Deal Breaker

The new government has wasted no time in searching for ways to save money and just about every element of government spending has come under review. At the heart of those spending cuts, a row has erupted over Universities and the amount of funding that they get.

In his first round of savings, the Chancellor announced the university funding would face cuts. There have been varying estimates of the result of these cuts, government sources suggest that 10,000 places will be cut, the National Union of Students suggests that 20,000 or more people could apply for University this year, only to find that the places aren’t available.

The issue at the heart of this is how university is funded in this country. The Labour government introduced top-up fees which placed the cost of tuition at around £3,000 a year, although it has since risen with inflation. Many universities have argued that this is not enough, and that if the cap isn’t raised there will a funding crisis in the sector that could see some universities go under.

Accordingly, a review has been ordered by the present government that would explore raising the cost of tuition fees from that £3,000 to around £6,000. This would mean that the average student debt of leaving university (which currently stands at £22,000) would rise by at least ten thousand pounds.

Unsurprisingly, the NUS and other student bodies have reacted angrily to such proposals, whilst some elements of the Liberal Democrats are even less happy. After all, the Lib Dems ran for election on the policy that they would work to make university free within the decade, doubling the tuition fee is hardly the way to achieve that.

There have also been suggestions that the government might outsource the role of providing tuition fee loans. At present the government lends students the money through the student loan company and then reclaims it through pay checks for however many years it takes to pay off the loan. The loan is not, despite popular belief, interest free, it is linked to inflation, but as inflation can rise faster than wages can, in real terms, students end up paying more.

Perhaps the day will come when it proves cheaper to apply to a bank for a student loan than it will for the government, particularly if banks like Santander continue to offer competitive rates on loans, or perhaps it will simply be a case of applying to a bank for a student loan instead of the government because the student loan book has been sold. At any rate, it seems undeniably that university is going to get a lot more expensive, both for those who are about to go, and those who have been.