Published on November 6, 2012 | by Billie-Jade Thomas

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Rise in tuition fees based on Government miscalculations



Government miscalculations could mean that there are no real savings from increased tuition fees in England and Wales, according to the Higher Education Policy Institute (HEPI).

The independent think tank has released a report claiming that the Government has “seriously” miscalculated its higher education policy, and has underestimated the cost to the “public purse” as a result.

HEPI says that the Government has underestimated how much universities charge on fees, and has also overestimated how much graduates will earn in future.

The report, published on October 25, challenges the Government’s claims that its modelling of the cost of its higher education policy is reasonable, stating:

“The cost of its HE policies still depends on highly uncertain and optimistic assumptions.”

New findings

HEPI says that the Government’s assumption that universities would charge average annual fees of £7,500 is wrong, as information collected by The Office for Fair Access show that those charges are actually closer to £8,300.

“The budget will have to be balanced somehow, charging graduates more on their student loans is one way of doing that.”Bahram Bekhradnia

The Government has also overestimated the future earning of graduates at £75,000, 30 years after graduating, which is “an extremely optimistic assumption given the nature of the world and UK economy,” according to HEPI.

HEPI says that the revenue the Government expects to get back from student’s loans is “highly uncertain”.

If the findings of the report are proven to be true then “the new policies may actually cost more that the arrangements that they have replaced, which could see graduates repaying more in the future,” states HEPI director, Bahram Bekhradnia.

The effects

Speaking to Arts London News, Bekhradnia said: “There is a strong possibility that graduates will have to pay back more in the future. The budget will have to be balanced somehow, charging graduates more on their student loans is one way of doing that.

“Other possibilities are that the government will just absorb the costs, in which case the taxpayer will pay more; or that fewer university places are provided, which will provide fewer opportunities for young people in the future.

“The government denies these effects and points out that our estimates are based on assumptions which they claim are not as sound as theirs, which is nonsense,” he said.

Speaking to ALN about the report, Education Correspondent for the Financial Times, Chris Cook, said:

“We will not see how much the current student loan system actually costs until 2045.” Chris Cook, FT

“The really important thing about HEPI’s report is that it shows how the strategies the Government are using to finance the HE system are based on things that we can’t possibly know at the moment, for example, how people’s wages will grow – these factors will influence how quickly people pay back their student loans.”

Cook says that we may not see the effects of the current Government’s calculations until a much later date.

“Students who graduate in 2015 will have 30 years to pay off their loans, which means that we will not see how much the current student loan system actually costs until 2045,” he said

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