Should Students Pay Tuition Fees

There is discussion at the moment about whether student tuition fees should be increased to £5,000 but I think people should also be considering whether or not they are reduced, possibly even to 0. People argue that since it is the student that gains from earning more from their degree then they should be the ones who pay for it. However, there are three problems with this:

1. The students don’t have the money to pay for their degree when they are studying them.
2. Because the tax system is progressive then the proportional increase in taxes paid is much greater than the proportional  increase in the taxes paid. Not to mention the fact that in absolute times the cost of the tuition fees is  repaid many times over in the additional taxes that a person earns.
3. The economy as a whole gains from a more highly educated work force since they are more productive in working in industry etc.

Point 2 is the most important. If we suppose that the level of income  to pay 40% tax is £30,000 and that there isnt a tax free allowance (a tax free allowance would make the system more progressive and therefore strengthen the argument) and all other income is paid at 20%. If our student was only going to earn £30,000 before they would pay £6,000 but if going to university doubles their income to £60,000 they would now pay 3 times as much tax, £18,000, even though they have only doubled their income. As a result the percentage pay off to the government is greater than it is to the student and the government should therefore contribute to the costs.

How they Should be Paid For

The problem if we decide that the government should pay some or all of the tuition fees is how it would be able to afford the increased fees. What  I think is the est method would be to reduce the number of university places available or at least have a smaller number of them which the government pays. This would not only reduce the bill which the government would have to pay for the fees but it would also increase the value of degrees since only a small number of people have them.

If the goverment wanted to avoid the cost of paying for the tuition fees now and only pay for it when they were receiving the higher rates of tax from the graduates then they could allow for the tuition fees loan to be offset against the graduates income tax at a certain rate a year. Say for example the graduate had a tuition fees loan of £10,000 and was paying £5,000 in tax in a given year then the tax could be reduced to £4,000 to allow the graduate to pay off £1,000 of their loan.

Why the number of places could be reduced

The purpose of higher education for most people is one of the following:

1. To provide a higher level of education so that the students can perform a specialised job, eg) medicine or engineering
2. To enable students to differentiate themselves from each other and demonstrate a level of intelligence which will improve their chances of employment (whether they actually use their knowledge or not)
3. In order to go on to do a PHD and research.

The UK economy only benefits from people in group 1 since they actually need their degrees to do their job. People in group 2 use their degree to prove their ability in order to get a job but dont actually use anything they have learnt to do the job and could therefore do it equally as well had they not spent 3 or 4 years studying for it. It seems the majority of people eventually end up in group 2 even if they start off in group 1 since they may find that they are actually better at something else or they can earn more by moving into management, this is also reinforced by the fact the economy isn’t perfectly aligned with our academic subjects.

Since only a fraction of the jobs lie in group 1 we don’t have to worry that a cut in student places would damage the productivity of the economy and since group 2 is about differentiating people it doesn’t make sense to have too many people doing a degree else they wont be any different. Over all the number of students could easily be reduced without damaging the economy or peoples incomes.

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