Dear Teachers – an important letter about your pupils' future
Every good teacher wants their pupils to go to university if it’s right for them. Yet now butting up against that is the 2012 university fees increase, that offends some teachers’ personal politics and leaves others worried about encouraging pupils into a perceived large debt.
I’ve struggled with this too. In January I berated 100 MPs that, "for 20 years, we’ve educated our youth into debt when they go to university, but never about debt; that must change before we treble fees" (see financial education MP speech video).
Soon after I was asked to work as a volunteer with Universities, the NUS, ASCL and others to head the sexily titled Independent Taskforce on Student Finance Information. Whilst I’m no fan of the changes, I felt I needed to put my money where my mouth was and said yes – believing that regardless of the rights or wrongs of the system, students shouldn’t sacrifice their higher education if it’s right for them.
A heightened version of this dilemma is one I suspect many, especially left wing teachers, face right now. They’re torn between championing access to university and the fact that to do so involves needing to desensitise their students to the politics behind the fees.
Yet we need to think about their futures as well as the bigger picture – too little is being said about the practical financial reality rather than the polemic issues.
I worry the political fallout and language of fighting the changes is possibly more damaging to pupils’ aspirations than the changes themselves. Take the consistent media headlines of ‘leaving uni with £50,000 debts’. While this is the top end price tag, they rarely explain it bares only a passing resemblance to what students will actually pay. That depends primarily on their earnings (some call it no-win no-fee) so many will only repay a fraction of this, others many TIMES more.
With today’s figures showing university applications are so far down 12.9% (see UCAS application data), there is no doubt that the new fees are putting off a generation of students. Worse, it’s likely the hardest hit are those from non-traditional university backgrounds, who are more debt averse – a real threat to social mobility.
Love or loathe it, pupils and parents need to understand the real cost to them, without that they can’t make a rational decision over whether it’s worth it or not. Yet sadly myths and misunderstandings abound.
I know many teachers are already talking to their pupils and students about the changes, and we (ie, the Taskforce & I) want to help. There’s a range of free resources that we’ve made to try and make it easier and take up less of your time, these include…
- The Teachers Guide to Student Finance 2012
- Students Guide to Student Finance 2012 (feel free to print & distribute)
- The Student Finance App – just search ‘Uni Fees 2012’ in app stores
- Student Finance 2012 Calc – how much will it really cost you?
- Poster on Student Finance 2012 – I’d suggest the back of loo doors, always a great place to read (some may say it’s a little too appropriate)
- Coming soon… we’re working with PFEG on lesson plans for teaching about the system.
I hope these will be useful, we worked with ASCL on trying to give teachers what they need, and have tested the student guides with 17 years olds.
Whilst I’m writing, may as well note down some of the biggest misunderstandings …
Student finance 2012 – 10 Quick Mythbusters
- You don’t need the cash to go to university. Fees are automatically paid by a Student Loans Company loan. There are loans for living costs too and those from families with income below £42,600 will get living grants.
- You only repay if earning over £21,000. From the April after graduation, full-time students will start repaying at a rate of 9% of everything over £21,000 (this figure will rise with average earnings from 2017 – the year after repayments start). If you never earn over the threshold, you never repay anything.
- Monthly repayments are the same, whether fees are £6,000 or £9,000. The course fee size doesn’t impact monthly payments as they’re set at 9% of earnings above £21,000.
- The loans are wiped after 30 years. If the loan hasn’t been repaid within 30 years, the borrowing is wiped.
- There are no debt collectors. Repayments are collected via the payroll from employers, just like tax. This means they never see the money, it’s paid automatically, so there are no debt collectors chasing.
- Repayments are £540/year LOWER than now. The relevance of this isn’t political, it’s about answering the question many students and their parents are asking: "how will I survive day to day owing that much money." Well in cash flow terms, while current graduates repay 9% of earnings above £15,000, the new threshold’s £21,000, so future graduates will have more disposable income up until the point where today’s graduates will have paid it off.
- They will owe money LONGER and may pay MORE. Yet to balance out the point above, compared to current graduates under the new scheme, as you repay less each year, the original debt’s much bigger and you pay higher interest (as much as inflation plus 3%), it’ll take MUCH longer to repay the loan than now and depending on earnings may cost more.
- The effect on getting a mortgage is likely minimal. Many worry about the ability to get mortgages under the new system. Actually student loans don’t go on credit files and are likely to have little impact compared to now. In fact the disposable income increase in the early years is a mild improvement for the ability to build a deposit and earnings multiples, though as they’ll still be repaying long after today’s graduates clear their in later years its mildly negative.
- Many will repay all working life, but NOT pay it all back. Many starting even on £25,000 salaries won’t repay all owed within the 30 years (see www.studentfinancecalc.com) meaning you repay for much of your working life, and won’t need to repay all that’s owed.
- Many won’t pay any more in total on £6,000 courses than £9,000. As many, even some on starting salaries as high as £30,000 (and rising after) may not repay their combined fees and living loan at the £6,000 fee level before its wiped after 30 years, there is no increased cost to them of taking a £9,000 fee course.
