Martin Lewis changing tack on HE finance considerations

[shuggarushed]

Until recently, ML consistently encouraged all young people considering uni to not worry about finance on the grounds that if they didn't get a highly paid job then they would never have to pay back the debt/tax (he prefers to call it a tax). While true, that was an unaffordable reality for the taxpayer. Inevitably, the system was changed in 2023 and graduates of the new scheme are much more likely to pay back their debt/tax. Cue lots of discussion here on Mnet and elsewhere about whether the high cost of a degree is worth it and, now, ML is starting to weave this narrative into his journalism. Given his influence (i.e. most UK students and parents are familiar with his narratives on student finance), it'll be interesting to see what impact it has and how it evolves over coming years. For now, he's collecting stories, and treading carefully as it's obviously an emotive subject.

Example: His most recent podcast covers it in the last 10 minutes from about 1h:02m in the recording: https://www.bbc.co.uk/sounds/play/p0m92f0w

The flip side of that though is if your daughter doesn’t pay back the cost of her university experience in full, someone else is paying for it, it’s not free. So it’s not at all comparable to paying £1k for a cruise - the taxpayer isn’t paying for your cruise. If even you don’t value your daughter’s education/university experience enough to want to pay for it, why should the govt?

Looking at a population level, can the country (ie taxpayers) afford this largesse. Is there a greater good than the increased earning potential of graduates. Why is the country choosing to invest scarce resources in this way? Is it fair to the 18 years old who don’t go to university and start work straight away? Should they get a subsidised loan that they don’t have to pay back in full to go off and discover themselves/have fun? Less than 50% go to university.

Personally I do think there is a greater good in having a university educated population and in people studying esoteric/non-vocational subjects, but it happens today in such a haphazard, random way and I do think there should be more strategic thinking in how post school education is funded and what types/subjects should be studied. And feeding into that strategy should be what subjects are useful (in its broadest sense) to the country.

What ML’s shift says to me is that there is a growing realisation that graduate employment isn’t what it once was. Salaries are really quite low, especially relative to the minimum wage and that extra tax of 9% is a real killer for an awful lot of graduates for a very long time.

@rhabarbarmarmelade When I was at university back in the 80s, we had 20-25 taught hours over the week (so went in every day). And this was an Arts subject ...scientists had more I believe

DS1 has just finished a soft Stem degree and had 12 hour contact time a week at a London university that pledges timetables will be set so that students will always have at least 2 days off a week so they can get a job. Personally I'd rather they crammed the degree into 2 years and saved them the ~£230 per week accommodation costs.

The reality is that he used to sell it as a graduate tax so as to encourage the less well off students to go into higher education. He also used to say the student loan didn't count for mortgage purposes without stating it does indeed impact the affordability calculations. I think this is a reason he has reined it back it in a bit together with the lower threshold/40 years repayment now.

Well it should really as otherwise the tax payer is footing the bill.

And for children who won’t receive a deposit/inheritance? £30k is limited for an educated individual.

The stories I hear from parents of Uni students about limited teaching time/seminars compared to 6th Form (independent) is startling.

These kids could be saving a fortune in rent if the course was focussed to get through it/study time.

I appreciate for some subjects they might need a longer course, but for some courses they should be rattling through them.

I do think that so many have been sold a pup. There is a great emphasis on the “experience” so those that fail to have a whale of a time feel that something’s gone wrong. Plus the standards in even very good universities are often very poor. I was astonished at the content of a young friend’s English degree and the lack of work that needed to be submitted.

I agree with a pp that if one opts for work at 18 there are limited opportunities now in so many industries. Remember how many secretaries there used to be? Thousand upon thousand. So many agencies and indeed the chance to hop in and out of jobs. Also lots more girls seemed to want to be nurses. It was more highly-regarded a few decades ago. As for the boys (being rather gender segregating here!) loads went at 18 into the City or Army.

As someone who is a course leader for a nursing apprenticeship course I can say that they have stagnated and have been that way since Labour came into power. Why? Who knows? Dissolving NHS England hasn’t helped. So if you are considering an NHS type apprenticeship good luck finding one!

The 40 years pay back has changed a lot. The lower paid will pay back more. It’s also very clear the country cannot afford so many degree holders not getting anywhere near paying off the loan. Currently, former students owe the country £230 billion and it’s going up. People only see loans from a personal point of view, but we certainly need to cull some degrees to save the country money.

The highest paying degrees are medicine, dentistry and economics. Degrees like English and Art are at the lower end of earnings. Stem is mostly at the higher end but not all stem degrees are equal! The IFS did good analysis on this a few years ago and with doctors’ wages now very much outperforming other grads, the pecking order won’t change. Other highly paid people have a variety of degrees.

2 years is problematic for degrees like MFLs. 4 years really is the minimum for a good MFL degree. I also take issue with the notion that Tony Blair is to blame for student numbers. John Major increased the universities to include all HE colleges, polys and other colleges in 1992 and David Cameron lifted the cap on student numbers in 2013. Blair had nothing to do with that. Around 37% of dc go to university at 18. Few 18 year olds get degree apprenticeships. Nowhere near the 50,000 stated earlier. Last time I looked it was 10,000 - the majority of degree apprenticeships go to adult existing employees. Plus lots of 18 year olds don’t know what work they want so find making career choices at 18 difficult. Many rural areas have no breadth of apprenticeships at all that dc can get to. It’s very patchy.

Overall, poorer dc are supported to go to university but the job they aspire to is key. Far too many MN posters don’t need to worry about what dc earn. The real world for poorer people isn’t like this. They are not feather bedded by rich parents so earnings matter.

Announcement about to be made by the government which is likely to relate to finances.

The reality is that university is very expensive. In many cases it's not a great idea. Graduates are coming out of university and going into jobs that they could have done straight out of school but they now have £60k of debt.

Wow - maintenance grants for low income students funded by levies on international students. That will break the model. We already rely heavily on international students.

and fees going up..

this is good for universities but not good for students

Bloody hell good luck with that.

Are they going to allow more international students?

@OhDear111 statement today states that they want 2/3 young people to go to university/apprenticeship

Does this mean that those that started this year, pay more for their second and third years

Nothing said about that.

Tuition fees and maintenance loans will increase in line with inflation. So even more debt for students (although this is desperately needed by the universities). Most make a loss on every UK student.

Yes £400 more next year and then a further increase the following year

then inflationary increases automatically every year. Lets hope we don't go back to the very high levels we saw not so long ago..

Having completed a degree just prior to covid, I was very surprised at how little support there was and has been since to get my peers and I into work. Considering the tax payer pays for our studies still, you would think it would be worth their while to at least have some options for us to enable us to pay back the student loan. Seeing as there is a cut off date as to when it applies, should there not be a push for those who are still unemployed 5+ years to perhaps get some boost into employment somewhere? It feels like a fair few of us have just bimbled into very low paying jobs and no one minds we will never pay back our loans, but this can't be the case.

@HasaDigais that a loan or money to keep without being paid back?

No further information yet about the grant. But back in the old days, a grant didn't have to be paid back.

https://podcasts.apple.com/gb/podcast/the-martin-lewis-podcast/id520802069?i=1000732659880

should I clear my student loan? question.

It's a different question of whether the system represents good value overall, as to whether it's good value for the individual student.

I do actually pay towards DD's uni experience, I pay her accomodation fees.