DAVID GROSSMAN: Stephanie Fulford arrives in Leeds
with her parents to check out the university. The journey from school
to college is daunting, Stephanie plans to study Geography so it certainly
wouldn't do to get lost. How her time in higher education will be funded
is rather uncharted at the moment, the government's reviewing the system,
not least because it wants to make sure that by 2010 half of all young
people find their way into college.
The government has a problem
in trying to expand higher education - it's going to cost. Especially since
many of the students it's trying to attract, are from low income backgrounds,
who could potentially need far more financial support. The introduction
of loans and tuition fees has helped to pump more money into the system,
but has also upset a lot of middle class families who have to bear the
brunt of the expense. In announcing this review, the government's hoping
to steer a course through these competing concerns, but almost any policy
change they can come up with seems to risk upsetting somebody.
BARRY SHEERMAN MP: It seemed to me a great shame
that we should immediately start unpicking that because it was a bold decision.
Many of those decisions have to be painful, but they were right and it
seemed to me, you know getting it wrong to go back on it and say, oh well
we've made a mistake, there was no mistake, you had to change the basis
of student finance, no modern, modern government who wanted a first class,
world class Twenty First Century university system, could afford to go
on the old way.
ACTUALITY: "Can I just say a big
welcome to everybody here, who's come to the open day".
GROSSMAN: With more students than
ever streaming into universities, Tony Blair's concerned that they and
their parents don't feel put upon. Stephanie's parents already have a son
at university and the costs are adding up.
BARRY FULFORD: If Stephanie goes away for
a three year course - then we'll be looking at somewhere in the region
of three or four thousand pounds to fund Stephanie plus the thousand pounds
a year to fund Andrew at Birmingham. So in a very short period over five
years, we'll be looking at something in excess of twenty thousand pounds,
possibly, to fund them through university.
GROSSMAN: You can forgive today's
students getting a bit nostalgic abut the way their predecessors were funded.
Up until 1990, students received a means tested grant towards their living
expenses. Today though grants are just a memory, replaced by the Tories
with loans. Students now also get handed a bill for part of their tuition
fees - although the poorest fifty per cent are exempt. This whole system
though is now under review.
MARGARET HODGE MP: We want to ensure that we've
got the balance right. There were concerns expressed and there are continuing
concerns expressed over the balance. Are we asking, particularly people
from lower income backgrounds to pay too much towards their living costs.
GROSSMAN: Students have always
wanted more money, but since the introduction of loans the issue of graduate
debt is of real concern. Students can now borrow up to �3,815 a year from
the government's scheme, a bit more for students in London. Barclays estimate
that last year's graduates have an average total debt of �10,000. That's
hardly small beer and say some a powerful disincentive to staying in education
GORDON MARSDEN MP: Perception is all important
and if you come from a background where no one in your family has been
to university and none of your peer group are going to university, then
the perception of piling up a lot of student debt, even if in fact that
doesn't translate in to reality with repayments, is very important.
GROSSMAN: The government though
is believed to be looking at options that stop well short of reintroducing
universal grants. One possibility is targeted bursaries, perhaps expanding
the current Opportunity Bursaries Scheme worth �2,000 each to six and a
half thousand students from poorer backgrounds.
MARSDEN MP: The benefit of the Opportunity
Bursaries Scheme is first of all that it's there already and therefore
there is a bureaucratic structure which wouldn't have to be reinvented.
Secondly, it would relieve substantially the concerns of students coming
from first generation or disadvantaged or working class backgrounds about
CONNOR RYAN: Well you still have something
like three times as many people from professional families as from blue
collar families going to university, so higher education is still to an
extent a subsidy of the middle classes. If you want to see greater participation
from working class children, as well as seeing improved standards in schools
you need to have some sort of targeted support at those students, rather
than having some blanket reintroduction of the grant.
GROSSMAN: As Stephanie explores
Leeds University, the government's got to consider not just how she and
other students are to be supported, but how they can fund their ambitious
plans for the expansion of higher education itself.
DR NICHOLAS BARR: Thirty years ago we still had
an elite system, where only 5% of 18 year olds went to university. Now,
it's easy for the tax payer to finance a small high quality system. Today
we've got 35% of young people going to university with an aspiration of
a 50% participation rate and that is huge enormous staggering progress,
very warmly to be welcomed, but one of the implications is that the tax
payer cannot be the sole source of finance for a mass system.
GROSSMAN: More or less everyone
agrees that student finance urgently needs a boost. But who should pay
for it and what form should it take, that of course is the difficult bit.
The debate on the answers to those questions is raging at the heart of
government. With the Education Department, Number Ten and the Treasury
all desperate to make sure that when it's published the review reflects
their own individual agendas.
MARSDEN MP: The Treasury obviously are
concerned to avoid open ended commitments to future expenditure which will
cause them enormous problems. Number Ten obviously are alert to the sensitivities
politically, broadly of the issue. Not least because students and their
parents are a vocal political force. And the department, while taking
those points on board is also acutely conscious of its broader objectives,
which Number Ten shares, of widening participation in higher education,
so there's bound to be conflicts of view points.
GROSSMAN: One possible solution
that the government's been looking at to raise money for higher education
is an extra tax on graduates.
SHEERMAN MP: Personally I think there's
nothing wrong with a system that said look, those people that benefit from
higher education have benefited and you know got much better incomes because
of the education they got should, should pay something back and I think
if that's a good principle it should apply to anyone, whether they're..
whether they're twenty- five or thirty- five or sixty- five. Then you know
let's have a graduate tax where something flows back into the system. If
it was ring fenced for higher education investment, I think that would
be a wonderful thing
GROSSMAN: But for the prospective
students looking round the Geography department, having to pay a graduate
tax after university isn't something they should get worried about just
yet. Although at one time keen on the idea, the government is believed
to have reconsidered after an getting an unfavourable reaction in focus
RYAN: I think the problem with
a graduate tax is that once the middle classes start calculating what the
repayments would be, they would find firstly that they're significantly
more than would be repaid under any loan system and fees system combined,
and secondly that there would be no way of paying all the money up front,
so one would have to continue making those payments for a period of perhaps
a quarter of a century.
UNNAMED WOMAN: Hi, I'm Ellie, I'll be taking you
round the campus, I'll show you all the main bits.
GROSSMAN: As most students will
admit the odd hangover is unavoidable but a financial hangover that lasts
forever could make many think twice about taking up a place at university.
The Scots have opted for a limited form of graduate tax, where instead
of up-front tuition fees students have to pay back a fixed amount - two
thousand pounds after they graduate, so long as their income reaches a
BARR: Higher education is then
free at the point of use, so then you have free higher education for everybody
and it's repaid by an income related graduate contribution, that's eventually
switched off. That looks very much like free higher education paid for
out of taxation and that's not froth and bubble and spin, that is real.
Higher education would be free at the point of use, no student would have
to pay tuition fees up-front, they would go to university, they would sign
a bit of paper, it would all be free, they would get their degree and once
they started earning more than a certain amount there would be an add on
to their income tax which would last until they'd paid their agreed contribution.
GROSSMAN: There's plenty to learn
too for Stephanie's parents as they get to grips with student finance.
It seems we're unlikely to move to ANY form of graduate tax soon because,
quite simply the Treasury doesn't like the idea.
MARSDEN: The main problem in terms
of finance is that it would take a very long time for that money to feed
back in to the higher education system, unless the Treasury were able to
or were prepared to give a sort of advance against it, which I think unlikely,
but I think there are other problems with it as well, with the move to
people being in self employment, with greater graduate mobility, with all
of these factors I think you would find in effect it would be a lot more
difficult to collect than people have sometimes thought, and we could end
up with the same problems that we've had with the Child Support Agency,
GROSSMAN: There is an idea that
would actually save the Treasury money. At present student loans just
keep pace with inflation - so what about getting graduates to pay them
back at a more realistic interest rate?
BARR: If the interest rate that
students paid went up by two or two and a half per cent so that it was
equal to the government's cost of borrowing that would close a huge fiscal
black hole at the heart of the present loans scheme. Next year, the student
loans company is going to lend about two thousand five hundred million
to students. Of that amount seven hundred million will never come back
because of the cost of the interest subsidy, so to put it another way,
if next year students paid a slightly higher interest rate, equal to the
government's cost of borrowing, it would be possible to spend seven hundred
million pounds on grants or on other measures to promote access and the
same would be possible the year after that and the year after that.
GROSSMAN: But would reform of student
finance on its own make any difference - some Labour politicians argue
that the whole review is something of a distraction when it comes to attracting
more students to university particularly those from poorer backgrounds.
They argue that the real barriers to higher education are well before
aged eighteen and it's these problems that urgently need attention and
SHEERMAN: All the evidence my select
committee took in the last year in terms of looking at access to higher
education and retention in higher education could not find hard evidence
that students on lower incomes were being put off coming in to higher education.
Now a lot of people said you will see it soon, the statistics will start
showing, but I have to say still today I haven't seen convincing evidence
that this has been a bar.
HODGE: We've got to intervene when
people are very young to encourage them to come in to higher education
and to raise their aspirations. There is this terrible statistic that I
always quote from some research that was done which showed that over 40%
of young people from the lower socioeconomic groups never think about university
as an option for them, during their school years. That means their teachers,
their friends, their family, all the influences on their lives don't put
university as an option for those individuals, because of their background
RYAN: I think the issue here is
can they successfully introduce the sort of reforms that are necessary
in order to increase opportunities, in order to allay some of the concerns
about the existing system, but at the same time make sure that there is
sufficient money for higher education?
GROSSMAN: As Stephanie and her
family head home it's an uncertain time for her - she's got exams to come
and has still to decide which if any university place to take up. The
review of student finance probably comes fairly low down her list of worries
at the moment but what the government eventually decides could have a lasting
impact on her and thousands of other young people for many years to come.