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Heading up the new Independent Student Finance Taskforce

Heading up the new Independent Student Finance Taskforce

I’ve today agreed to take an (unpaid) role, heading up the Independent Taskforce on Student Finance Information. Its aim is to help ensure everyone understands exactly what they’re getting into – the good bits and the bad.  

The new taskforce (see Student Taskforce MSE news for info of who’s on it) is comprised of universities, the NUS, student money advisers and colleges. Together all are trying to ensure every student affected by the 2012 English student finance changes, understands the cost. Afterall, only then can they decide whether it’s worth it. (For now, see the student finance 2012 – 20 key facts guide).

Why I’m doing this

Many of you will have heard me say this line before – it’s something that angers me – and that as a nation we should hang our heads in shame about…

For 20 years we’ve educated our youth into debt when they go to university, but never about debt – that must change.

It’s one of the reasons I’ve been involved in lobbying hard to get compulsory financial education in schools. Back in January, at the launch of the All Party Parliamentary Group on Financial Education, I challenged over 200 MPs saying something like:

“If we treble tuition fees and we start charging some students commercial rates of interest and we let them go and take those loans out without understanding the debt they are getting into … we have done a disservice to an entire generation of our youth.” (watch the video)

And having said such a thing – how can I not act now to put my money where my mouth is?

And while I’m no fan of the changes, as I’ve written many times before (especially the interest rates and possible early redemption penalties), the truth is these changes are happening. And barring small clauses, that won’t change for at least the life of this parliament – so the sooner we have clear financial education on this out there, the better. 

If we don't do this, things will get much worse

If we don’t do this, things will get much worse

What scares me silly is that the sit-ins, government posturing and others involved in this are trying to subvert explanations of how the system actually works for their own political point scoring (see student loan arguments could tar a generation blog).

This runs the risk of mis-educating and scaring an entire generation unnecessarily. Of course, there are some things to be scared of, but not necessarily the ones we’re frightening people with.

Sadly, this isn’t the first time this has happened.

In 1998, when income contingent loans were first introduced (that’s the official name for paying proportionately through income tax, depending on income) it was a massive improvement on what was there before.

Unfortunately, it was introduced at the same time as tuition fees, which stole the headlines, painted everything negatively and meant many never truly understood the new repayment system and the benefits of it.

I have met many disadvantaged sixth formers over the years who were scared because they "can’t afford to go", whereas they wouldn’t have needed to pay anything till they left university and, only then, if they earned enough (and that won’t change).

Our society is in danger of making the same mistake again. The easy solution would be financial education in schools which would help this enormously (see more financial education info).

Yet in the short term we need to ensure that whatever the political decision, however palatable or unpalatable people find it, we don’t stop our youth from getting an education out of a misplaced fear.

This is a major concerted effort

Sadly, one early newspaper report got half a story on this and wrongly tried to present this as me selling student loans for the Government. 

That’s a load of baloney. This group is not a government group and it’s not government-funded, though Universities Minister David Willetts has agreed to co-operate and provide info when needed.  It’s formed by Universities UK, the National Association of Student Money Advisers, Guild HE, the NUS, and others – the deputy head of the group is Wes Streeting, NUS president 2008-10, and a leading campaigner against tuition fees.

It’s aim is about unbiased financial education over the costs of uni (note I talk costs, not fees – as many confuse the two).   

It’s worth noting the remit does not include promoting the value of university. While I strongly believe in education and the fact the ability to go should depend on merit not cash, I have argued against the taskforce promoting going to university.

Not because that’s a bad thing, but because until people understand the cost they can’t decide if it’s worth it – and mixing the two muddies the water. The structure of tuition fees is objective, the value of university is subjective. So it’s for the unis and colleges themselves to push the ‘you must go’ message.

What’s it actually going to do?

It’s early days yet – we’ve our first meeting on Monday of the operational group and that will be crucial – and are welcoming wider agencies to become supporting organisations (so if you represent a consumer group, education group, or organisation with an interest do get in touch).

As the budget’s very slim, the prime idea is to be a focus for best of breed communications to students (including mature students and part-timers), parents, pupils, teachers, academics and universities.

The aim is to gather together the clearest and best examples of apps, web tools, guides, speakers, ambassadors, literature, calculator and more. For example, I’m keen on getting a course designed to teach six formers and putting together an independent authoritative report together on the impact on the ability to get a mortgage and credit.

  • Chaloner Chute

    Hi Martin

    I am delighted about this initiative. You may recall getting in touch with you, about a Student Money Pack two years ago, when I was very concerned about the lack of student financial education/awareness; or indeed about any co-ordinated effort to advise students on Money Matters. That was the title of my proposals. As a concerned parent I would be keen to join the task group.

    Best regards


  • Emily Davies

    Hi Martin – I’m not sure if this is within the scope of your new task force, but do you know if there is any information regarding funding for graduates who go on to study Medicine or Law? Currently graduates are not eligible for tuition fee loans to study these higher level courses, yet because fees are being tripled, many would-be Doctors & Lawyers are being priced out of these courses as they cannot afford to pay £45,000 for tuition fees up front. There isn’t any info on this anywhere else, if you could shed any light on it I’d be really grateful. Thanks. :)

  • Anonymous

    I think it’s excellent that you are providing much-needed clarity to this subject (as a concerned parent of twins starting Uni in 2012). However, even if we understand what students are getting themselves into, is there any guarantee that the terms will stay the same for 30 years? In particular, what would stop a future Government deciding to raise the amount you repay (currently set at 9% of salary over £21,000)? Or deciding not to wipe the loan out after 30 years? 
    rgds, Andy

  • Anonymous

    I think it’s excellent that you are providing much-needed clarity to this subject (as a concerned parent of twins starting Uni in 2012). However, even if we understand what students are getting themselves into, is there any guarantee that the terms will stay the same for 30 years? In particular, what would stop a future Government deciding to raise the amount you repay (currently set at 9% of salary over £21,000)? Or deciding not to wipe the loan out after 30 years? 
    rgds, Andy

  • Louise Dubec

    I understand that your aim is to change our perception on university fees so that the student takes on the debt rather than the parent – in that case why is the grant system based on household income? As we earn above the threshold to receive any grant my daughter will have to pay the full fees which other students may receive grants for yet they may end up ultimately earning more in the future than my daughter with no debt to pay. It should be the same debt for everyone if it is to be repaid from future earnings. As it stands, it would be financially beneficial for us to get a divource and/or give up my part-time work inorder to qualify for the grant. This whole situation needs to be much fairer,

  • Louise Dubec

    What I don’t understand is that we are supposed to believe that the student should pay for their university education from future earnings so why then are grants based on parents/household income? Surely, it is irrelevant what your family earns now but is more relevant what the student earns later. Right now we are not eligible for any of the grants and assistance but others are and yet when all the students graduate some will have debt where others don’t. At its extreme, it might be better for parents to get divorced or give up part-time jobs inorder to qualify for the grants. How fair is all that? Surely, the repayment to the state should be linked to future earnings only?

  • Anonymous

    My son will start uni in 2012 but is unlikely to qualify for any grants because my husband ( his step father) and I earn too much. My husband will actually have retired but with my job we’ll still be over the limits.
    Currently as a family we are trying to scrape together money to pay some fees up front but will this be allowed and is it a good idea.
    We are also looking at universities in HOlland where the fees are lower and there does seem to be access to some finance .

  • Martin S Lewis

    Please read the, in there I’ve written a section (its a drop down you need click it) on “if I have the money should I not take the fees loans.” Frankly in that case the answer for most is yes – take the loan even if you have the money.  So please don’t start trying to hurt your own finances to get the cash. Please go and read the guide – it’ll take you through how it works

  • Anonymous

    I’m glad you are involved, Martin. I am a parent (being made redundant in 2 weeks) with year 11 and Year 12 girls – both academically able, who want to go to university, but who are angry and upset at what they will be carrying as debt when they graduate. My eldest daughter is particularly upset, as her specific course is only offered in Wales, and she faces 3 years of sitting next to students paying around £6000 less a year for the same education. Our local MP – a Lib Dem – seems unable or unwilling to answer emails on the subject. 

  • Anonymous

    Currently, as I understand it, the universities decide who gets a loan and who gets a bursary or partial bursary to offset the tuition fees and can set their own criteria for students to receive these grants. So it would seem that students who would be eligible for fees to be covered by a bursary may receive very different amounts from different universities, further confusing students who may have to weigh up the ‘offers’ made by universities and will never know whether they will earn enough to make the whole thing worthwhile.
    I would agree with other posts that all students should have to pay back based upon earnings and some should receive maintenance grants based upon parental income.

  • Anonymous

    What upsets me is that there doesnt seem to be any opportunity to avoid the fees or to repay the debt early.  It encourages maximum borrowing as in reality many graduates will not clear the debt within 30 years having paid back up to £100,000 once compound interest is added. This extra debt seems to wipe out any potential financial advantage a degree may have offered to future graduates.

  • Peter Cobrin

    At notgoingtouni we have a very clear take on this whole debate.  As you would expect Martin’s perspective is, rightly, very consumerist.  However you wrap it up, at some point graduates will “lose” money from their ongoing salaries to repay this debt.  As consumers, they should demand evidence that this “loss” represents value for money, and if they can prove that any course was misrepresented when they applied — they should have a right of redress.  After all, we have the FSA to redresss financial services misselling.  Who will provide redress to the young student who finds out that his course was the proverbial crock of s***t?