Government wants retrospective repayment hike on undergrad & FE loans – admits £9k fee system is unsustainable

UCL Defend Education blocks MP Vince Cable's offices with red boxes representing debt, during the campaign against loan privatisation which also threatened to hike up repayments

UCL Defend Education blocks MP Vince Cable’s offices with red boxes representing debt, during the campaign against loan privatisation which also threatened to hike up repayments

Ben Towse, NUS Postgraduate Committee

After years of denial and dismissal, the government has quietly admitted that the fee and loan system it introduced for undergrads starting in 2012 in the face of the mass protests of 2010, and later extended to further education (FE) students over 23, is “unaffordable in the long term”. Our protests and criticisms, derided at the time, have been vindicated, but it is a bittersweet victory. Repayments on the loans are lower than initially expected, because the repayments are determined by income, and too many graduates will be on low incomes because of the Tories’ low-wage austerity economy. Now the government wants to reduce the national debt further. So instead of going for those who can afford it – by taxing the rich and businesses – they propose to gouge billions of pounds out of students and graduates, by increasing repayments on all post-2012 loans, changing the terms students signed up to when they started their courses.

Changing the repayment threshold

The policy was buried in the recent Budget, and three days ago the Department for Business, Innovation & Skills (BIS) opened a consultation. When the post-2012 loans were introduced, repayments were to taken from income over £21,000, to protect lower-waged graduates. In order to keep that threshold the same in real terms, from 2016 it was promised to rise in step with average incomes. The Tories now propose to freeze that threshold at £21k until at least 2021 – so as inflation and living costs rise, the threshold will fall in real terms, meaning repayments are increased, and lower-waged graduates who would not have expected to make repayments will now have to.

The second, less preferred option presented is to freeze the repayment threshold in a similar way, but only for new borrowers – i.e. students starting in 2016 and later. The government does not like this option because it will make it less money and that money will only come in from 2020 onwards, failing to contribute to their political target of paying off debt during this Parliament. Maintaining the system the Tories introduced just 3 years ago, and not changing the repayment terms for anyone, is barely considered an option in the consultation – it is described as “unaffordable”.

Raiding the pockets of lower- and middle-income graduates

What will the impact of these retrospective repayment hikes be? Andrew McGettigan says about 2 million borrowers will be affected. The government projects that graduates on starting salaries of £21,000 to £30,000 would repay an additional £6,100 each over the lifetime of their debt before the remainder is written off at the 30-year mark. Graduates starting at £40k, who would previously have expected to pay off virtually their entire debt before the 30-year mark, will repay just £300 more under the new system. And those lucky few starting on £50k will actually pay slightly less in total under the new system than the old one, as the increased repayments will ensure they pay off their debt sooner, before interest accumulates! So this policy directly raids the pockets of middle and lower earners, leaving the better-off largely unaffected or even richer.

The government expects to make £3.2 billion in extra repayments from existing undergrad borrowers, and an unspecified additional amount from future students. By comparison, they will make just £35 million out of existing FE borrowers, in part because these students will be repaying out of lower salaries. FE loans seem to be included in these changes not because the government has considered a case for doing so, but because it would be bureaucratically too difficult to separate them out of the undergrad-focussed loan system they were bundled into in 2013. The consultation gives almost zero attention to the effects on further education.

Crossing a line

This is not only an injustice in terms of the regressive gouging of even more cash out of graduates. Crossing this line, showing the government is willing to retrospectively alter the terms of repayment, and setting the precedent that student debt holders are a piggy bank that can be raided any time the state needs some spare cash, could have a grave effect on prospective students’ willingness to take on debt and enter university or post-23 FE study. When introducing this system, the government made much of how prospective students need not worry about taking on debt, as it would only be paid off “when they could afford it”. How are students, particularly those without the safety net of wealthy and supportive families, supposed to be encouraged to take up study and get into debt if the repayment terms can change at any time on the whim of the government? The effect on widening access could be grave.

So too could the effect on choice of courses. If the government can change repayments at any time, the pressure is on to get high-paying jobs that will pay off more debt faster, before the next government policy swerve. Why risk delaying repayments? Students will be pushed even harder to abandon academic exploration and focus only on the subjects that will net us the most lucrative jobs.

We have to stop this – and we can

The student movement must fight the threat of both retrospective and future changes to increase repayments. We will defend current students and graduates, but we won’t sell future students down the river either. Instead, all increases must be stopped, and then fees, loans and existing debt should be scrapped and replaced with free education and living grants for everyone in further and higher education. The government should tax those who can afford it instead of raiding us to bail out their economic problems.

It will not be enough for NUS and student unions to write polite responses to this consultation and wait for the government to respond. We need to kick off serious action, including protest and direct action, and we need to do so as soon as possible. The NCAFC National Committee is holding a meeting open to NCAFC members next week to discuss stopping the maintenance grant cuts, and this issue will be on the agenda too. Join us to plan the fightback.

NCAFC Calls Mobilisation Over Debt: Organise in your area now!

demo

In June, the government announced plans to sell off student debt to private companies. Because there is so much student debt, it is unprofitable to own, so to sweeten the deal, the government is considering upping the repayment rates. This would be the equivalent of a huge and retroactive stealth hike in tuition fees, all in the name of an exclusive, market model of education.

In an open letter, we have explicitly targeted the LibDems and demanded that they rule it out: http://www.theguardian.com/commentisfree/2013/sep/13/nick-clegg-universities-direct-action

NCAFC is calling for national and localised action against the sell-off of the student loan book. On top of direct action, NCAFC will seek to create a new coalition of social movements and trade unions to fight the sale of the student loan book by mobilising students, workers and graduates.

What can you do?
• Call an organising meeting on your campus around October 1st, the day when our deadline for assurances runs out. NCAFC London has already organised one here:http://www.facebook.com/events/168905169966158/
• Plan embarrassing stunts and disruptive direct against your local politicians – Lib Dems and others – if they fail to declare that they are against the debt sale and the Lobbying Bill
• Tell the companies who fund the Lib Dems to stop funding them
• Make sure that you and any organisation you are involved in joins the new coalition against the loan book sale. NCAFC will be calling a meeting in the coming weeks

The Facebook event for this mobilisation is here: https://www.facebook.com/events/212736578888544/

Whatever you get up to, please let us know so we can publicise it, by emailing the NCAFC national committee on [email protected], same goes for if you need help or resources!

National demonstration – 29 January 2011, London

The first parliamentary vote might have gone through, but this is not the end! That is why, in the absence of action by NUS, the National Campaign Against Fees and Cuts has called a second national demonstration in London, on Saturday 29 January. [Read more…]

The case for free education: an NCAFC briefing

We have produced this briefing to help activists win the arguments for free education, and counter the lies told by the bosses and their government about the “need” for cuts in public services.
[Read more…]

Student feeder march to anti-cuts protests, 20 October

Join the student feeder march to Downing Street on the day the cuts are announced!

4-7pm, Wednesday, October 20
Meet University of London Union, Malet St, WC1E 7HY

Bring banners and noise!

Freeze the Cuts, Cut The Fees!
Cut Bonuses Not Books!
Fund Welfare Not Warfare!

Called by the Coalition of Resistance

Facebook event here.

NCAFC statement on Browne Review as a downloadable leaflet

Please download this leaflet, copy it and distribute on your campus/in your town. (New versions will appear as we have more information and plans.) Click here.

RED ALERT: Coalition threatens unlimited fees

NOW IS THE TIME TO FIGHT BACK!

(For this statement as a downloadable and copyable leaflet to give out on your campus, click here.)

The Browne Review of higher education funding, which is due to make its report tomorrow (12 October), is pretty much certain to recommend abolishing the cap on tuition fees.
[Read more…]

No to a graduate tax!

Cable: out to rob students and shut universities

1. We oppose the Lib Dem-Tory coalition government’s plans for a graduate tax. At the same time, this “exercise in rebranding” fees (as lecturers’ union UCU put it) is not the only or even the worst problem with Vince Cable’s plans, which amount to a massive extension of marketisation in our university system.

We demand an end to all fees, free education and living grants for all students; we want higher education to be run as a public service, funded by taxing the rich and business.

2. The graduate tax is rebranding because the existing system is already, as Cable has admitted, a form of graduate tax. Under his plans, students will still pay for university, and in fact pay more, with all the inevitable consequences in terms of access to higher education. A graduate tax is the Lib Dems’ way of squaring their promise to abolish fees with their enthusiastic participation in a right-wing Tory government committed to further marketising higher education.

The leaderships of the National Union of Students and the Labour Party are, unfortunately, in agreement with the government that students should pay for university. NUS in particularly has been utterly pathetic, falling over itself to welcome Cable’s proposals. The real question is why students should have to pay at all. We do not expect those who use the NHS to pay any kind of charge or tax, nor those who have children and use schools. The same goes for all kinds of other public services funded out of general taxation. The Tories and Lib Dems might like a world where people are charged for using hospitals or schools, but they don’t dare admit it. So why should university or college be any different?

Education is a good in itself, a public service which benefits individuals and society. It should not be seen as a ticket to a higher paid job, particularly since the great majority of those who graduate from university will not be high paid, if they are lucky enough to get a job at all. “User pays” is an extremely dangerous principle, a wedge pushed into the heart of the welfare state.

Of course, we will be told that the money for free education isn’t there. Yet this year, just the individuals on the Sunday Times “rich list” – that’s the 1,000 wealthiest people in the country – increased their wealth by £77 billion. So much for “all in it together”! Compare that to the £7 billion the scrapped Building Schools for the Future scheme costs, or the £8 billion it would cost to abolish all fees, not only for British students but international ones as well (the figure for home students only is £2.7 billion).

The idea that cuts and higher fees are necessary or unavoidable is simply nonsense. The reality is that this government of millionaires is seeking to make the vast majority of people – workers, the unemployed, pensioners, students – pay for the crisis the bankers created while the rich, after a little wobble, continue to rake it in.

We shouldn’t let them pull the wool over our eyes. We should demand that instead of making cuts the government scraps Trident, taxes the rich, takes over the wealth of the banks which we are subsidising as taxpayers anyway. The public is a majority shareholder in RBS. Why not use its profits rather than the scraped-together savings of working-class graduates to pay for education?

The choice is not universities vs schools or universities vs hospitals. It’s between the jobs and services we all need and the greed of big business and the super-rich.

3. At the same time, Vince Cable says he wants to see some two-year degrees, more students living at home, university closures/mergers – according to the Guardian, at least twenty universities will close in the next few years under his plans – and a big expansion of private universities. He wants to expand the marketised system which New Labour put in place, meaning a liberal education for an elite and low-quality, underfunded training to turn the rest of us into pliant workers for exploitation. Though NUS has failed to recognise it, this is the central thrust of his plans, and must be vigorously opposed.

4. Just as there will be strikes by public sector and other workers against the government’s plans for cuts, there will be mass student resistance, continuing the surge in occupations and direct action against cuts which began last year. NUS’s welcoming of a graduate tax suggests that it will be at best an unreliable leader for that resistance. The National Campaign Againt Fees and Cuts exists to coordinate the fight back, strengthen it and help it win.

Tory cuts no way – EMA is here to stay!

(Originally posted on Revolution)

The Con-Dem government have refused to rule out cutting Education Maintenance Allowance (EMA) as part of their promised cuts programme.

[Read more…]

Mandelson declares war on higher education

The announcement by Peter Mandelson on the 22nd of December of an extra £135m worth of funding cuts to Higher Education, which brought the total level of education cuts in the UK to £500m, revealed the government’s plans for Higher Education. In a letter to the Higher Education funding body HEFCE, Mandelson made it clear what he wanted to see in the sector: more business control over education, ‘fast track’ stripped-down degrees, and intensified competition for funding between universities. These changes go hand-in-hand with a jobs massacre in the sector. Before Mandelson’s latest announcement, the University and College Union calculated that over 6,000 jobs were at risk in Higher and Further Education across the UK. With these additional cuts, that figure is certain to grow.

In his letter, Lord Mandelson calls for the creation of two-year degrees. He calls this “diverse provision” – in reality it is a way of maintaining a business-friendly skills base in society on the cheap, and will be paid for in higher class sizes, greater workloads, and a dumbed-down, exam-driven syllabus. In addition, the letter is explicit that the content of courses needs to be more directly determined by business interests. It calls for clearer signals from business on what skills employers want in their workers, and for “a mechanism to redeploy funds, on a competitive basis, to those institutions that are able and willing to develop… provision in these key areas”. In other words, the government wants to force institutions of learning to provide only the courses that businesses want to see, or to have funds withdrawn.

The government has been building a business-oriented education sector for some time now. Last year student activists disrupted the latest in a series of conferences between business leaders and university bosses aimed at expanding the influence of business in higher education.

The cuts and restructuring that have been taking place since the introduction of fees are now set to intensify in the wake of the economic crisis. The student movement and the unions that organise education workers have to get themselves in shape – fast – to resist these attacks.

We need unity between staff and students, a realistic programme of industrial and political struggle in the immediate term, and a willingness to take radical direct action- occupations, unofficial action and secondary action all need to see a comeback in the education sector.