America's unsustainable universities

When 15 per cent of graduates default in three years, there's problems with a system.

One of the oft-repeated claims made in favour of the Government's three-fold increase in the cost of university attendence is the fact that Britain's universities are being out-competed by better-funded American ones.

The broad strokes are true, and hard to argue with. While it remains impressive that Britain has three of the THE's top 10 world universities, and 32 of the world's top 200, the domination of the top-tier by the US is clear. The country produces more Nobel prizewinners, pays its staff more, (even when counting just public universities), and invests more in research and facilities.

But where does all that money come from? Fees from the students. And where do they get the money to pay the fees? Massive student loans. And what happens when costs increase but wages don't? People start to default. A lot.

The Washington Post's Dylan Matthews:

The big takeaways from the Senate HELP committee’s report on the for-profit college sectors were that the institutions (a) are expensive, (b) produce a whole lot of dropouts, and (c) are mostly financed by the federal government. If that weren’t bad enough, they only spend about 17 percent of their funds on actual instruction, and a whole lot more on marketing — including lobbying the feds to pay their bills. A new release (pdf) from Moody’s builds on these findings, and concludes that the situation is not only bad but getting worse. Students at for-profit colleges are defaulting on their loans sooner and sooner after entering:

It may be that Britain still needs to change to compete with the US. But mimicking a system in which 15 per cent of graduates are defaulting on their lowns just three years after entering repayment doesn't seem like the best plan.

Harvard University. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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What do Labour's lost voters make of the Labour leadership candidates?

What does Newsnight's focus group make of the Labour leadership candidates?

Tonight on Newsnight, an IpsosMori focus group of former Labour voters talks about the four Labour leadership candidates. What did they make of the four candidates?

On Andy Burnham:

“He’s the old guard, with Yvette Cooper”

“It’s the same message they were trying to portray right up to the election”​

“I thought that he acknowledged the fact that they didn’t say sorry during the time of the election, and how can you expect people to vote for you when you’re not actually acknowledging that you were part of the problem”​

“Strongish leader, and at least he’s acknowledging and saying let’s move on from here as opposed to wishy washy”

“I was surprised how long he’d been in politics if he was talking about Tony Blair years – he doesn’t look old enough”

On Jeremy Corbyn:

"“He’s the older guy with the grey hair who’s got all the policies straight out of the sixties and is a bit of a hippy as well is what he comes across as” 

“I agree with most of what he said, I must admit, but I don’t think as a country we can afford his principles”

“He was just going to be the opposite of Conservatives, but there might be policies on the Conservative side that, y’know, might be good policies”

“I’ve heard in the paper he’s the favourite to win the Labour leadership. Well, if that was him, then I won’t be voting for Labour, put it that way”

“I think he’s a very good politician but he’s unelectable as a Prime Minister”

On Yvette Cooper

“She sounds quite positive doesn’t she – for families and their everyday issues”

“Bedroom tax, working tax credits, mainly mum things as well”

“We had Margaret Thatcher obviously years ago, and then I’ve always thought about it being a man, I wanted a man, thinking they were stronger…  she was very strong and decisive as well”

“She was very clear – more so than the other guy [Burnham]”

“I think she’s trying to play down her economics background to sort of distance herself from her husband… I think she’s dumbing herself down”

On Liz Kendall

“None of it came from the heart”

“She just sounds like someone’s told her to say something, it’s not coming from the heart, she needs passion”

“Rather than saying what she’s going to do, she’s attacking”

“She reminded me of a headteacher when she was standing there, and she was quite boring. She just didn’t seem to have any sort of personality, and you can’t imagine her being a leader of a party”

“With Liz Kendall and Andy Burnham there’s a lot of rhetoric but there doesn’t seem to be a lot of direction behind what they’re saying. There seems to be a lot of words but no action.”

And, finally, a piece of advice for all four candidates, should they win the leadership election:

“Get down on your hands and knees and start praying”

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.