the death of UK higher education
Having heard today's news that public funding for university teaching in the UK is more or less going to stop (79% cut, the remaining pittance to be targeted at 'strategic' fields e.g. clinical medicine, nursing, science, technology and modern languages)...[*]
...and that the proposed way of making up the shortfall is to jack up tuition fees, to be paid via student loans administered by the government and subject to a repayment rate of 9%...
I thought I'd run some numbers.
Some facts:
* Graduates will not be liable to pay back loans until they're making £21k/yr.
* It is likely at this stage that 'early-repayment' penalties would apply, in order to make the system 'fair' by preventing richer kids paying off the loans quickly and thus avoiding large chunks of interest.
So assuming a 30-year term, at a 9% rate, what do we get?
* Using Oxford's cost of living guide, I'm assuming a total loan of £42k (£7k fees + £7k living expenses, for a 3-year degree). Some places will be cheaper, but not so much cheaper, and London will be way pricier. So at 9% over 30 years, the repayment comes to £337.94/mo.
* Those making £21k, and thus just over the threshold of liability for repayment, will take home £1368 or so on today's taxes.
* Average starting salary for graduates is roughly £24k, which under the current tax system means they take home roughly £1535/mo.
* Average salary for 33/34-year-olds who went to university is about £38k, which means a take-home of £2343.
30 years is, of course, most of the working life of these kids. And now they can kiss the idea of affording a house goodbye until they are maybe 45 or 50. How do you even *save* toward a house deposit if you have to live on £1000-1200/month, including rent and council tax and everything else?
EDIT TO ADD: Ok, so I misunderstood the '9% rate' in the THE article. It's 9% of the graduate's gross salary after they start making £21k, at an interest rate that depends on inflation and on how much they make. Which means less in monthly repayments, but who knows how long it will take to actually pay the thing off?
[* Don't get me started about what this does to the prospects of university lecturers who are not in one of these fields. That could be a whole separate post.]
...and that the proposed way of making up the shortfall is to jack up tuition fees, to be paid via student loans administered by the government and subject to a repayment rate of 9%...
I thought I'd run some numbers.
Some facts:
* Graduates will not be liable to pay back loans until they're making £21k/yr.
* It is likely at this stage that 'early-repayment' penalties would apply, in order to make the system 'fair' by preventing richer kids paying off the loans quickly and thus avoiding large chunks of interest.
So assuming a 30-year term, at a 9% rate, what do we get?
* Using Oxford's cost of living guide, I'm assuming a total loan of £42k (£7k fees + £7k living expenses, for a 3-year degree). Some places will be cheaper, but not so much cheaper, and London will be way pricier. So at 9% over 30 years, the repayment comes to £337.94/mo.
* Those making £21k, and thus just over the threshold of liability for repayment, will take home £1368 or so on today's taxes.
* Average starting salary for graduates is roughly £24k, which under the current tax system means they take home roughly £1535/mo.
* Average salary for 33/34-year-olds who went to university is about £38k, which means a take-home of £2343.
30 years is, of course, most of the working life of these kids. And now they can kiss the idea of affording a house goodbye until they are maybe 45 or 50. How do you even *save* toward a house deposit if you have to live on £1000-1200/month, including rent and council tax and everything else?
EDIT TO ADD: Ok, so I misunderstood the '9% rate' in the THE article. It's 9% of the graduate's gross salary after they start making £21k, at an interest rate that depends on inflation and on how much they make. Which means less in monthly repayments, but who knows how long it will take to actually pay the thing off?
[* Don't get me started about what this does to the prospects of university lecturers who are not in one of these fields. That could be a whole separate post.]