Paying for University Education

When I (hopefully) graduate I will owe the Government about £20,000 in loan repayments. That’s a lot. Tomorrow a report is due to be delivered to the Government which is expected to recommend the removal of the current £3,300 odd tuition fee loan cap. It has been suggested that may see University tuition fees rise to around £7,000 a year.

In comparison with countries such as the United States the British system is cheap but I don’t think landing graduates with a huge sum of debt is the right way to go about funding the higher education system.

The Lib Dems played with the idea of a ‘graduate tax’ which would see those who received the benefit of a free University education (so not me) pay a higher rate of income tax for the rest of their lives. If the University system is working then surely graduates will pay back far more tax anyway from the greater wages they can command (provided the graduates aren’t all working in call centres).  I think the problem is that the previous government wanted more people to go to University than was and is necessary which has led to the creation of degree courses in downright ridiculous subjects (pdf).

Foreign students already pay higher fees and make up an increasing proportion of students at UK Universities, I imagine because of the larger fees they are willing to pay. The amount Universities receive in fees from students is less than 30% of their total income.

The repayments for student loans are currently 9% of all income earned over £1,250 a month. On average UK salary (£25,428 a year) on a £20,000 loan at current rates of interest it will take 16 years to pay off.  16 years in which I imagine most graduates will want to buy a house.

Is my degree is value for money? Impossible to tell until I’ve got it and a job but I am pretty confident it will give me much greater opportunities than most other subject choices.

Photo: Stephen Boisvert (cc)

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