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1 June 2011

The problem with tuition fees isn’t presentational

Education ministers need to consider the opportunity cost of student debt.

By George Eaton

The government persists in believing that the problem with its tuition fees policy is merely presentational. Today’s Times (£) reports that ministers have enlisted Martin Lewis, the founder of MoneySavingExpert.com, to explain the new system to pupils.

The government is said to want students to think of debt as “weekly repayments of £7.50 – the cost of two pints of beer and a packet of crisps or a bottle of wine”. As Vince Cable argued in his recent interview with the New Statesman, “We have got a progressive graduate tax: it isn’t about fees, and there’s no fixed debt, because you don’t have to pay it”.

But what this argument ignores is the opportunity cost of student debt. The £30,000-40,000 the average graduate will pay back could be used to buy a house, for instance, or to save for retirement. David Willetts points out that monthly repyments will be lower under the new system for middle-earners but the total debt will still be higher.

Other supporters of tuition fees note that graduates continue to earn more than non-graduates. But the so-called “graduate premium” has fallen from £400,000 to £100,000 and is now non-existent for some arts students. Willetts is undoubtedly right when he says that some “do not understand” the system, but then others are simply unwilling to pay the highest public university fees in the world for uncertain gain.

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As a result, just weeks before the publication of the government’s much-delayed white paper on higher education, the universities minister is facing an unprecedented challenge to his authority.

On 7 June, Oxford dons will debate a motion of no confidence in response to the coalition’s “incoherent and incompetent” reforms. Should the motion pass, it would be a first for any university in England. At Cambridge, 150 academics have submitted a grace “of no confidence” in Willetts to the university’s sovereign body, the Regent House.

The government’s tuition fees headache is about to get a little worse.