“I truly regret going to university and taking out a loan. I remember believing that it won’t make a huge impact in my monthly salary and I won’t even notice it. I do notice it, every single month.” These are the words of just one of almost 50,000 anonymous graduates, submitted to the Treasury Committee as part of its inquiry into the student loans system.
At the start of this year, I predicted that the debate over student loans wasn’t going away, no matter how much ministers might wish it would. There have been several developments since Rachel Reeves, having changed the terms by freezing repayment thresholds in her November Budget, insisted the system was “fair and reasonable”.
First, new polling by Ipsos found that public sentiment on the issue is shifting in favour of young people who borrowed to invest in their futures, with a majority concerned about the level of debt graduates are incurring and the terms of the loans. Then in March, the Treasury Committee announced its inquiry, catapulting the issue onto the parliamentary agenda. The Committee published the results of its call for submissions last month, which raised serious questions about whether the teenagers who took out these loans properly understood the terms, as well as providing evidence of the impact repayment was now having on this generation. The Committee is currently holding hearings, with ministers from the Treasury and the Department for Education to be grilled this week, and its report on the subject is expected later this summer.
All of this is to be welcomed. But alongside questions about the financial product itself (and the ethics of a system where the government can retrospectively change the terms unsuspecting 18-year-olds signed up to), there’s a wider debate to be had: about what university is for, who benefits, who should pay, and how we ended up with this situation in the first place.
That’s what a new report from the think tank Policy Exchange attempts to do. “Tarnished Towers: Fixing England’s Broken Higher Education System” is a deep-dive (over 100 pages long) on everything that has gone wrong in the university system, from loans and fees to admissions, academic standards, franchising, research, government, and even campus culture.
Policy Exchange is an unapologetically right-leaning institution (it was one of David Cameron’s pet think tanks, back in the day), and its recommendations will not be to everyone’s tastes. The way it is promoting the report is telling: the press release leads on the prevalence of “low-value” degrees, noting that “only 57 per cent of graduates are in full-time work 15 months after graduation” and that “in almost half of subjects, the bottom quarter of graduates earn less than minimum wage five years after graduation”.
One of its key recommendations is to reduce the number of university places by 30 per cent, which carries the implication that almost a third of students would be better off not going to university at all. It has been endorsed by the Conservative shadow education secretary Laura Trott, as well as Reform’s education spokesperson Suella Braverman and Blue Labour figurehead Maurice Glasman, who says his only concern with the report is it doesn’t go far enough and repeats his call for half of universities to be closed. Needless to say, this is not exactly what most campaigners decrying the injustices of the current system have been calling for.
But reading beyond the provocative top lines, I think the report is an important contribution to the debate for three reasons.
First, while the call to axe courses will no doubt get the most attention, particularly in the right-leaning press, this is not one of those interventions in the university debate that demonise students for being demanding snowflakes. There is an entire section on fees and debt, which notes the punitive interest rate and takes aim at the argument this can in any way be considered “progressive”. “While there is a fair case that graduates should make some contribution to the cost of their degree – the benefits of a degree being split between the individual and society – it is much less clear why any graduate should be required to pay back much more, in real terms, than they borrowed,” it argues. The standard argument heard so often over the past few years – that entitled young people shouldn’t expect the state to pay for their degrees and should stop complaining – is torn apart. That this assessment is coming from a think tank on the right is all the more compelling.
Second (and relatedly), it would be hard to find a sharper repudiation of the reforms imposed in 2012. According to the executive summary: “We have a funding system that does not enjoy the confidence of the public, who perceive it as usurious and unfair – both absolutely and between generations – and yet is unsustainable, and subjects universities to year-on-year real term cuts.”
These reforms, lest we forget, were brought in under a Conservative prime minister (albeit it in coalition) and kept in place under successive Conservative governments – governments in which both Braverman and Trott served. Yet here they are, putting their names to a report which is utterly scathing about a major plank of Conservative Party policy at the time. Braverman has since switched parties, but Trott is on the Tory front bench and has been advocating for closing 100,000 higher education places. The Tory party, meanwhile, has picked up the interest issues, with Kemi Badenoch calling for the “unfair debt trap” to be scrapped.
You don’t have to agree with the idea of cutting places to see the significance: political dynamics on this issue have shifted. One of the purported successes of the 2012 reforms was the subsequent increase in young people going to university, particularly from disadvantaged backgrounds. This was frequently held up as proof that the increase in fees and changes to the loan terms were nothing to worry about, as they were not impacting numbers. That the party which brought in these reforms has now U-turned and is actively seeking to reverse that “success” suggests something has gone very wrong.
Which brings us to the final point: how did we get here? Two ideas have been key to the makeup of the current system: “expansion” (more places) and “marketisation” (more choice). The report notes that “Though the first is more associated with the left and the second with the right, in practice the two together have dominated policy choices during the 21st century whichever party has been in government.” It argues that expansion – as endorsed by Tony Blair – has been a disaster, driving down standards and resulting in people who would have been better off heading straight into the workplace or to vocational training instead pursuing low-value degrees.
But it is also damning about the supposed marketisation so espoused by Conservatives. “The Higher Education sector, as currently constituted, is not a market,” it states bluntly. The competition between courses promised by proponents in 2012 never materialised. The consequences for providers whose courses fail to deliver for the students taking out tens of thousands of pounds in debt are virtually non-existent. There is little transparency or accountability – both fundamental for a functioning market. Turning students into “consumers” and trying to recruit as many as possible for an ever-expanding sector was always going to fuel perverse incentives. Now the consequences of that inevitable failure are falling on a generation of young people who don’t just feel let down, but utterly betrayed.
“This is not the future I thought I was signing up to aged 17 and there’s a generation of people in my boat,” reads another of the agonising responses to the Treasury Committee. If we’re going to fix the system, we need to understand the philosophy behind it. That philosophy invented the illusion of a market to fuel mass expansion, funded by the dreams of aspirational teenagers. Any prospect of a better system starts with admitting that bleak reality.
[Further reading: Will graduates ever be compensated for student debt?]
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