act of deception.

The changes announced (that the £21,000 starting point for repayments will not rise in line with inflation) will not have an immediate impact but over the lifetime of most loans it is estimated that the average student will repay an additional £6,000 if the threshold is not increased in the future. This will particularly penalise median earners who are making some repayments but cannot make a significant reduction in the capital of their loan. As no student has yet made any repayment under the new regime I can only speculate that projections for rates of repayment are lower than the worst estimates currently in circulation and the Chancellor is just getting in early with this amendment. How long will it be before 9% of earnings over the threshold becomes 10% or more?

I don’t want this blog to be about the bad hand being dealt English students right now. You can find far better analysis of this elsewhere. However, there can be no doubt that the best advice we can offer students considering a Bachelor’s degree here: have you thought seriously about leaving the country?

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Filed under Student Mobility, study abroad advice, Study Abroad Facts, Uncategorized

England is the most expensive place to be an undergraduate student

The OECD’s report into education has revealed what we have always known to be true: the introduction of £9,000pa tuition fees makes England the most expensive place on average to get a bachelor’s degree in the OECD nations.

This might seem ridiculous particularly bearing in mind US tuition fees but there are two important points to consider that mean the OECD is absolutely correct:

  1. Fees for international students are usually higher. This means that an English student going to the USA, Canada or Australia is likely to pay much more than £9k a year but domestic students in these countries usually pay considerably less.
  2. In countries where there are tuition fees, these are usually variable. English tuition fees are also technically variable but this distinction has been lost in practice on both recent occasions when fees have been hiked, first to max. £3k and then to max. £9k. English universities wasted little time in going to the maximum available level irregardless of whether this reflects the cost of a university degree (a famously unknowable number); the perceived impact on quality has meant that no university wishes to develop a reputation for being cheap. This has led to the bizarre situation where every degree more or less has the same price tag for domestic students (variations for international students might suggest that there is at least some element of cross-subsidy going on). The USA is undoubtedly much more expensive than England for many students. Their private universities can charge up to $60k per year. However, most importantly, there is choice in the USA. As a domestic student you can go to a local community college followed by an in-state university and gain a Bachelor’s degree for a lot less than £9,000 per year. The majority of US students will never get anywhere near the most expensive universities and those that do, usually have an efficient system of financial aid to mitigate the cost. It is this choice that is largely missing from the English system. Provision within FE colleges or at private universities is usually at a lower tuition fee. In the case of private HE this is largely because student loans for tuition are only available up to £6k a year. Should that cap be lifted I think we can be reasonably certain what would happen…

In conclusion, while the OECD’s conclusion might seem baffling at first, we would have to agree, England is now the most expensive country on earth to be an undergraduate and it is only likely to get worse.

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Filed under Higher Education, International Higher Education, Uncategorized