Flaws in fees policy 1

January 31, 2003

The argument for top-up fees ("Fees can be up to £3,000 - with Whitehall strings," THES , January 24) is based on flawed logic and a failure to learn from Australia, which introduced a similar higher education contribution scheme (Hecs) in 1989.

The first flaw is to assume that the state will not offset fee income by cutting allocations. In 1995, Australian universities received 52 per cent of income from federal sources and 12 per cent from Hecs. By 1999, the federal percentage had shrunk to 37 per cent with students paying 19 per cent.

The second flaw is to assume the most well-off will contribute to their education, while those in need can apply for scholarships. The number of well-off students - taken as a standard deviation from the mean - is too few to generate the funds needed to boost the scholarship sought by universities. For the system to work, almost everyone will end up paying and a tiny number will receive financial support.

The third flaw is that graduates are better off than non-graduates. While this may be true on average, it is not true when graduates want to start families or are in lowly paid professions. Even if payments are suspended, the debt - through interest - increases.

Finally, the earnings threshold above which additional taxes are levied also tends to drop over time. In Australia in 1989, a 1 per cent tax surcharge was payable on salaries above A$22,000 (£7,900) and 3 per cent on salaries above A$30,000. In 2000, there was a 3 per cent surcharge on salaries above A$23,242, increasing to 6 per cent payable on salaries of A$41,838.

A survey of Australian students in 2000 showed finances had influenced choice of course (11.1 per cent), choice of university (17.4 per cent) or the mode of study (23.3 per cent). Full-time students reported working 14.4 hours a week compared with five hours in 1984. One in ten reported missing classes because of work, while two in ten said that the employed work adversely affected their studies.

Michael J. Wise

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