Coronavirus: Graduates should pay for the benefits of having a degree

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This article by Alison Payne first appeared in the Herald on 1 June 2020.

THE current pandemic crisis is requiring policy makers to reconsider many issues.

We are in uncharted territory with additional strains being placed on budgets that were already under pressure. There will not be enough money to do all the things we would like to do and, as a result, new long-term solutions need to be examined.

Higher education funding is one such issue.

The pandemic has hit a sector that was already struggling financially.

In September 2019 Audit Scotland reported more than half of all Scottish universities were in deficit, and the position had got worse since 2014/15 for most chartered and modern universities. The report noted three of the four ancient universities; St Andrews, Edinburgh and Glasgow, were in better financial health but these universities relied on large numbers of fee paying non-EU international students. That income stream is now under threat. Universities Scotland has estimated a 50 per cent drop in international students could cost the sector as a whole £435 million.

The coronavirus did not cause the wider financial problems within the higher education sector, but it has helped shine a brighter light on the cracks.

In other words, a sticking plaster to get through the crisis and account for the loss of international student fee income is not what is required. We also need a long-term solution to help get the whole sector on to better financial footing and Reform Scotland believes that a deferred fee should be part of that discussion.

While it is true to say society as a whole benefits from having a well-educated workforce, the individual graduates themselves also benefit from the higher earnings they accrue.

At present in Scotland, only wider society pays for graduates who are originally from Scotland through the tax system, while the graduate does not contribute in any way that reflects the personal financial benefit from having a degree. Although graduates may earn more and subsequently pay more tax, many top-rate taxpayers may not have gone to university, so higher tax contribution should not be seen as payment towards higher education.

There needs to be a better balance between the individual graduate and taxpayers in contributing towards higher education. As a result, Reform Scotland believes graduates should contribute towards the cost of their higher education by means of a deferred fee, to be repaid once they earn more than the Scottish average salary.

The Scottish Government could also look to introduce schemes that cut or scrap repayments for graduates who remain in Scotland working in certain sectors for set periods of time.

Deferred fees should not deter people from going to university. The amount you pay back is based on the amount you earn.

If you don’t gain too much financially from going to university, you repay little or nothing at all. The financial expert Martin Lewis has referred to this as being in effect a “no win, no fee” education.

We also need to recognise the current policy has also created a “cap” on the number of Scottish students who can go to university, regardless of the grades they achieve.

This is because Scottish universities have to be able to roughly match the number of places they offer to Scottish and EU students with the funded places that are available that year. As a result, some applicants who meet the entry requirements may not be offered a place.

There is, however, no cap on the number of fee-paying students from the rest of the UK or from outside the EU. Deferred fees should form part of the debate about long-term solutions, but more immediately we also need to reconsider who the taxpayer is funding to attend university in Scotland.

Students from the rest of the UK have had to pay fees to attend Scottish universities for many years.

Due to EU rules, students from EU countries could not be charged these fees. As a result, the Scottish Government currently pays for EU students and those individuals take up places within the cap. Regardless of views on Brexit, the fact remains that the UK is soon to leave the EU. It would be bizarre to use what limited resources we have to offer free tuition for students from Cologne while happily charging those from Cardiff.

The Scottish Government has committed to pay for student support for EU students starting their studies in 2020/21.

Students from the rest of the UK currently pay to attend university in Scotland. From 2021/22 we believe that these charges should apply to students from the EU as well.

Finite resources are being pulled in many ways, we believe that these two policies could help the Higher Education sector find a more sustainable footing going forward.