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University debt write-off costs £6 for every £1 spent on teaching Labour plan to fix student funding by solving loan gap
(35 minutes later)
Plans to revolutionise higher education and halve the cost of student fees are to be proposed by former Labour cabinet minister John Denham, as he warns that "the whole system of university finance for English students is sliding slowly but surely off a cliff".Plans to revolutionise higher education and halve the cost of student fees are to be proposed by former Labour cabinet minister John Denham, as he warns that "the whole system of university finance for English students is sliding slowly but surely off a cliff".
Warning that Britain already has the most expensive public higher education system in the world, the former universities secretary under Gordon Brown points out that for every £1 spent on teaching students nearly £6 is spent on student debt cancellation, a growing black hole in the public finances.Warning that Britain already has the most expensive public higher education system in the world, the former universities secretary under Gordon Brown points out that for every £1 spent on teaching students nearly £6 is spent on student debt cancellation, a growing black hole in the public finances.
He claims this debt cancellation figure is rising, with as many as 50% of this September's students not expected to repay their loans in full. Under Labour's fee system the figure was just 28%, "an increase that means fewer and fewer successful graduates are paying off the debts of more and more economically less successful graduates".He claims this debt cancellation figure is rising, with as many as 50% of this September's students not expected to repay their loans in full. Under Labour's fee system the figure was just 28%, "an increase that means fewer and fewer successful graduates are paying off the debts of more and more economically less successful graduates".
He warns "this will become a bigger issue in English politics", as ever-rising fees will lead to "more and more students and parents asking what and who they are paying for".He warns "this will become a bigger issue in English politics", as ever-rising fees will lead to "more and more students and parents asking what and who they are paying for".
He says that, as a result – despite £6.7bn of tax funded spending on higher education – hardly anything is spent directly on teaching students. He points out £4.2bn is spent on debt cancellation, and only £700m is spent on teaching.He says that, as a result – despite £6.7bn of tax funded spending on higher education – hardly anything is spent directly on teaching students. He points out £4.2bn is spent on debt cancellation, and only £700m is spent on teaching.
In a speech to the Royal Society of Arts he will say: "I don't know of any progressive principle [in] which it is a good idea to induce people, generally from lower income backgrounds, to take on huge loans, demand big payments and then to tell them they don't have to pay after all.In a speech to the Royal Society of Arts he will say: "I don't know of any progressive principle [in] which it is a good idea to induce people, generally from lower income backgrounds, to take on huge loans, demand big payments and then to tell them they don't have to pay after all.
"It's not how progressive parents bring up their children and the state shouldn't do do it either.""It's not how progressive parents bring up their children and the state shouldn't do do it either."
Other costs associated with a high fees system, he says, are the £150m a year National Scholarship programme and the £700m of fee subsidies provided by the Office for Fair Access.Other costs associated with a high fees system, he says, are the £150m a year National Scholarship programme and the £700m of fee subsidies provided by the Office for Fair Access.
Insisting the terms of the debate have to change, he suggests the cost of higher education can be cut by making 30% of courses intensive two-year courses lasting 39 weeks of study a year, and costing 20% less to deliver than a three-year degree.Insisting the terms of the debate have to change, he suggests the cost of higher education can be cut by making 30% of courses intensive two-year courses lasting 39 weeks of study a year, and costing 20% less to deliver than a three-year degree.
He also suggests as many as 50,000 courses – 15% of the total - should be funded by employers paying for the training of a member of their workforce.He also suggests as many as 50,000 courses – 15% of the total - should be funded by employers paying for the training of a member of their workforce.
He introduced these employer-sponsored courses when he was universities secretary.He introduced these employer-sponsored courses when he was universities secretary.
Above all, he argues that by working from the assumption that more money will be going into teaching, the cost of fees can come down.Above all, he argues that by working from the assumption that more money will be going into teaching, the cost of fees can come down.
He will suggest that as fees fall, debt charges will fall and the percentage of debt repaid will increase.He will suggest that as fees fall, debt charges will fall and the percentage of debt repaid will increase.
He calculates that increasing the teaching funding sevenfold from £700m to £4.8bn would lead to the spending on student debt cancellation falling from £4.2bn to £2.2bn – a £2bn transfer from debt cancellation into the education of students, helping to achieve a halving in fees.He calculates that increasing the teaching funding sevenfold from £700m to £4.8bn would lead to the spending on student debt cancellation falling from £4.2bn to £2.2bn – a £2bn transfer from debt cancellation into the education of students, helping to achieve a halving in fees.
He adds that due to the young age profile of UK students, higher education is seen here more than anywhere else as "a one shot deal for young people to do as early as possible".He adds that due to the young age profile of UK students, higher education is seen here more than anywhere else as "a one shot deal for young people to do as early as possible".
He says intensive two-year courses would require commitment and a maturity of approach by students, but this would be perfect for somewhat older students with work experience.He says intensive two-year courses would require commitment and a maturity of approach by students, but this would be perfect for somewhat older students with work experience.
He also suggests more students should study from home, saying it is the only realistic way to bridge the gap between the maintenance system and the real costs of studying. He suggests as many as 60% of students would study from home, requiring a cultural challenge for universities.He also suggests more students should study from home, saying it is the only realistic way to bridge the gap between the maintenance system and the real costs of studying. He suggests as many as 60% of students would study from home, requiring a cultural challenge for universities.
He also defends his plan for asking employers to subsidise as many as 50,000 employees undertaking higher education. He points out at present 50% of graduates do not work in graduate jobs, undermining their ability to pay and negating one of the reasons many go to university in the first place.He also defends his plan for asking employers to subsidise as many as 50,000 employees undertaking higher education. He points out at present 50% of graduates do not work in graduate jobs, undermining their ability to pay and negating one of the reasons many go to university in the first place.
Denham, who was a former parliamentary aide to the Labour leader, Ed Miliband, has put his ideas into the party's policy review.Denham, who was a former parliamentary aide to the Labour leader, Ed Miliband, has put his ideas into the party's policy review.
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