Why shouldn’t medics and engineers pay higher fees?
According to Lord Browne’s report into tuition fees a degree is now worth ‘just’ £2,500 a year to ‘graduates’. This equates to £100,000 over a lifetime, after tax. This figure, however, doesn’t include student debt. So, is university worth it, from a purely financial point of view when student debt is included?
Yes.
On average, students graduate with £20,000 of debt. This is repaid when your earnings reach £15,000. Effectively, as a graduate you pay a 9% graduate tax on all earnings over £15,000 until your student debt is cleared. So, let’s say you’re earning £22,000 a year in your graduate job, you will be paying back £630 a year. In fact, until you’re earning £43,000, the ‘graduate premium’ will outweigh any student debt repayments.
‘Aha!’, the critics may snarl. ‘So the current system penalises successful graduates?’ Well, no. It’s difficult to earn £40,000 a year without degree. Try becoming a doctor, lawyer or engineer without a degree. Their graduate premiums are of course higher. Plus, they pay back their student debt quicker.
The fact is some degrees are worth more than others. Putting an exact figure on how a much a ‘degree’ earns you is pointless. Engineers and medics, for example, will nearly always earn more than history graduates. My degree has less of a premium as it gives me fewer valuable skills. I can’t build bridges or perform surgery; I can sift through lots of data and read quickly.
How fees are paid for should reflect this. Expensive degrees, with lots of teaching like engineering and medicine, should have higher fees paid for by a graduate tax on high earning graduates. It’s unfair that arts student have to pay the same as science students for considerably less teaching and resources. Students with these more expensive, skills based degrees tend to earn more as a result. They should thus pay enough fees to cover the actual costs of their degree, if they can afford to. Should doctors and engineers earning large salaries not chip in a little extra for their education? If not why not?
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"It’s unfair that arts student have to pay the same as science students for considerably less teaching and resources. Students with these more expensive, skills based degrees tend to earn more as a result."
… But if these art degrees were cheaper the problem of fewer and fewer people taking up science, engineering and maths places would be accelerated. Arts degrees should not be subsidised as heavily as science degrees, this would sway way people into areas of work that are in need of graduates.
Arts degrees aren't subsidised as heavily as science degrees as it is. Encouraging more into science is a problem. Better teaching in secondary schools would help. But that's a whole other topic…
charging more for science degrees a bad idea, I mean half the time it doesn't matter which deree you have to the career you go into, a person with an arts degree can go into a high earning graduate job if they good enough, like the economics and finance students getting jobs in the city where they could earn more money in one bonus season then an engineer will do all year!
@Imran. It's not about how much they earn, but how much their degree costs – which, in the case of engineering, is a heck of a lot more than £3000.
Of course the net benefit of to society, the economy and the nation as a whole of most science, engineering and medicine degrees is inarguably higher. First if we examine engineering, Britain already produces far fewer engineers than either France or Germany, and we suffer as a result, in terms of developing new technology that will potentially bring economic benefits, create more jobs, and provide additional tax revenue later on. In a nation that is far too reliant upon financial services, and that should be looking to diversify more, this is exactly the kind of thing needed.
This applies equally to the biotech, chemical and pharmaceutical industries- three areas where we still remain a world leader. For instance in the last year 3 new kinds of immunological drug have been developed in Britain, each worth ~£300 million per year each, a sizeable proportion of which will no doubt flow to the treasury. In addition to this they potentially will save and improve many lives. This is exactly why we should be doing more to encourage children to consider careers in this area and not deter them from what frequently viewed as "too hard".
The argument with regard to medicine is a different one, admittedly there are already sufficient numbers of applicants, and probably would be still should fees be raised. However, it is a profession that is already dominated by the public and privately schooled middle classes. In a profession that should be both representative of the population as a whole, and attracting the most talented youngsters possible in order to further medical science. Raising fees further would see even fewer children from lower income backgrounds enter medical school and this is clearly undesirable.
* A brief side note- medics in Scotland already pay higher fees- but these are lower than those charged in the rest of the UK anyway, and so it is not such an issue.
there is this often repeated myth that engineers are high earners. hopefully the engineers of the future who read this wont be disappointed. but from my experience, i did an engineering degree in the 80s. of the 30 or so students i was with, 25 or so made it to the finals, and about 3 became engineers despite the other often repeated myth that this country needs more engineers. those who became engineers didn't earn much more than they would have for not getting a degree. i'm one of the few who 25 years on has stuck with it as a career. i took four years off working in the finance sector and made enough to dent the mortgage, but am now working on less than half that as an engineer again – at £20/hr. it is a good job, rewarding in other ways and employment is fairly consistent, but the money is not what you may think and in the uk never will be.
Medics and engineers earn more and therefore end up paying more in taxes. If Britain churns out less graduates with the ability to work in high-skilled technical industries then this will result in less tax revenue for the government, which means less money to spend on public services. Public services include things like…..education!
European (such as Scandinavian) countries that don't have tuition fees tend to have higher rates of income tax. Therefore paying 9% extra tax on earnings above £15,000, which is the reality of student debt, is in fact quite similar to situation in these countries.
All degrees are subsidised by the government to a certain extent. If we're going to introduce differential fees by subject I'd argue the opposite to your position. Arts degrees are least deserving of subsidy as Arts graduates contribute least to the economy.
I'm in favour of simply scrapping tuition fees.
Labour's case has collapsed further with the latest down scaling of the graduate premium from the claimed £400k.
and has anyone ever heard an explanation for higher education minister Bill Rammell's claim that without top-up fees we'd need "3p or 4p" added to the "standard" rate of taxation. I make that £15 bn or about 10 times what top-up fees actually net.
The £70 a year increase in tax (per taxpayer) that would be needed to replace tution fees is easily affordable even in these times.
It's true: abolishing top-up fees would cost only a few billion. But this isn't going to happen; universities need more money, and the government ain't going to give it. It has to come from somewhere, and the fairest way is to take it from who benefits most from their degrees: graduates.
What I should have pointed out is that I believe that all students should pay more, in general. Education should be free at the point of access, but those who can afford to pay for it (graduates) should do so.
You're right, society gains a net benefit from high earning, skilled graduates. The amount of extra tax they earn, however, won't redress the shortfall between the cost of their degree and what they paid. If you can afford to pay the full cost of your degree, you should. An engineering degree will probably earn you an extra £500,000 over your lifetime, compared to many other degrees. Is it that unreasonable to ask them to cover more of the cost of the qualification that gave them £500,000?
It costs an international student £12950 per annum to study engineering at my university, and its a four year course, and I believe this represents the full cost of the course, thats £51800 in total. Now an UK student (non-Scottish) student pays £1820 per year, 7280 in total. The difference between 51800 and 7280 is £44520. Now if the engineer doees earn 500K over the course of their lifetime and pays tax on it even at just 10%, (although obviously it will be higher) they will already have paid back more than it costs to train them. In essence they already do cover the cost of their qualification.
In contrast, an arts student, especially at less prestigious universities outside of the russel group, may earn no more than the national average over the course of their lifetime, having cost even 10K extra to train they are costing the state considerably more than the engineer, and as such it is actually the engineer/scientist/medic that is subsidising their degree.
Higher education funding makes up 2% of the budget. 500,000 extra over a career = 200,000 extra tax. 2% of 200,000 = £4,000.
This means that for the £51,800 universities spend teaching engineers, they get £4,000 back (plus around £13,000 in tuition fees over four years in England). That's the problem.
British universities are financially fucked. They've just had another £600m knocked off their budgets. They need some more revenue somehow, and it looks like this is going to have to come from students. Would you not become an engineer if you looked at only earning £460,000 extra, rather than £500,000 extra?
I wouldn't become an engineer anyway…I'm not a massive fan of maths! But do you think the average 17 year old from a lower income isn't going to think twice about a 50 grand price tag or that it isn't going to influence their decision? Anyway by that logic an arts student paying perhaps no more tax than average…2% of nothing being well nothing, is still a much bigger drain. The point is that the economic benefits of training more engineers means the government gets that extra 200K…which is a good return on a 50K investment by any measure- the hypothetical engineer has made their training worthwhile. The fact that the government then sees fit to waste cash on PFI, foreign wars and a massive bank bailout is really their responsibility (and I'll wager a fraction of any of these would cover the funding gap).
The new scientist ran an interesting article several months ago about how an investment in science and technology may be the best way to stimulate an economy, pound for pound. Following on from this Obama has announced the largest ever science investment increase worth $70 bn per year! At the same time our government cutting higher education funding is truly mystifying- why cut from research budgets when its an area that will bring benefits. In a week in which Britain recieved 3 nobel prizes, one in each of the sciences (2 of which were biologists!), it is a shame that the government is undermining future success in this area. Details of the Obama plan here: http://www.newscientist.com/article/dn17037-obama...
I forgot to mention that my solution would be to scrap all those extra university places and plough the funding back into research. I mean seriously that 50% target….what is the point….in what alternate reality do we need that many graduates? NULAB are simply using universities as a holding pen for the youth in an attempt to keep unemployment down.
Duncan,
you say "the government ain't going to give it."
why not, as I said its easily affordable – if students and recent graduated were to vote en masse for a party who were against tuition fees then they would. Remember how Blair said he was scared to raise tax on flights b/c it would cost votes.
and what is fair about graduates earning as little as £15 k having a massive tax hike ?
Why not? Because not enough people give a crap. On the whole, people see students as a bunch of whining middle class kids, who are thus extremely undeserving of any extra money. If the government suddenly had an extra 2-3bn to spend, it would put it into: primary/secondary education, pensions the NHS or the military. Why? Because investing in these wins votes. Investing in universities is a political luxury, not a necessity. (I'm not saying this because I agree, but rather because that's the way it is).
It's not a massive tax hike. The gap between income tax at £30,000 (20%) compared to £40,000 (40%) is a big jump. 9% extra until you've paid off what is still (compared to N America) a small debt is not much.
James,
In general I'm in favour of fewer places, higher fees and more bursaries to increase access from lower earning families. If you can afford to pay more you should, if you can't you shouldn't. 40% in HE, as we currently have, just means that more jobs now ask for a degree rather than actually needing one. 50% is just going to make this situation worse.
You're missing the point that arts students cost a lot less to educate, even if they do contribute less to the economy. The problem is not for the economy as a whole – subsidising future high tax payers makes sense – but the financing of universities, who are getting shafted with the current system.
Duncan
you really think investing in the next generation of doctors, scientists and other professionals is a "luxury".
though your "give a crap" point has some truth in it … to a large extent those who will be affected by the "war on students/graduates" are university age or below (some not even born) so they dont' have votes. Its cynical. I'm sure thats what motivated this Labour policy – not the effect on the country of having its professionals start their working lives 10s of £1000s in debt just to net a couple of billion.
having said that top-up fees were never put to the country as an election option. In the 2001 election Labour pledged not to introduce them and then did it anyway
oh so an extra 9% tax on already indebted graduates earning as little as £15k isn't a "massive hike".
reminds me of Rammell saying it was £10 a week and less than a CD ?
So if that isn't a massive hike it makes my general taxation alterantive a miniscule increase ? Recouping the £2 bn is just £1.20 – £1.30 a week and would be paid largely by people earning a lot more than £15k.
"you really think investing in the next generation of doctors, scientists and other professionals is a "luxury"." Nope, not what I think at all. I said it was, at the moment, a 'political luxury'. People want to see their money spent elsewhere, hence Darling taking 600m (5%) off the HE budget – because that will lose him the least vote.
"So if that isn't a massive hike it makes my general taxation alterantive a miniscule increase?" You're right, it would be a miniscule increase. But I would feel uncomfortable knowing that someone who works on a checkout is paying extra so I can ponce about studying history for three years. If you can afford to pay for your university education, you should. Students can't afford to, but graduates can – particularly high earning ones, who I argue should pay up as much as they can (reasonably) afford.
The principle of the current system is sound: nothing up front, interest is adjusted only for inflation, and only paid back if it can be afforded. It needs some tweaking, but I think those three basic tenants make for relatively fair higher education funding.
"If you can afford to pay for your university education, you should. Students can't afford to, but graduates can – particularly high earning ones, who I argue should pay up as much as they can (reasonably) afford.
The principle of the current system is sound: nothing up front, interest is adjusted only for inflation, and only paid back if it can be afforded. It needs some tweaking, but I think those three basic tenants make for relatively fair higher education funding."
Nail on the head there
Thank you, David.
by "polital luxury" you mean the public won't buy that a miniscule increase in tax is needed to educate the next generationof professionals. I don't think so .. I think that case can be made. don't forget Labour has to spin to get top-up fees accepted (the "3p or 4p on tax" claim) – I think the public are far more likely to rebel against Labour's plans to develop WMD (aka trident) is they are made aware of the facts
and tax funded university tuition does not mean the checkout girl pays more – Blair tried to spin that one when he claimed "poorly paid hospital workers" would lose out – tax increases will be aimed at those who can afford it
"If you can afford to pay for your university education, you should …. only paid back if it can be afforded"
So you'd not set the repayment level at £15k where it clearly can't be afforded. So you'd increase the repayment level from £15k to, what ?, around £30k ?
No, I'd keep it at around £15,000. Someone earning £16,000 pays £90 – 90 quid! – back over a year. You can't afford £1.75 a week when you're on £16,000? That's not even a pint! Clearly can't be afforded? Please explain how that isn't affordable.
"afford £1.75 a week when you're on £16,000? "
or £3.50 if you'er earning a princely £17k or £5 when earning a fortune of £18k or £500 a year when earning £21k – these sums are right aren't they ? its 9% on earnings over £15k
you make £1.75 seem like a tiny difference …
explain why its you say its a tiny amount for a indebted graduate to pay when earning as little as £15k struggling to pay rent, transport and food but when I want to have those on high salaries to pay £1.30 or so a week in order to scrap tuition fees you then say its a "political luxury"
oh by the way its occured to me the checkout girl (or man) you were talking of earlier (and who presumably you don't want to pay £1 or so a week for tuiton fees even though you say its affordable) is often a student !
Those sums are correct, well done. If you think £3.50 a week is a lot at £17,000, then I just can't argue you with you.
cool
no lets do it your way …
lets ask an extra £3.50 a week = £182 a year from each of the UKs 30 million taxpayers (not just those earning as little as £17 k and indebted from being a student )
I make that £ 5 1/2 billion a year and as you say ( you do say this don't you ??) we'd barely feel it !
no one would complain over such a miniscule rise in tax !!
yet that would pay for tuition fees nearly three times over !!!
"cool
no lets do it your way …
lets ask an extra £3.50 a week = £182 a year from each of the UKs 30 million taxpayers (not just those earning as little as £17 k and indebted from being a student )
I make that £ 5 1/2 billion a year and as you say ( you do say this don't you ??) we'd barely feel it !
no one would complain over such a miniscule rise in tax !!
yet that would pay for tuition fees nearly three times over !!!"
Okay, let's talk about your £3.50 poll tax. One, it's regressive, as it taxes everyone the same amount – I thought you were in favour of taxing those who could afford it more. Two, why should someone on a low income pay extra for me to go to university and study history? Why should they pay for something which gives them no benefit? People would complain, and they would have every right to.
Making graduates pay as much of their tuition as they can is the only fair way of doing it, as they are the ones who benefit most and who get the extra money in the long run from being more qualified.
" I thought you were in favour of taxing those who could afford it more. " I am ok I could have said £3.50 from each of the UK's taxpayer "on average" but I assumed that was obvious – you obviously appreciated thats what I meant !
"Two, why should someone on a low income pay extra for me to go to university and study history? "well I've already dealt with that one too – those who earn high wages should pay higher tax – not those earning £17k even if they did go to uni.
"People would complain" would they ??? come on, you've just said no one would complain at an extra £3.50 a week – even if earning as little as £17k – - make your mind up !!!!
"as they are the ones who benefit most " well apparently not according to Lord Browne – not financially anyway !! very little profit – £100k over a lifetime minus inital debt and factoring in net present value. Why should they pay for something which gives them no benefit? "many graduates doing valuable work that benefits society (answering that question) do not receive massive financial rewarsd !!__
£100,000 return for a £20,000 investment? Not a bad return. And that's the average, which necessarily includes bad degrees from bad universities. If you go to to a good uni and get a good degree, you're likely to earn much more.
"come on, you've just said no one would complain at an extra £3.50 a week – even if earning as little as £17k – - make your mind up !!!!" I don't mind paying £3.50 a week for something I've used and benefited from. I would mind paying £3.50 a week from something I haven't used or benefited from. Do you see the difference?
not a bad return – well not a good return … especially when you factor in that many of those pounds will be earned at the end of a career (net present value) and so worth less.
and a far cry from the £400 k Blair claimed in 2003 – how much further will it fall ?
even if the premium stays at £100k if you factor out doctors and lawyers and accountants its likely that many graduates doing worth while jobs with worthwhile degrees get no financial return at all – quite contrary to your claim that having a good degree means a good salary ("If you go to to a good uni and get a good degree, you're likely to earn much more.")
"I don't mind paying £3.50 a week for something I've used and benefited from"
good and many people would agree that they benefit from the UK having well trained professionals even if not graduates themselves.
whereas, as I say, many graduates have not benefitted financially from having a degree so they will "mind paying £3.50 a week from something" they haven't "benefited from"
not a bad return ? not a good return either when you consider its over a career and doesn't factor in that the pounds earned in the future are worth less than those now ( net present value) – whereas the debt is now.
and £100k is a far cry from the £400k Blair promised in 2004.
remove lawyers+doctors+accountants and I doubt there's any financial advantage at all.
certainly the graduate on £17k has not much financial advantage yet you'd make him/her pay ! and he may well have a good degree and be doig a worthwhile job – you seem to think only of a good job as being a well paid job !
yes I'm sure many taxpayers realise they "benefit from" the UK having a well trained workforce and will be happy to pay for it – especially those who earn £100k *in a single year" as opposed to an alleged extra £100 in a lifetime.
sorry didn;t mean to post twice – didn't seem to appear first time – should be patient