Don't Eat With Your Mouth Full

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Q. When is a loan not a loan?
(A. When it's with friends, of course.)

From this article on university funding, a quotation from Nick Hillman, David Willetts’s former chief of staff and "one of the architects of the coalition’s higher education policy".

Hillman believes that there’s something disingenuous about the humanities’ complaints. “What the humanities are saying is that for the first time ever, history, for instance, is getting no money directly from the taxpayer. And they say that this means that the government doesn’t care about the humanities, which is not true. Because those £9,000 fees that are being racked up, many of them won’t end up being paid [because the students won’t earn more than the threshold where repayment kicks in] and so the burden will fall on the taxpayer in the end. The idea that there’s no public subsidy for historians is untrue, it’s just not direct any more.”


I don't think it's the humanities being disingenuous here! The way he talks, you'd think the £9,000 fees were never intended to pay for education at all, despite what was said by the coalition when they were introduced. According to Hillman, they're an indirect route by which the Government pays.

But hang on! If the Government was going to pay anyway, why go to the expense of setting up a loan company, pushing unpopular legislation through Parliament (on the grounds - specious, as it now seems - of economic necessity), and employing thousands of civil servants and various other go-betweens? Why not just, you know, recognize that producing educated graduates is an excellent investment for the economy and good for society as a whole, and fund education in the first place? (The fact that Hillman regards education spending as a 'subsidy' is very telling, I think. Watch out for the 'S' word creeping into other areas of discourse - health for example.)

There are two possible explanations, I think, by no means mutually exclusive. The first is that the architects of the coalition's education policy - such as Willetts and Hillman - are massively incompetent, and put in place a system that could never deliver the funding it was intended to. The other is that they wish to keep young people in debt, to ensure their political docility through their twenties, thirties and forties. The first is I think by now unarguable; the second looks increasingly so.

This way does mean that half of the money _is_ paid for by the people who are being educated, and the people that pay are the richer ones.

Of course, this could have been done as a graduate tax, or a general tax, if the Conservatives weren't opposed to the T word.

A way of collecting debts that only gets back 50% of what was lent is a pretty good example of incompetence, I'd say.

Personally I feel that the argument for state-funded education holds at tertiary level as much as it does at primary and secondary - because society benefits financially (as well as other ways) from having gradates. A rise in the top rate of income tax - or even a toughening of the 40% tax relief that higher rate earners get on pension contributions, for example - would be good ways to fund it, and would fall very largely on those who are reaping financial benefits from a university education.

Failing that, a graduate tax is certainly a more attractive possibility than fees - as long as it applies to all graduates and not just new ones (with some relief for those who have already paid fees under earlier versions of this scheme). I don't see why I or David Cameron should be exempt, given that we both benefit from our university education to this day.

"A way of collecting debts that only gets back 50% of what was lent is a pretty good example of incompetence, I'd say."

I completely disaagree - when they are not intended to be collected in the first place. Not all debt is created equal - and using the form of debt to make some people pay for education, while others don't, don't seem _entirely_ unreasonable to me.

"society benefits financially (as well as other ways) from having gradates"

I've never been convinced by this argument. Graduates have largely earned more, because it's used as a filtering system - but that doesn't mean that tertiary education in any subject actually benefits society financially. I'd love to see some proof that it does so - but I never have done.

they are not intended to be collected in the first place

That just lurches from the first of my two explanations to the second, still less defensible one. You appear to be suggesting that the government is deliberately putting tens of thousands of citizens under the burden of £40,000 or so of debt apiece (once living expenses are taken into account), despite knowing - even intending - that it will never be paid off. That's not an education funding system, it's an immoral system of political control. Cripes, that way debt bondage lies! (It also encourages an extremely unhealthy attitude to debt generally, I think.)

As for whether graduates benefit society, the best way to consider this might be to look at a few of the more prosperous countries without any formal system of post-18 education, so as to make the comparison. Perhaps you could name a few of these places that have no university-educated scientists, engineers, doctors, lawyers, writers, etc., but still manage to thrive financially?

"appear to be suggesting that the government is deliberately putting tens of thousands of citizens under the burden of £40,000 or so of debt apiece (once living expenses are taken into account), despite knowing - even intending - that it will never be paid off"

Yes. That's exactly the design - that the poorest will never pay back any of the fees, while the richest will pay it back eventually, but with significantly higher interest rates, and the majority in-between will pay extra on their taxes for 30 years. It's basically a reasonably progressive graduate tax with the small, but important flaw that the very richest can eventually repay theirs entirely.

Which is why Labour's proposed changes infuriate me so much - their changes mean that people with starting salaries over £35k will be able to pay their way out of it, which is solidly regressive. Whereas the solution they should have gone with is to say "It's just a tax - everyone who graduates will pay it, and nobody is to be allowed to pay it off" which would be more progressive.

(See here for more details.

And I agree that dentists, lawyers, engineers, etc. benefit society. But a large quantity of degree holders are not in these areas. And if we're looking at purely financial gain then there's no evidence that most areas of, say, the humanities bring financial benefits. (There are other benefits to society beyond the financial, of course, and I wouldn't want to make it so that only people from rich salaries could afford to be historians.)

Yes. That's exactly the design

I'm sorry, but if you can't see the dishonesty - actually, the wickedness - of a policy designed to ensure that millions of people spend most of their working lives burdened with an unpayable debt, I don't know what I can say to convince you. That these people are the ones on the lowest pay only compounds the offence. It's simply disgraceful.

And I agree that dentists, lawyers, engineers, etc. benefit society. But a large quantity of degree holders are not in these areas.

Just to note - that's quite a different argument from the one you made earlier.

It's true that it's trickier to establish the economic value of non-vocational degrees, because they have a high dispersal factor: i.e. students go into a far wider variety of jobs from them. Consequently it's not as easy to track the economic value of skills such as research, the construction of arguments, the assessment of evidence, effective communication, etc., which are typically developed in such degrees. I'm not sure what kind of evidence would convince you that such skills do have value (presumably the fact that many humanities graduates hold key posts in the world of business and industry isn't enough, for some reason) but since I'll be leaving for Japan early in the morning I haven't the time to gather the evidence for you. Perhaps you could hire an unemployed humanities graduate for the job?

"Im sorry, but if you can't see the dishonesty - actually, the wickedness - of a policy designed to ensure that millions of people spend most of their working lives burdened with an unpayable debt, I don't know what I can say to convince you."

Neither can I. But I'm very willing to have you try.

All I can say is that in my experience people with student loans (and I had one myself for many years) do not think of them as "debt" in that sense. It's something which triggers a higher rate of tax, which they just don't actually think about 99% of the time, as it comes out of their pay before they see it.

Oh, and I am _totally_ in favour of people taught to think, construct arguments, etc. I think we should have them doing so much earlier in life than university, in fact. And that it shouldn't take three years to do so, or need to be mixed in with teaching them about art history at the same time.

All I can say is that in my experience people with student loans (and I had one myself for many years) do not think of them as "debt" in that sense. It's something which triggers a higher rate of tax, which they just don't actually think about 99% of the time, as it comes out of their pay before they see it.

Wow, that's a massive difference between the UK and US systems. I think about my student loan payments and how old I'll be when I finally get rid of them and how else I could use that money all the time. Particularly when I have to wrestle with the not-very-helpful agencies in charge of them.

In the UK you generally _don't_ pay off your student debts. The interest rates are set at inflation - so if you're lucky enough to have spare cash you're much better off doing something else with it...

See here for more:
http://www.moneysavingexpert.com/students/student-loans-repay

That is very different. In the US, student loans are the only debt that can never be put off. Even going into bankruptcy won't clear them. The spare cash is what you have, if anything, after you make your loan payment.

Whereas UK ones are paid for straight out of your pay (along with taxes), are lower when you earn less, and are torn up after 25 years.

I don't like the student loan system over here, but they are a _lot_ less toxic than US ones, which seem to be the worst of all worlds.

For those who reach the requisite threshold (I think about £21K at the moment) it means an extra income tax of 9% on income earned above that threshold) - something no major party here would consider imposing on anyone else, especially not graduates of an older generation. There really is a war on the young in this country.

Edited at 2015-03-29 06:43 pm (UTC)

I'm not going to try. As to the dishonesty part you've virtually admitted it yourself (claiming that it's a tax disguised as a loan); and as to the morality of deliberately putting people in a position of unpayable debt - well, I don't propose to explain why that's wrong here. Google "debt bondage" and "payday loan".

Oh, and I am _totally_ in favour of people taught to think, construct arguments, etc. I think we should have them doing so much earlier in life than university, in fact. And that it shouldn't take three years to do so, or need to be mixed in with teaching them about art history at the same time.

As far as economic value it doesn't need to be mixed in with art history. There will of course be people who use art history in an economically productive way directly; ás for the rest, I refer you to your own remarks above about the wider value of such studies to society. Otherwise, this is a fairly insubstantial argument: of course people should be introduced to these skills before university, just as they should be (and are) introduced to maths and physics before university. In neither case does this make university-level study redundant.

Oh, and I hope you enjoy Japan/find the trip useful/both depending on your reasons for travel.

Thanks - I'm going to put the finishing touches to my packing now.

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