Student finance in England has received into a horrible mess. Loans are subsidised, costing the taxpayer a whole lot of money, and – as a outcome – the Treasury has rationed them. Some college students who have the correct qualifications cannot get a university area. That is profoundly unsatisfactory for them, as properly as for income-strapped colleges who would like to expand to stability their books. As educating subsidies in arts and humanities are eliminated, and with even core science, engineering and maths topics underfunded, funds-strapped is precisely what virtually all colleges are.
So it is not difficult to see why college students and vice-chancellors alike may like the thought of carrying out away with that Treasury rationing. But in a country exactly where George Osborne insists that there is no funds left, it was a considerable shock to hear the austerity chancellor announce final week that he was removing the cap. The fees are likely to be considerable: all experience suggests that where no limits apply, demand for increased education will surprise on the upside. Only last month, the Guardian reported that the failure to grip student numbers at the new private companies – which consequently soared to nearly forty,000 – contributed to a fiscal emergency that is forcing the Division for Business, Innovation and Capabilities to make savings that could hit poorer college students. The autumn statement announcement at first concerns publicly funded institutions, but it will soon extend to private colleges also, as the magic (or, in other eyes, the mayhem) of competitors is unleashed. At this time of upheaval, the merits of any reform depend on a plausible implies of financing it.
So what is the plan? The chancellor claims that additional subsidised student loans for the long term will be financed by marketing off the loan guide from the previous. In return for funds upfront, the Treasury will surrender the stream of repayments on these outdated-type loans, taken out among 1990 and 1998. This is PFI accounting – a scramble to flatter the books in the subsequent year or two, at the expense of the public finances in the longer phrase. But it is stripped even of the typical PFI intellectual gloss, about the transfer of risk away from the public purse. It is like selling a property in order to rent, and convincing oneself that the funds-flow acquire justifies residing far more lavishly than before. It isn’t going to add up, and the danger is that the books will eventually be balanced by making students repay even much more – or redoubling the latest assault on grants for the poorest students.
The chancellor is correct to want to see far more younger individuals studying, despite the fact that there is a separate debate about whether or not far more general degrees, as opposed to much more specialist instruction, are the greatest way to fill Britain’s capabilities gap. But ahead of Mr Osborne even gets into that, he should resit Accounting 101.
Higher education: caps off | Editorial
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