University Funding 'Black Hole' and Higher Tuition Fees
Posted in Undergraduate Finance Advice
So there’s been a lot of talk lately about the “Black Hole” in University Funding (which as far as metaphors go, isn’t a particularly reassuring one) – but what exactly does it mean?
Well, according to a recent report by the Higher Education Policy Institute (or HEPI, to their friends), the introduction of higher tuition fees by the Government could actually end up costing the taxpayer MORE than the old system. The report basically indicates that the total costs of implementing the new system have been underestimated, leaving what is now being described as a £1bn “Black Hole” at the centre of university funding.
So that doesn’t sound great. But where exactly has this “Black Hole” come from, and why didn’t the Government see it coming?
According to the report, there are three main contributing factors:
1. When estimating how much universities would charge students in fees, the Office for Fair Access predicted the average would be £7500 across the UK. Unfortunately, it looks like the average is actually closer to £8300, meaning students have had to borrow more in loans.
2. The Government predicts the average male graduate salary will be £75000, 30 years after graduating. This has already come down from an initial £100,000 prediction, and some are still saying it’s a touch on the optimistic side (given the slightly dodgy state the economy is in at the moment). If it does turn out to be too optimistic, it could mean less loan money gets recovered.
3. Following on from that, they’re also hoping that any graduate salary increases will be spread evenly across all graduates. If, however, people on a low or medium income don’t receive as much of an increase as those on larger salaries (as has been the case in the past), the Government will receive less in repayments than estimated.
To summarise, things aren’t looking all that great in the world of university funding at the moment…
Bahram Bekhradnia, HEPI’s director, described the effects that this funding “black hole” could have on students, the taxpayer and the higher education system as a whole.
“Either future taxpayers will need to pay more, or other parts of the higher education budget will need to be cut, or student numbers will need to be held down even further than presently planned, or former students will have to repay more,” he said.
Image couretsy of thebadastronomer.