There's no such thing as a free education?

Reform Scotland believes that we need to re-examine the funding of higher education in Scotland in order to ensure a better balance, with both taxpayers and graduates contributing towards the cost of university education. We should be doing this because it will lead to a better and fairer method of funding higher education in Scotland, regardless of the current financial crisis or the possible removal of the cap on tuition fees down south - even though both of these things strengthen the case for change.

That is why Reform Scotland’s report, Power to Learn, published last June, called for graduates to contribute towards the cost of higher education in Scotland through the introduction of a deferred fee. The fee would cover a proportion of the cost of the degree and would only need to be paid back once the graduate earned more than the Scottish average salary.

In an ideal world, higher education should be an option open to everyone who reaches the required academic standard. However, even under the current system of taxpayer-funded university places, there are school leavers who cannot afford to attend university and instead seek employment. It cannot be right that such individuals, or indeed other non-graduates, have to fully subsidise those who can afford to go to university.

Although it is true that society as a whole benefits from having a well-educated and diverse workforce, graduates also gain individually from the higher wages they can accrue as a result of their degree. But, under the current arrangements, it is only wider society that pays for university education though the tax system, while the graduate does not contribute any more than the non-graduate. Although graduates may earn more and subsequently pay more tax, many successful top-rate tax payers have not gone to university, so higher tax contributions should not be seen as payment towards higher education.

Introducing some element of fee can also help to improve standards. David Lammy, the former Higher Education Minister in England and Wales, has said that when fees are introduced “students are more purposeful about what they should expect at university and what the general minimum standards should be across universities in this country.”

However, we are not advocating that Scotland should follow England with the re-introduction of up-front tuition fees. Such an arrangement could simply deter those who come from less well-off backgrounds. Similarly, we reject the notion of a graduate tax where the individual pays indefinitely, since that could see the graduate contributing more than the full cost of their study.

A deferred fee ensures that graduates pay a fair share towards the cost of their education, but equally guarantees that their ability to enter higher education is not based on their parents’ ability to pay. The deferred fee should cover a proportion of the cost of tuition. The Scottish Government would fund a set percentage of the average cost of a degree, broken down by broad subject area.

There is currently a lack of published evidence on the true cost of higher education in Scotland, which is why Reform Scotland has recommended that the Scottish Government commissions independent research to work out the true average costs of degrees. Then, in discussion with representatives of Scottish higher education institutions, it can be decided what proportion the government will pay.

The deferred fee is based on the system introduced in 1989 in Australia, a country which has a higher education participation rate of 86 per cent according to the OCED. Research has also indicated that the introduction of the scheme did not have a negative impact on participation rates in higher education from lower socioeconomic groups.

The existing system for collecting student loans could easily be used for the collection of the deferred fee, once the graduate earns more than the Scottish average salary, which in 2007 was £23,000. In the longer term, Reform Scotland believes that some of the extra resources raised from the deferred fee could be used to expand the availability of loans to all students and to raise the point at which they start being repaid to the Scottish average salary, in line with our proposals for the deferred fee.

In all this though, it is worth remembering that higher education is not free. Rather, it is paid for by taxpayers. Further, it is not a universal service like healthcare or school education from which no one should be excluded. Instead, it is based on academic achievement. Before universal services such as healthcare or policing are targeted for spending cuts, it is only fair that the current system of university funding, which often sees the less well-off contribute through their taxes for the better off to go to university, is reviewed.

Reform Scotland believes that our recommendations will go some way towards helping to create a system of higher education that continues to produce well-educated individuals, but is funded in a way that is fairer to society as a whole.