University funding challenge

The UK seems incapable of coming up with a system of funding for universities that can command a wide range of support. (I should say England and Wales rather than the UK, as you don't hear many complaints about Scotland's abolition of tuition fees, at least from the students).

When I went to university over four decades ago, tuition fees and a portion of living expenses were paid by one's local authority. In one respect this made no sense at all: once I'd graduated, the London Borough of Waltham Forest was going to be among the last places I'd choose to live, so it wasn't much of a deal for the local ratepayers. But at least that system achieved one of the key goals everyone claims to be seeking: it allowed a kid from a working class background to go to one of the world's best universities, without taking on a crippling debt burden.

The latest attempt to sort out the system is a report by Lord Browne, the former head of BP. His plan calls for allowing universities to charge students what the traffic will bear, though fees above a certain level will have to be shared with the government. So Oxbridge degrees will cost more than those at some newly-minted ex-polytechnic. This is probably the only way to allow the Oxbridges, Imperials and others to compete with the immensely wealthy Ivy League schools in the US.

Repayment of student loans will only start when a graduate achieves a certain income level: the initial proposal is £21,000 a year, which is just above the average wage. In an odd twist, however, higher-earning graduates will pay a higher rate of interest on their loans than the lower paid. This obviously opens up all kinds of perverse possibilities: someone who works hard to get a medical degree from a top school and then gets a job as a consultant will pay the full freight, while someone who goes to a less esteemed school and gets a degree in golf course management, then winds up on the dole, never pays back the loan.

Unfortunately, Business Secretary Vince Cable, whose portfolio includes universities, seems very taken with this idea -- so much so that he is talking of levying a fee against any graduate with the temerity to pay off their loan early, and even taking steps to prevent wealthy parents from avoiding the interest charges altogether by paying their offspring's fees in advance. Is it possible that Vince is not aware of the time value of money? People paying back their loans early, or getting a sub from mater and pater, are reducing the burden on the public purse, which is normally seen as a virtue these days. Then again, making the higher rate impossible to avoid would effectively move Lord Browne's proposed scheme back in the direction of a graduate tax, which may have been Vince's preferred route all along. Either way, it doesn't have much to do with fairness.