The Debate Around Increasing Tuition Fees: Are Degrees Worth the Cost?

The recent call for an increase in tuition fees by university vice-chancellors in England and Wales has sparked a debate about the cost of higher education. With a decade-long decline in real pay for university staff and increasing pressure from unions for a higher wage deal, the need for higher tuition fees is becoming more pressing. The current cap of £9,250 in England has been in place since 2017 and is set to remain frozen until 2025. However, with inflation currently at 10%, this means that by 2025, there will have been a long-term cut to university per student incomes by around a third.

The potential rise in tuition fees to £12,000 or £13,000 per year, as suggested by the founder of the University of Buckingham medical school, Karol Sikora, is becoming increasingly likely. But what would this mean for students and taxpayers, who ultimately subsidize higher education?

For taxpayers, the cost of higher education would increase. The average student loan in 2021/22 was £46,000, consisting of approximately three years of full tuition fees at £9,250 per year and three years of maintenance loans at £6,000 per year. Under the current system, a student earning a starting salary of £40,000 per year with annual pay rises of 2.5% would not pay off this loan. They would pay a total of £84,000 over 30 years, of which £54,000 was interest, and leave nearly £16,000 unpaid.

An increase in fees to £13,000 per year would result in the same £84,000 worth of repayments over 30 years, but almost all of it would be the interest on the initial debt. £56,000 worth of debt would remain unpaid after 30 years, with the taxpayer footing the bill. Even with the repayment term extended to 40 years, £12,000 would remain unpaid and written off.

The greatest danger of increased fees would be that the higher debt and potentially higher lifetime repayments will put off talented young people from less advantaged backgrounds from going to university at all. We know that aversion to debt is stronger among those with lower family incomes, and so there is a real danger for social mobility should fees be seen to be prohibitively high.

It’s important to consider if degrees are worth the cost. The short answer is yes. Even though students may feel that the current cost of university is poor value for money, graduating from university continues to be beneficial. By age 29, men earn 8% more than their contemporaries who do not go to university, and women earn 28% more. It’s important to weigh the long-term benefits of higher education against the cost.

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