The Guardian,
The end for Ulu

Michael Chessum (University of London Union president) on the end of the union:

“But this development is neither accidental nor senseless: it is the result of a marketising higher education system which is run by cliques of senior managers and former academics who have, increasingly, no basic loyalty to their institutions, their students or to any meaningful conception of education as a public good.”

Those who fear that, in the longer run, the study body will be fully incorporated into the corporate university are right to do so.

The demise of universities as places where young people can learn to participate in political action is unfortunate and will diminish the quality of both university life and of society more generally. Higher education ought to train students for full participation in society, not just the economy.

Read the full article on The Guardian website.

Related tweets:@michael_chessum
The Guardian,
Student loan sale U-turn ‘likely to cost £12bn’

This only tells part of the story:

“The decision to abandon the sale of the student loan book is likely to cost the government £12bn over the next five years and will require a review of the public finances, Graham Parker, the Office for Budget Responsibility (OBR), told the Treasury Select Committee on Tuesday.”

What is true and certain is that £12 billion has been booked as likely proceeds from the sale of a tranche of student debt and that needs to be reversed (the, so called, ‘cost’).

However, it is not certain that the government should have reasonably expected to swap the tranche of student debt in question for £12 billion in cash. This was only likely if buyers were also guaranteed a minimum return, something that would have cost the government year after year.

It is quite possible that cancelling the sale will be a net benefit to government: no transaction costs, expensive fees to bankers, etc. and no synthetic hedge to guarantee returns. Moreover, keeping the debt on the government’s books is a constant reminder that graduate employability cannot be neglected.

Read the full article on The Guardian website.

Related tweets:@GiftedPhoenix, @EricGordy
UK Parliament: Business, Innovation and Skills Select Committee,
Student loans system reaching tipping point

The Business, Innovation and Skills (BIS) House of Commons Select Committee released a report on student loans. The report damns the departments methods of estimating repayments and likely realisable value in a sale to investors.

The minister’s off the cuff announcement over the weekend appear to preempt the reports publication (see yesterday’s post).

The question that emerges is how sustainable is the current system of income contingent, government backed student loans. The system has brought more money to UK universities and may not cost the taxpayer more because, even with 45% estimated non-repayment, the student contributions roughly equal the extra inflow. The system is somewhat fair because those who manage to privatise the benefits of their education repay their education costs. However, treating the education costs as a fee and loan creates the impression that many do not pay back what they owe. The idea of education having mixed private and social returns is lost in the accounting.

The sale of the loans is already booked on the government’s accounts and is the basis for funding 30000 extra places. In the short term, the booking of the sale will need to be reversed and the extra places may need to be cancelled. Andrew McGettigan in his Critical Education blog has thoughtful comment and links (herehere and, on the rollback of student numbers, here).

In the longer term, three paths present themselves.

First, the government could continue down the privatisation path, altering the conditions of the loans to be more like that of the USA, with higher interest rates and, perhaps, removing the income contingent repayment system. Higher education as a public benefit is lost.

Second, there could be a return to a system largely funded from the recurrent higher education budget, perhaps with a more modest (e.g., £3500) fee backed by government loans as was in place until recently. This keeps some balance between the private and public contributions to higher education and prevents the headline write-downs of the current system. The total cost to the state need not change significantly, but those who successfully privatise their education get much larger returns to their private contribution than under the current system.

The third way is to keep the current system and accept that the write-downs are the state’s contribution to public benefits of higher education. This goes some way to ensuring that those that benefit financially the most repay their tuition but does not halt the tendency to see higher education as a consumer’s purchase.

Note: updated 22 July, 2014 to correct number of extra places announced in Autumn Statement.

See also:Andrew McGettigan (on BIS report), Andrew McGettigan (Autumn Statement reprise), edumeme (Vince Cable's announcement), Andrew McGettigan (on reversal to expansion), Guardian (BIS report), The Guardian (editorial on loan book sale), The Guardian (Aditya Chakrabortty on privatisation and loan book sale), UK Parliament (BIS report home), The Independent, UK Parliament (BIS report, html), UK Parliament (BIS report, pdf), The Telegraph, The Sun, The Mail, The Times (paywall)
Related tweets:@amcgettigan, @patmcfaddenmp
The Guardian,
Student loans sell-off abandonment raises tension in cabinet

Transaction costs, plus the discount required to give the buyers a profit given that the state can borrow for less than any likely buyer, means that the sale never made financial sense. Mr Cable seems to have realised this:

“‘The government was considering the sale of student loans on the basis that it would reduce government debt. Recent evidence suggests this will no longer be the case,’ the business secretary told the Social Liberal Forum.”

This is a good decision.

Read the full article on The Guardian website.

See also:Andrew McGettigan (early coverage)
Related tweets:@chakrabortty, @Aaron_Kiely, @Aaron_Kiely, @HarryCoath, @Alice_Smart, @le_education, @wonkhe, @lewis_d_coyne, @caronmlindsay
The Conversation,
Cost of student visa clampdown weighs heavily on colleges

Professor Geraint Johness:

“Using a methodology that I developed ten years ago to evaluate UK export earnings due to overseas students, the latest data suggests that the value of such exports amounts to well over £10bn each year. Constraints on the ability of our higher education institutions’ ability to sell their services have a non-trivial effect on the UK’s export earnings and GDP.”

In a society and economy best characterised as international, such as that in the UK, a balance needs to be struck between the costs and benefits of policing the boarders. Especially, with student numbers, it may be that in the attempt to reduce immigration much greater benefits are lost.

Read the full article on The Conversation website.