The pros and cons of university tuition fees

Keir Starmer has further distanced himself from the Jeremy Corbyn era and confirmed that Labour is likely to drop its promise to scrap tuition fees.

Despite pledging to “support the abolition of tuition fees” during the 2020 contest to succeed Corbyn as Labour leader, Starmer told BBC Radio 4’s Today programme that the party will “move on” from the pledge and seek to “set out a fairer solution” to student finances.

Until 1998, full-time students in England could attend public universities completely free of charge. But, according to the Brookings think tank, “concerns about declining quality at public institutions, government mandated caps on enrollment, and sharply rising inequality in college attainment led to a package of reforms” brought in by Tony Blair’s New Labour government in 1998, which included the introduction of a “modest tuition fee”.

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In the more than two decades since, successive governments have increased the amount universities can charge students, with the maximum fee for an undergraduate course currently £9,250 a year.

The move has proved hugely contentious, with the decision by the Conservatives-Liberal Democrats coalition government to raise fees from £3,000 to £9,000 in 2012 sparking mass protests and contributing to the near wipe-out of the Lib Dems at the subsequent general election.

1. Pro: education benefits

Though it is “impossible to know how trends would have evolved” without the introduction of tuition fees, evidence suggests that “at a minimum, ending free college in England has not stood in the way of rising enrollments, and institutional resources per student (one measure of quality) have increased substantially since 1998”, said Richard Murphy, Judith Scott-Clayton and Gillian Wyness for Brookings.

According to analysis of the historical funding of UK universities, by the time tuition fees were introduced in 1998, funding had fallen to about half the level of per-student investment that the system had provided in the 1970s.

Experts agree that tuition fees have provided extra income for universities that has enabled them to compete on the world stage in terms of research and education. “The UK’s top institutions are able to continue to aim for and deliver one of the highest standards of university-level education anywhere in the world and it’s largely thanks to the introduction of tuition fees,” agreed Pads for Students.

2. Con: student debt problems

With the vast majority of students taking out a loan adding up to tens of thousands of pounds to cover their tuition fees and living costs “it’s safe to say many students and parents are scared by this huge sum – and worry about how they'll ever repay it”, said Money Saving Expert’s Martin Lewis.

According to data from a House of Commons Library report, the average debt for those who started their course in 2021/22 will be £45,800 by the time they graduate. While students only start paying back their loans once their earnings exceed a certain threshold (currently £27,295 a year), they are charged interest from the day they take the loan out (currently capped at 6.9%).

In essence, however, fear of debt “is misplaced”, said Lewis. “That’s because the price tag of university is mostly irrelevant.

“What matters in practical terms is how much you have to repay,” Lewis said, which “depends on what you earn after university.”

In effect, he said, “this is (financially at least) a ‘no win, no fee’ education” but, with graduates currently paying around 9% of their income once they reach the repayment threshold, it has still prompted a serious debate around the long-term cost-benefit of a university degree.

3. Pro: reduces state spending

The cost to the Exchequer of replacing lost tuition fee income and restoring maintenance grants was estimated at around £9bn per cohort of students in 2017.

At the time Labour, who had committed to abolishing tuition fees, calculated the bill at £11.2bn a year, “by far the largest single pledge amongst their manifesto spending promises, and overshadowing other spending commitments on early years, schools, and technical education”, said Wonkhe.

If the money was not spent on the fees-free policy, said Times Higher Education (THE), “it might join the pot for other social-sector spending, and so be distributed in ways that advantage lower household income deciles, or it might remain unspent – meaning that all taxpayers would benefit from reduced government debt (and reduced interest payments)”.

4. Con: unequal access

There is “a powerful argument that university education should be free to ensure equality of opportunity”, said Economics Help. “If students have to pay for university education, this may dissuade them,” the website added. In theory, “students could take out loans or work part-time, but this may be sufficient to discourage students from studying and instead may enter the job market earlier”.

Yet while “repeated studies have shown that social mobility has dropped since the increase in tuition fees came into effect”, Pads for Students claimed, social mobility campaigners have warned that cutting tuition fees could be “dangerous” unless it is matched with increased government funding to make up the shortfall.

5. Pro: stops ‘poor paying for privileged’

“Basic economics suggests that she who benefits should be she who pays,” said Bruce Chapman from the Centre for Global Higher Education.

Conversely, this means that if “there are no charges paid by graduates, then there are subsidies going from all taxpayers (read, including all taxpayers without a university education) to those who are on average lifetime advantaged (read, most graduates),” he argued. In other words, “advocating ‘free’ universities is equivalent to supporting financial assistance going from the poor to the privileged,” said Chapman.

“The elasticity of demand for tertiary education is very low – meaning that fee changes don’t affect demand very much,” said THE. But by charging tuition, progressives have argued that “the system could bring in more resources from students who could afford to pay, while enabling any given level of public subsidies to go further by targeting assistance to the neediest (including efforts to reduce pre-college disparities in achievement)”, said Brookings.

6. Con: the marketisation of degrees

The introduction of tuition fees has led to fevered debate around the so-called marketisation of degrees.

“The supposed benefits of markets do not apply to higher education: students and their parents are not repeat consumers; they don’t know what they are buying, while universities know very well how to tart up what they’re selling,” said Oxford geography professor Danny Dorling in The Guardian.

“Some institutions have become more focused on marketing, thanks to the financial incentive, than on providing a good education,” he added.

While the emphasis on judging the value of a degree merely by its relation to future earnings misses the point of higher education for many, Dorling argued that it has made some degrees (such as science, technology and maths) more prized while others (such as in the arts) deemed a luxury.