Evidence about how prospective students are responding to the rather shambolic university fee reform in England is trickling in. The debate over the evidence has, of course, already started. So say it is early days, others say it is showing the beginnings of a trend. What is clear, however, is that the UCAS data shows that applications are down significantly (15.1 per cent according to the THE and 13% according to the BBC). This early data is ‘historically unreliable’ (THE), but I think there will be more people surprised if this does not indicate a trend than if it does.
The universities minister Willets, of course, holds the party line. The UniversitiesUK takes a rather more cautious view, tying the success or the failure of this grand social experiment to the still-to-be-determined reaction by prospective students. Professor Eric Thomas, the President of UUK, argues that if people find out how the fees work, there should be reason not to apply to university to do a degree.
Taken as they are, the figures do seem to support Professor Thomas’ view. The facts are he following (caveat emptor! this is for information purposes only):
- the student pays nothing upfront or during their studies
- payments start after graduation (or after dropping out, presumably) and only when annual income passes the £21,000 limit
- of the annual gross salary in excess of £21,000, the graduate (or drop-out) pays 9 per cent as student loan repayment
- the payments continue until the loan is repaid back or for 30 years, whichever is sooner
- whatever balance remains at the end of the 30-year period will not have to be paid
On the face of it, this does not seem like such a bad deal. There are no upfront payments, and whatever the payments will be in the future, they will be predictable.
For example, if the graduate earns £30,000, the amount in excess of the £21,000 limit is £9,000. 9% of this £9,000 is £810. So the graduate will (only?) need to pay this amount, is monthly instalments of £67.50. Assuming that this £30,000 is a career average for the 30-year repayment period, the graduate would never have to pay the whole amount, paying back the capital of the students loan (if we assume it is £36,000) would take more than 44 years. And then there are is the interest, and interest on interest and the interest on interest on interest (I am sure you see the pattern here).
If the graduate is supremely gifted, lucky, well-connected or wins the Apprentice (or some combination of these factors) and earns £100,000 per annum, the amount in excess of the limit is £79,000, which translates into payments of £7,110 per year or £592.50 per month. At this rate, the loan is paid back very quickly, in some 5 years. Even the interest will not have much time to add onto the capital that much.
So, all in all, the system looks quite fair, in the Tory kind of way. If you earn a lot, you get rid of your debt. If you do not earn that much, you do not have to pay it all back.
What remains unclear, and what no one, still, seems to be discussing, is the effect of the debt burden on the graduate’s ‘fiscal health’. Should they wish to buy a house to live in, how will the debt be treated? Since the cost is individualized, it would make sense, from the lenders’ perspective, to count the debt amount against the individual in question. The £36,000 debt, probably considered to be a ‘good debt’ in some sense, will reduce the mortgage the individual is able to get. Which in turn reduces the amount of money they can pay to the seller of the house. It seems that future graduates will less space, house prices have to come down, or people will be tenants in rental accommodation all their life. The latter two options would be rather anti-Thatcherite effects for a Tory policy.
Perhaps most importantly, though, this shift will bring in, or accelerate, the rise of the new kind of power relationship Maurizio Lazzarato has identified, building on Foucault’s work on modalities of power. This power relationship is that of debtor and creditor. We have already seen how this modality of power has challenged the sovereignty, the power of the state. Under the pressure from creditors, Greece has lost much of its sovereignty, and Italy has brought in a government comprised of technocrats, people who are experts not in democracy but in economics. In UK, or at least in England, the debtor-creditor power relationship will be (further) individualized through the university fee ‘reform’. In England, the idea seems to be to offload the sovereign debt problem to the individual. The dynamic will be different, but the principal power relationship is the same. The power relationship will bring in new realities, as the new intensifications of power tend to do. We know little of those new realities, but we a headed toward them.
The Managementalist 