Universities Call For Higher Interest On Student Loans To Plug £1.1Bn Deficit

[Injin]

http://www.timesonline.co.uk/tol/news/uk/education/article7126137.ece

Graduates should pay back their student loans earlier and at a higher rate of interest in order to reduce the growing deficit in higher education, a powerful coalition of leading universities suggests today.

The Russell Group, which represents 20 institutions, including Oxford, Cambridge and UCL, warns that without drastic action the sector will face debts of £1.1 billion by 2012/13 and put its future “severely at risk”.

“More investment will be needed if research-intensive universities are to maintain and build on recent improvements and continue to provide an internationally excellent learning environment,” the group says.

Its submission to Lord Browne’s independent review of student funding, published today, says that the UK’s undergraduate finance arrangements are among “one of the most generous in the world”.

The current system, in which graduates begin to repay low-interest loans only once they start earning more than £15,000 a year, is designed to cushion them from the usual risks associated with borrowing, the submission says.

It provides “all students with in-built insurance against spiralling debt and inability to repay.

“The lack of a real rate of interest on student loans is, therefore, a subsidy which imposes high costs on the Government, and which exceeds the requirements of ensuring fair access to higher education.”

It adds: “One way of modifying the current system is, therefore, that student loans should carry a real rate of interest, one which would be equivalent to the Government’s overall cost of borrowing.”

Public costs could also be reduced by lowering the threshold at which graduates begin paying back loans, forcing them to start repayments sooner after leaving university.

The submission says that it cost £14,190 to teach a chemistry undergraduate at a Russell Group university in 2007/08. The institution received £10,570 from tuition fees and grants — leaving a funding gap of £3,620.

The group suggests that there are three realistic ways to remedy the current levels of annual deficits:

— reduce costs by cutting staff;

— increase income through raising fees for home undergraduates;

— increase income through increasing fees for overseas students.

None of the options could be adopted by themselves, it says.

Although the submission stops short of suggesting higher tuition fees for UK students, it appears to indicate that these other solutions may not be fully workable.

Reducing the deficit through cost cutting would mean axing thousands of staff across the Russell Group, it suggests.

The submission notes that fees paid by international students have become an increasingly important source of income, but adds that the scale of the deficit is such that “eliminating it would require a per annum increase of more than 200 per cent in income from international students”. To do so could jeopardize the stability of the UK international student market.

Sally Hunt, general secretary of the University and College Union, said: “The future for the UK is, as the Russell Group report correctly identifies, as a high-skilled knowledge economy and that requires proper funding for our universities.

“We desperately need to overhaul how universities are funded and move away from the idea that the current review of student funding is merely a question of how much student fees go up by.”

The Russell Group published their submission to the review after pressure from students. The group had previously asked for it to be kept confidential, although they insisted that they had always intended to publish it in due course.

Lord Browne’s review is due to report back to Parliament in the Autumn.

Both vice-chancellors and the business sector have called for higher tuition fees in the past. Tuition fees currently stand at a maximum of £3,225 per year.

101 in elephant ignoring is now in session.

Edited May 14, 2010 by Injin

[Tiger Woods?]

http://www.timesonline.co.uk/tol/news/uk/education/article7126137.ece

101 in elephant ignoring is now in session.

14k pa to teach a chemistry student. FFS! For a class of 20 that is £280k per year. If you cannot teach someone chemistry for half that and make a profit you are doing something dreadfully wrong.

Edited May 14, 2010 by D'oh

[Dorkins]

The group suggests that there are three realistic ways to remedy the current levels of annual deficits:

— reduce costs by cutting staff;

— increase income through raising fees for home undergraduates;

— increase income through increasing fees for overseas students.

At least they have correctly identified the solution to their budget problems. I would also suggest fewer and cheaper capital projects. The last university building I worked in cost £40m to build in 2007 (I believe the university already owned the land) and was designed for a total staff number of about 250 i.e. £160k worth of building materials and design/construction labour per staff member. Of course it was a fancy glass and steel job with "architecture" written all over it, and no doubt will have very high maintenance costs and be virtually unusable in 50 years. What a ridiculous way to spend public money.

[Guest DissipatedYouthIsValuable]

14k pa to teach a chemistry student. FFS! For a class of 20 that is £280k per year. If you cannot teach someone chemistry for half that and make a profit you are doing something dreadfully wrong.

Or paying a lot of interest.

Are we not insisting on repatriating public buildings back to the public with no debt obligation in return for providing bankers with bailout money?

Why the ****** are your children and grandchildren footing the bill for swapping CDOs for money with the BoE?

Why aren't your children and grandchildren getting hard useful assets in return for allowing the bankers obsession with mathematical consistency to continue?

Edited May 14, 2010 by DissipatedYouthIsValuable

[DabHand]

14k pa to teach a chemistry student. FFS! For a class of 20 that is £280k per year. If you cannot teach someone chemistry for half that and make a profit you are doing something dreadfully wrong.

Overpaid and overpensioned.

Hilarious really. Who the hell is going to eat this so these navel gazing arsewits can continue their vocational largess. No-one will go to uni but the rich if market rates and early repayment become the norm. May as well charge the full upfront "school fee" and have done with it. Leave it up to the students to secure their funding....oh just like America.

[Guest DissipatedYouthIsValuable]

Overpaid and overpensioned.

Hilarious really. Who the hell is going to eat this so these navel gazing arsewits can continue their vocational largess. No-one will go to uni but the rich if market rates and early repayment become the norm. May as well charge the full upfront "school fee" and have done with it. Leave it up to the students to secure their funding....oh just like America.

We must follow America, its the future of a well governed society.

Whereas those idiot Greeks, with their lax attitude towards slavery and riotous disregard for fantasy perpetual motion systems, are just savages.

Edited May 14, 2010 by DissipatedYouthIsValuable

[Live Peasant]

University VCs are feeling the effects of the recession.

Time to squeeze the kids so they can award themselves another 40% pay rise.

I'm beginning to understand why revolutions end up with the intelligentsia being exterminated.

They're not bright enough to realise when they've had a good run.

[VeryMeanReversion]

"XXXXXX should pay back their XXXX loans earlier and at a higher rate of interest in order to reduce the growing deficit in XXXXXX, a powerful coalition of XXXXX suggests today."

Just fill in the X's for whatever your vested interests are. Everyone will want everyone else to pay. I think UK infighting has only just begun.

VMR.

[Tiger Woods?]

Overpaid and overpensioned.

Hilarious really. Who the hell is going to eat this so these navel gazing arsewits can continue their vocational largess. No-one will go to uni but the rich if market rates and early repayment become the norm. May as well charge the full upfront "school fee" and have done with it. Leave it up to the students to secure their funding....oh just like America.

It's not the academic staff so much as the administration and bean counters which just expanded like mould on a nice warm petri dish.

[interestrateripoff]

So the VI's are wanting to take even more money out of the economy, higher interest on loans is a tax in disguise.

Why don't the Uni's become banks and lend the money directly to the students?

[billybong]

Students will have to pay more to subsidize their lecturers and staff and their pensions and builders building new college blocks..

Edited May 14, 2010 by billybong

[Guest_FaFa!_*]

I would also suggest fewer and cheaper capital projects.

This is the nub of it. Whilst you have some ridiculous salaries for some VCs and Deans the renumeration for lower ranking academics is not excessive, particularly given the fragile job security. Many HE institutions have spent vast sums of money on upgrading facilities and are now in debt due to it. I'd imagine the game plan is to try to take advantage of the cheaper pound to get the international students in to fill the gap.

[Executive Sadman]

Overpaid and overpensioned.

Hilarious really. Who the hell is going to eat this so these navel gazing arsewits can continue their vocational largess. No-one will go to uni but the rich if market rates and early repayment become the norm. May as well charge the full upfront "school fee" and have done with it. Leave it up to the students to secure their funding....oh just like America.

Often, 'In state' public university tuition is CHEAPER than the UK . I know a couple of americans a few years back who even did exchange programs with other states, plus add in lower living costs, especially accomodation.

Yes, the Ivy league ones are obscenely expensive, but on average there isnt much difference between the US and UK. I guess thats why so many americans go to university/college, and they dont have to worry about Gordon Brown types telling them they will definetely be loaded after graduation so can pay more taxes too.

According to "College Board", the average tuition price for a 4-year public college in 2008-2009 is now $6,585 compared to 2004 where the price was slightly above $5,000. The average price of in-state tuition vs out-of-state tuition for 2008-2009 was $6,585 for a in-state 4-year college to $17,452 for out-of-state 4 year college (collegeboard.com).

http://en.wikipedia.org/wiki/College_tuition

$6600 isnt so different to our £3300 or so.