In one respect at least, it seems to me that the students protesting about higher tuition fees have an overwhelmingly strong argument: why should they have to pay £27,000 for something that I got for free?
It’s not good enough to say that student numbers have increased enormously since my day, and that whilst the tax-payer could afford to educate an elite it cannot afford a mass education. This will not satisfy today’s elite students, who might reply: cut student numbers, then - I‘ll still get in.
And it’s just laughable to say that the public finances are too bad to allow a state subsidy. This just invites students to retort: who’s fault is that? (There’s also Paul’s point, that if public debt is a bad thing, so too must be private debt.)
The logical answer here is what Colin Talbot has proposed: a retroactive graduate tax. Quite simply, all graduates should stump up to pay for universities now. He’s estimated that this would cost about £350 per year per tax-paying graduate.
Unless you’re the sort of loony rightist who exaggerates substitution effects, this seems affordable.
So, what are the counter-arguments?
One could argue against retrospective and hypothecated taxation on principle. But I‘m not sure these arguments are stronger than the principle of inter-generational justice.
Nor am I convinced by the argument that the combination of a high graduate premium - assuming (strongly) that it persists - and economic growth means that today’s graduate will be much better off than past graduates.
If we assume a growth rate of 2% a year and a graduate premium of 25%, then the typical graduate will earn £1000 a week in today’s money in 25 years time. Many people who graduated 25 years ago get much more than this.
“Ability to pay” then, does not obviously favour tuition fees over a retroactive tax.
Instead, I suspect there are two arguments against a retroactive graduate tax and in favour of fees.
One is that fees introduce a market mechanism into universities that should drive up standards. The student who’s paying £9000 a year will not put up with sub-standard teaching - and even if she doesn’t have an exit option, she has a voice. This should force universities to raise their standards.
The problem here, though, is: will they do this in a good way - by better teaching - or in a bad way, by dumbing down and giving everyone good degrees and glowing reports? It’s not obvious.
The other argument is one of efficiency. Many of those of us who graduated without debts can downshift or take early retirement in our 40s or 50s. If it were not for student debt, economic growth would allow ever more graduates to do so. This would represent a large and growing loss of skilled labour. Tuition fees are one solution here - they tie graduates to the labour market in a form of debt bondage.
But where does this leave the argument about justice which I began with?
Simple. Power beats justice every time.
How about the recent graduates like me that have already paid some tuition fees? Should I have a graduate tax applied to me too? That seems rather unfair.
Posted by: sanbikinoraion | December 06, 2010 at 03:24 PM
Plenty of arguments against it:
1. Graduates are already paying tax on the premium: at 50% in many cases. If society doesn't think that tax on the premium isn't enough to cover the costs, why should other graduates be asked to pay for something they never signed up to?
2. The quality of courses and graduates in the old days were high. Subsidising masses of poor quality students today to have a few years of fun pretending to study something important isn't inter-generational justice.
3. Any such levy will soon become a "progressive" one, such is the nature of setting a precedent for new sources of funding (look at APD).
Posted by: Kay Tie | December 06, 2010 at 03:24 PM
Another argument against: fees give universities more independence from government. After all under the government's proposed system, a university charges a fee for each student and the state lends the student the money to pay for it. You get a functioning market.
With a graduate tax the money would have to be allocated to universities either through the budget or through a separate fund (as suggested by the NUS). This means that the number of students taken by each university will be based on central planning rather than supply and demand. Not the sort of result an economist usually likes, not to mention its effects of the autonomy of academia.
Posted by: Niklas Smith | December 06, 2010 at 03:46 PM
Perfectly happy to pay an extra graduate tax as long as my graduate 'premium' (the additional element of my earnings as a consequence of going to university) is included in my tax-free allowance.
Posted by: Adam Bell | December 06, 2010 at 03:54 PM
you didn't get it for free, you participated in a scheme where tax payers pay for university education
Posted by: Luis Enrique | December 06, 2010 at 03:54 PM
(meaning that somebody paid for you education and then you paid for somebody else's, meaning you paid for your own give or take. it was just an inter-generational trade, not a free education)
Posted by: Luis Enrique | December 06, 2010 at 04:36 PM
Could you explain how tuition fees 'tie people into the labour market in a form of debt bondage". They pay a percentage of earnings above a threshold (I think 9% of everything over £25,000). If they stop working, they stop paying. If they earn less, they pay less.
Posted by: John Hampton | December 06, 2010 at 04:39 PM
"overwhelmingly strong argument" - Really? The "in the past it was free" argument is by far the weakest.
Why should I pay for a prescription charge now when in the past they didn't? Why should I pay £'s in tax on petrol when in the past it was far less?
Posted by: Phil Ruse | December 06, 2010 at 04:43 PM
All students facing these new higher debts should just mass default.
Hell, if worked for Russia: http://www.berfrois.com/2010/12/deja-vu/ then why not?!
Posted by: Russ | December 06, 2010 at 05:00 PM
Students don't have a voice when it comes to bad teaching, however much they're paying for their education. Why antagonize a teacher who can make a difference in the quality of your degree?
Posted by: Eric | December 06, 2010 at 08:03 PM
"One could argue against retrospective and hypothecated taxation on principle. But I‘m not sure these arguments are stronger than the principle of inter-generational justice."
Hang on. Isn't this the opposite of your logic in the post below?
The current generation of university undergraduates will be overwhelmingly richer throughout their lives than the current generation of taxpayers, because the median taxpayer will die about 25 years before the median university undergraduate. Therefore, inter-generation justice demands that we shift the burden onto the student rather than the taxpayer...
Posted by: john b | December 07, 2010 at 01:48 AM
"(There’s also Paul’s point, that if public debt is a bad thing, so too must be private debt.)"
It's funny how the fallacy of composition only ever works in one direction.
Posted by: Peter Risdon | December 07, 2010 at 07:40 AM
Luis Enrique is spot on. The answer is to raise income tax back to a level it was in the past. But successive governments would sooner eat their own children than raise the standard rate of income tax.
The second answer is to reduce student numbers so that they roughly match the number of graduate jobs.
Every other idea seems like introducing complexity just to avoid the two simple but politically damaging solutions.
Posted by: pablopatito | December 07, 2010 at 08:44 AM
Power beats justice every time.
Beware what you are wishing for - these generations won't show any pity once they'll come to power, and they will, sooner then expected.
I don't want to debate on the merits, but just saying that pissing this people off now might turn out to be a backlash when those in power now will represents the vulnerable constituency.
Posted by: Paolo Siciliani | December 07, 2010 at 01:40 PM
"these generations won't show any pity once they'll come to power"
Yeah, I said that in the '80s. Now I can see what an enlightened radical Mrs. Thatcher was. Time heals all wounds..
Posted by: Kay Tie | December 08, 2010 at 10:39 AM
Sure, just wait and see
Posted by: Paolo Siciliani | December 08, 2010 at 02:09 PM
to the extent that having a degree raises your income, you already pay for it in tax.
Posted by: botogol | December 08, 2010 at 05:01 PM
The student loan for the fees is cancelled after 30 years. Assuming an average working life of 40 years, then a minimum of 25% of one's earnings won't be burdened by repayments.
Our education system now is mental. My Dad and others of the 45+, started work in journalism at 16/17. So not only do people now 'need' a journalism degree (3 years) but also 2 extra years called A Levels to be considered competent.
That was 5 years of subsidised superfluous education, now reduced to 2 years of unnecessary study.
Posted by: Radagast Brown | December 09, 2010 at 04:35 PM
"The student who’s paying £9000 a year will not put up with sub-standard teaching - and even if she doesn’t have an exit option, she has a voice. This should force universities to raise their standards. "
trouble is you are locked in? its not as if mid-course you can jump ship to a "better" uni?
Posted by: roym | December 09, 2010 at 05:15 PM