Time to tackle teenagers’ fears of fees

Earlier this year, the Government breathed an audible sigh of relief as university applications appeared to rise again after falling off in the first year of higher fees, although they are still not at 2010 levels.

But a new Ipsos Mori poll for the Sutton Trust suggests that ministers may have been a little premature in taking too much comfort from the latest UCAS data. The poll shows that two thirds of school children worry about the cost of going to university. Only 7 per cent of the 2600 11-16 year-olds polled said they had no concern about the cost.

At the same time, aspirations remain as high as ever. More than four in five young people say they are likely to go to university, even though in reality the proportion of 18-30 year-olds who do so is still less than half. 38% of young people say they are very likely to go to university when they are older, and 43% say they are fairly likely to do so. This is the same proportion as last year when the same question was asked.

Two thirds – 65% – of all the young people polled had significant concerns about university finance which break down as follows:  28% were concerned about tuition fees; 19% were concerned about student living costs and 18% were concerned about lack of earnings while studying.

And although 67% of young people said the most important consideration when deciding whether or not to go to university would be their exam grades, 17% said it would be the cost of going to university, with students from the least affluent families (23%) more likely to cite cost as the biggest consideration than those from the most affluent families (14%).

So, despite high aspirations – and a realistic sense of what they might need to do to realise them – nobody can argue that most young people aren’t still worried about the cost of higher education.

It’s hardly surprising that they are worried when graduates face debts of over £40,000 with fees of £9000 a year for most courses. The truth is that young people are caught between a rock and a hard place.

They know that they still need a university education to get on in life and get a good job. For all the talk of falling graduate premiums, a degree – especially one from a good university – still brings a substantial income bonus. And as Sutton Trust research showed earlier this year, a postgraduate degree is increasingly important, and brings with it an additional substantial premium.

And even if graduates may be finding it harder to gain an immediate job after university, their long term prospects remain brighter than for non-graduates.

But the canny teenager knows something else too. He or she knows that a degree comes with a much higher price tag than ever. Where this year’s graduates might be paying off their student loans into their thirties, those graduating from 2015 onwards will be paying back right into their fifties.

There may be some lower up-front costs, but a £40,000-plus debt with interest rates of up to 3% over inflation a year means that those repayments could impact on whether or when to buy a house or have a family. We’ve asked the Institute for Fiscal Studies to look into the implications of these debt repayments and to model the likely impact on important life decisions. They will report later this year.

But I think there is something else the Government could do now to ease the burden on low and middle income graduates in the future. They should means-test the tuition fee – as happened from 1998-2006 when fees were first levied on undergraduates – in the same way that the maintenance grant is already means-tested. As I noted in an earlier post, this is already commonplace in the United States.

Given that the Government already expects to write off a third of its loans – and some observers think they will have to write off much more – this need not be a particularly costly option. But it could start to allay the fears of debt that face all too many of those who should become tomorrow’s students. That would be a real investment in the future.