00:00Student loans are back under scrutiny as MPs examine whether the current system is fair for graduates, students and taxpayers.
00:09The British Social Attitude Survey suggests more people are questioning whether university is still worth the cost.
00:18Earlier, I spoke to Dr Steve McCabe, who's had a long career working in higher education.
00:25Well, I can speak as someone who's had experience both of being a student.
00:28A long time ago, I accept. I went to university in the very early 80s when like 7-8%
00:34of the population went and I got a grant.
00:38I didn't have to worry about fees because there were effectively no fees.
00:41The government paid the universities on the base of the numbers.
00:45So it was a very affordable system, dare I say it, which allowed people to have free education.
00:50So you could go from age 4 or 5 in primary school right through to 21 and above, of course.
00:56Now, the situation is that we've got sort of 40 plus percent.
01:00And of course, this was led by the fact that Tony Blair wanted to see 50 percent of the population
01:05go to university.
01:06Because the belief was that by having a much more educated workforce who had technical and other such skills,
01:14of course, they would be much more able to sort of to cope with the sort of the new technology
01:18and sort of the innovative and creative sort of spirit that's required in organizations.
01:22And that's all well and good.
01:24But of course, the other thing which is actually vitally important, of course, fees came in under the sort of
01:29the conservative administration back in the sort of the early 90s.
01:32Of course, they start at £1,000, then went up to £3,000.
01:35And of course, then went up to £9,000.
01:37And now they're sort of just a touch under sort of £10,000 a year.
01:40So students are sort of coming out with £30,000 debt and also, of course, any sort of money that
01:48they've had to sort of for living expense.
01:51So let's assume that's about £5,000 a year.
01:53So they're coming out with debts of at least £45,000 and probably a lot more than that.
01:57So £50,000, which, again, is all very well and good if, of course, you sort of go into a
02:02graduate level job that's paying you well.
02:04But the problem is, of course, we're not having sort of graduates go into those sort of jobs increasingly.
02:09They have to sort of take entry level jobs, which, of course, means that sort of those who would have
02:12gone into the entry level jobs of that university education are left with very few choices.
02:17The Treasury Committee says more than 52,000 people responded to its call for evidence.
02:22Many concerns focus on Plan 2 loans taken out between 2012 and 2023, where balances can rise if interest outpaces
02:32repayments.
02:34Wales has a separate student finance arrangement, but the wider questions around debt, repayments and confidence in higher education remain
02:42relevant.
02:43Ministers say repayments are linked to earnings and that lower pay graduates are protected.
02:48So we have a sort of real difficulty.
02:50And, of course, if you've got this so-called debt hanging over you, and, of course, some people say it's
02:54not a debt, but it effectively sort of translates into a sort of a tax for the rest of your
02:58life.
02:58Well, I was going to say the rest of your life, but, of course, there's various sort of versions of
03:02the sort of student's loan, which, you know, becomes more complicated.
03:06But you're sort of paying 9% over a certain limit.
03:09Then, of course, that is a sort of burden on a liability that you have to sort of repay.
03:13And, of course, people are now beginning to ask themselves, why should I sort of go and accrue or accrue
03:19this debt, as it were, and then end up in a job where I'm being paid as below the sort
03:24of the average wage for the sort of the country, which is at present about 30,000.
03:29So there's a big problem.
03:30And, of course, it's only going to get worse where sort of the jobs are seen to try up.
03:33And, of course, we've talked about AI in the past.
03:35That's going to have its impact.
03:37So what it does mean, and if I may offset it about, and, of course, I have a little bit
03:42of experience in this, having sort of been an academic in a university for, yeah, 35 years.
03:46So I do know how the system works.
03:48Universities have found it increasingly difficult to sort of cover their costs because, of course, universities are about sort of
03:52teaching, also about research and various other things.
03:55And, of course, we have huge overheads to try and keep the system going.
03:58So everyone seems to be unhappy, the students, or I call it now the customers, who sort of, you know,
04:04they pay for this education.
04:06Although, of course, it's not a true market because every university charges the same.
04:10So, of course, it hasn't worked out as was expected, where, of course, there would be a hierarchy of institutions.
04:15How this is fixed, I do not know because it would be very difficult to sort of to decrease the
04:21sort of the supply.
04:23Although that may happen by sort of a process of sort of elimination where some institutions may just go bankrupt.
04:30And I suspect the sort of government wouldn't be displeased about that because it might sort of reduce the sort
04:35of the number of sort of institutions who are sort of, you know, effectively trading on nothing.
04:39Perhaps we need a sort of more targeted system.
04:42But the problem is that once you sort of make a system more targeted and, of course, this mean test
04:46and whatever else, it becomes complex.
04:48And the transaction costs are sort of administered in the system become more expensive than actually sort of giving it.
04:52So it's a difficult situation we're in.
04:55And I think it's a clear case of if you want to get to there, wherever that may be, don't
05:00start from here.
05:01MPs will now weigh up evidence from graduates, student groups, universities, campaigners and government.
05:07Their task is to consider whether the system remains sustainable and whether it still commands public trust.
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