Student Debt and Intergenerational Justice

By Jonathan Tame 15 Jun 2018

On Sunday I’ll drive to Nottingham to collect my son and his belongings for the last time. He is graduating with a degree in French and History, filled with all kinds of knowledge and ready to begin his first full-time job – in the constituency office of an MP in East Anglia. I was in the same place 34 years ago, clutching my degree in agricultural economics and heading off to a job with the Ministry of Agriculture in London.

The biggest difference between us is that I left university with a little money in my bank account and no debts, whereas he has racked up a hefty ‘fee free overdraft – pay nothing before you graduate’ and a debt to the Student Loans Company of an eye-watering figure in excess of £50,000. Britain’s graduates have one of the highest levels of student debt in the world.

My education was deemed worthy of full public funding, whereas my son will have to pay the cost of his four year degree entirely, plus interest, with the taxpayer only contributing should there be a balance outstanding 30 years from now, when it will be written off.

The irony, as the report from the Lords Economic Affairs Committee pointed out earlier this week, is that the taxpayers who will be paying for larger student debt write offs in the 2040s include the very same people who were charged the £9,000 fees from 2012 onwards. The report estimates that writing off loans made during the 2017/18 year alone could amount to £8.4bn in 30 years.

The Lords report levelled many other criticisms at the present system. It favours full time undergraduate degrees at the expense of part time and vocational courses. It has led to universities prioritising the quantity of students enrolled, at the expense of the quality of their course. And the report was damning of the Chancellor who introduced the new system, as through clever accounting he appeared to be both cutting the deficit while increasing expenditure on universities – but only by shifting the funding from grants to loans.

Another report last month from the Resolution Foundation discussed this and other pressures on the ‘intergenerational contract’, the principle that different generations should provide support to each other across the different stages of their lives.  Other pressures included the crisis in funding social care for the ageing population, and the lack of affordable housing for young people.

As the government considers the university funding system, I would like to see three major reforms, reflecting the biblical warnings about excessive debt, the way God gives different types of gifts to different people, and the importance of intergenerational responsibility.

  1. Scrap tuition fees for UK nationals along with student loans, and replace them with a graduate tax. This would be far more equitable for present and future generations of students, and make the cost of the higher education sector more transparent.
  2. Elevate the status of professions that do not require a university degree. The number of people graduating exceeds the number of graduate jobs, while we have a shortage of many other workers, mostly skilled but some unskilled, and need to import builders, factory workers, plumbers, retail staff and care assistants from Eastern Europe.
  3. Create far more part-time courses which people can access at different stages of life, since the changing nature of work means people will need to retrain for new jobs at different points in their lives.

Strengthening the intergenerational contract by reducing the differences in wealth and opportunity between the generations should not ignore major inequalities within each generation, especially between those who own property and those who don’t.  But tackling the tuition fee and student debt fiasco is a great place to start.

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