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20 November 2018

MoneySavingExpert founder says two-year degrees won’t help low earners

Martin Lewis does not believe that accelerated university courses will lead to more student loans being paid back. 

By Rohan Banerjee

The government’s plans to roll out new two-year undergraduate degree courses risk an “oversimplification” of the student loans system and may not actually leave people better off, according to MoneySavingExpert founder and chair Martin Lewis.

The Department for Education, subject to parliamentary approval, will allow universities in the United Kingdom to run “accelerated” degrees, condensing the same amount of academic content in a traditional three-year course into two 45-week years of teaching; which would allow students to borrow less on fees and to save on a year’s living costs and accommodation.

In practice, the DfE claims, students are likely to pay 20 per cent more each year on tuition – up to £11,000 from the current rate of £9,250, which is already the most expensive annual rate in Europe. However, students would pay a fifth (£5,500) less overall for their course over a two-year degree compared to one that lasted three years.

Supporters of the policy have said that two-year courses add a much-needed flexibility to higher education. Universities minister Sam Gymiah commented: “Accelerated degrees not only make it possible for the next generation of students to access higher education and the undeniable financial, academic and personal benefits it has to offer but drives the sector to offer dynamic choices that serve students’ needs.”

He added: “Providers will be able to tap into a new market of students, particularly mature students and those who commute, who were previously locked out of higher education.”

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But Lewis, who launched his consumer finance website in 2003, suggested that two-year degree courses would not necessarily leave people better off, nor lead to more student loans being paid back. He explained: “This isn’t a problem with people doing two-year degrees rather than three-year degrees. It’s with the classic oversimplification that you’ll pay less for a lower-cost degree. Under the current system, the cost of a degree isn’t about what you borrow, it’s about what you earn afterwards – and the idea that you’ll save money is false for lower and middle earners.”

Under the current student loans system, students only repay nine per cent of their salaries over £25,000 per year (£25,725 from April 2019) until the debt is written off entirely after 30 years. As many graduates tend to earn below this threshold, Lewis said, only the highest earners would save any money by taking a “cheaper” course.

Meanwhile, the University and College Union (UCU), a trade body for academic staff, pointed out that the new two-year degree courses could make it harder for students to take a “deep approach” to their learning, with limited time available for independent study, and also highlighted the difficulty such courses would present to those who wanted to take on part-time work or extracurricular activities.

 Dr Tim Bradshaw, chief executive of the Russell Group, which represents 24 of the UK’s top universities, warned the government against “overpromising” on accelerated degrees. He said: “The government’s own projection for the likely take-up of these degrees is modest and we actually hear many students calling for four-year degrees, for example, to spend a year on a work placement or studying abroad. I wouldn’t want disadvantaged students to rule out a traditional three-year course because they didn’t believe they could afford it.”