A Taxing Education

The CBI says that students going into university should pay higher tuition fees, more interest on student loans and face greater means testing for grants. The president of the National Union of Students, Wes Streeting, dismisses the report as "unsurprising" given that it comes from a group of top business leaders and university chancellors - fat cats, as the NUS calls them. I had to laugh out loud when I heard him say this on television; this coming from the president of the National Union of Students.

He says that this will make students worse off, but for most it will not. Tuition fees are paid for with loans - so higher fees are not paid for by students, but graduates. Equally, higher interest on student loans is only paid after you leave university.

Not that I support the CBIs proposals as such, I would like to see an end to all government funding of students. Can hardly accuse me of bias, right? This would have three advantages

1) Ending government interference in universities, allowing better quality higher education of a kind more genuinely in demand by business and academia to flourish

2) Making students face the actual costs and benefits of the decisions they make, ending the phenomenon of students going to university simply for the 'lifestyle' or to secure worthless 'joke' degrees - creating a more economically efficient situation with more university places for those who will genuinely benefit from the investment of getting a degree, and more workers in the labour force from those who do not really need to go to university

3) End the situation we have today where people who have never been to university or who paid out of their own pocket to go abroad are seeing money fly out of their pay cheques to fund those who go today, and create one where the people who use universities are the ones who pay for them

4) Encouraging saving through parents saving more for their children's educations (rather than that money being robbed in taxes) which encourages investment and benefits the economy

Some people worry, however, that such a system would mean that only rich children can go to university and that even smart poor kids won't be able to afford to go. Of course, there are a number of options one can take in order to go to university in the absence of government funding. Firstly, as mentioned, parents can fund their own children. This is the only option that might not be open to poor children, since their parents will find it more difficult to save. The second option is to secure a scholarship from the university, a company or a charity. Thirdly, student loans, and fourthly one can work at the same time. Lastly, would-be students can enter the workforce full-time and save for university, then go in a few years time.

Some would still say that these options are not convincing alternatives to government funding; surely some smart, poor kids still won't be able to go? Well, take America for example. The United States does not fund university study for students, they must use one of the above options to get a degree. Of those who leave high school ready for college (i.e. with sufficient qualifications and the desire to go) 9% are black, and 9% are hispanic. We know that blacks and hispanics are poorer than whites and Asians, so we would expect them to make up a much smaller proportion of college students. In reality, the figures are mirrored almost exactly with the percentage of first year college students who are black or hispanic being 18% (/ 2 = 9%). This suggests that pre-existing wealth is not a significant factor in whether someone can go to university beyond the tendency of rich children to do better at school than poor children - something which is not solved through government funding of higher education students (16% of the US population is hispanic, 14% is black). It suggests that the five options listed above are indeed sufficient to allow smart poor kids to get a university education and that there is actually no need for government to pay. By 'pay', of course, I mean steal.