Evaluating two radical ways to pay for university - Macleans.ca

Evaluating two radical ways to pay for university

Oregon may drop upfront tuition payments while the U.K. allows $14,000 fees


An anti-tuition protest in London in December, 2010 (AP Photo/Gareth Fuller/PA)

In 2012, maximum tuition fees in the United Kingdom nearly tripled to $14,000 per year, about twice the cost of the most expensive undergraduate programs in Canada. At the same time, the government extended student loans to nearly everyone and made paying them back income-contingent, so that those who can’t afford to pay don’t have to. Regardless, students demonstrated wildly in the streets.

This week, legislators in Oregon voted to consider another type of income-contingent plan, this one pushed by students—yes, students—who are willing to pay so long as they don’t face big bills up front.

Canada does a better job balancing access and quality than many of its peers, but there’s room for improvement. That’s why we should consider the merits of the Oregon plan and the U.K. overhaul.

Following a global recession that hit Britain hard, its highly-indebted government felt it had little choice but to shift the cost of higher education to the students who benefit most directly. The sticker shock of $14,000 fees caused a widely-predicted dip in applications of about 7.7 per cent and many said access to education had suffered. But, one year later, the number of applicants to U.K. universities is back up. It rose 3.1 per cent to near where it was in 2011. It turns out that sticker shock doesn’t scare too many away.

That’s probably because students from all financial backgrounds get loans that cover their full tuition bills, plus help with living expenses. It’s much harder to get loans here. U.K. students are only required to pay the loans back at a rate of nine per cent of any income they make above $33,000 per year. Those earning a middling salary of $46,000 after graduation are only required to pay back $100 per month, although they might wish to pay more and get rid of their loans quicker. Either way, it’s not a heavy burden.

Oregon’s Pay it Forward, Pay it Back plan would let students enroll without paying anything upfront. Instead, they’d be required to annually pay three per cent of their future salaries (assuming they get jobs) back into the state colleges fund for 24 years. Students at the University of California Riverside have made a similar proposal, which would collect five per cent of income for 20 years.

Both the U.K. system and the Oregon proposal offer high levels of access to higher education, but the Oregon proposal also does some redistribution post-graduation. It’s more economically progressive, because people who manage a higher income after graduation will end up paying a bigger chunk of the total cost of the education bill. A graduate whose gross income is $600,000 over a 24-year span would pay $18,000 for a four-year degree, while a graduate who makes $2.5 million over that same period would end up paying about $75,000. That “take from the rich” aspect may be popular with idealistic students.

The U.K. system, brought in by a Conservative-led coalition, is less progressive. The richest need not take out loans or can pay them off quicker. However, it does reward families that save for their children’s educations and encourages graduates to work hard and earn more money to pay off their loans quicker.

Both proposals make it clear that all are welcome in university regardless of ability to pay, while still allowing universities to charge enough to maintain high quality. We ought to take a closer look.


Evaluating two radical ways to pay for university

  1. Universal education, period.

  2. Some questions –

    is the dollar sign related to the UK figures meant to represent dollars (American?), pounds sterling or euros?

    is $46,000 a middling salary for a recent graduate of Uni in England? it seems a bit high for Canada. What is the relative purchasing power of that amount?

    how is interest calculated on outstanding amounts and are students who repay smaller amounts from smaller incomes penalized or is this taken into account?

  3. I’d be skeptical of any system that removes the cost of education completely from view. Even in the Oregon system this has the potential for negative consequences if it is done in a way that keeps education costs out of sight and out of mind.

    Tuition costs that are paid up front force students to consider their employment potential before they begin a program. This is important because it allows the market to respond naturally to workforce demand, which is better for the country as well as those who find themselves in high demand careers.

    Removing up front education costs essentially severs that link between career demand and field of study. That’s not to say that people shouldn’t be allowed to study subjects that aren’t in high demand, but don’t do it by standing on everyone else’s back.

    • University is not a trade school. It’s education.

      • Keep telling the kids that. They might find it comforting when they graduate and are selling shoes or insurance, or both…

        • Or they will be doctors and astrophysicists and professors, and lawyers and astronauts and writers and …..

          Hey, you wanna dig ditches, go for it.

      • As I was trying to say in the last sentence of my post. People should still be allowed to pursue education in any field they choose but they shouldn’t expect everyone else to pick up the tab.

        Maintaining the link between economic need and educational choice is important especially since many people are interested in several fields and it is better for the country (not to mention their personal finances) if they choose a high demand field.

        • We need educated people in this country, especially as we are now in the knowledge age.

          If all you want is a trade for an immediate job, you don’t need ‘school’ at all. Just teach kids to read and write, and then at what….grade 5?….teach them how to be plumbers and welders and such. High school is just killing time since you won’t need Shakespeare and grammar and biology and geography and history at all.

          Canadians had this same argument over allowing free secondary school….which also doesn’t give you a trade….but the country certainly needed better educated people to thrive.

          If it’s one thing we need to support in Canada, it’s education.

          • First of all let me say that your contempt for tradespeople is disturbing. The elitist stigma that you are perpetuating is part of the reason we have such shortages in the trades.

            My argument against hiding the cost of education from students is based on economics; your argument for universal education is based on ideology and unrealistic utopianism.

            We are already beginning to see the results of this ideology, the oversupply of educational credentials resulting in jobs that used to be entry level only hiring those who have a bachelor’s degree. The solution to this problem is not to support initiatives that further oversupply educational credentials.

          • We need educated people….that’s simple fact. We have thousands of jobs we can’t fill because Canadians don’t have the qualifications….so we bring in educated immigrants.

            Immigrants are more educated than Canadians. Also fact.

            Something else that is also fact….people don’t want trade jobs.

            So rabbiting on with your Marxist stuff about ‘workers unite’ and ‘come the revolution’ and all….is of no interest to me or anyone else.

            Bachelor’s degrees ARE now entry level…..that’s been true for years.

            Manual labour can be, and is being, done by robots.

            Work in the knowledge economy requires KNOWLEDGE.

            Brain not brawn.

          • While I agree we need educated people on principle, the fact remains that our homegrown educated people are struggling. While Canada has done better than most G8 countires with youth employement, that is certainly no laurel to rest on. They often graduate with crippling debt, live at home with their parents and are having a tremendously difficult time purchasing a home and starting a family… consequently they are not having kids, kids that we need to pay our massive public debts forward another generation (lest all the domino’s fall)… hence we need to import more and more immigrants to fill the void.
            It has been my experience that post secondary education is less about education and more about business… making money off the naive imo. I agree with PJ in that we desperately need a way to link education to the actual job market, so these kids know what the actual job prospects are when they enlist in a program. Of course University’s have no incentive to do this, as many students may simply say “no thank you.”

          • University educated people always find work, either here or abroad.

            They won’t graduate and become CEO of GM the next day, but they are far better off financially and socially than anyone with trade school.

            If that’s what you think ‘education’ is….it’s obvious you don’t have one.

            Students who say ‘no thank you’ then have no one to blame but themselves for their limited lives.

          • I can’t agree with you on that, first off “always” is a foolish term to use, and secondly, the types of work these students are finding when they join the work force is either below their skill set as acedemics or outisde their skill set as practical labourers (requiring further education, often at the college level) or (worst of all) not finding any job in their field of study and landing where ever they can to make ends meat.
            Saying no to bacholor of arts you cannot afford to go into a trade is a viable choice for many people, one that can and does enrich their lives, and for many, enriches them beyond what they may have achieved (or failed achieving) by attending university.
            As I say above, the real challenge is creating a better transition between being educated and being employed… this is where post secondary institutions fail its students.

          • We are no longer in the Victorian era where if you were born into the servant class, you died in the servant class.

            We have upward mobility now….and you choose your own class. If you don’t like the one you’re in…move to another one. Yes, it involves effort to move up the ladder….but that is the whole idea after all. You work to get ahead.

            Instead we’ve had people 4 generations in the factory.

          • You’re right it is not the Victorian era, we do have a system of upwardobility… the thing is… it could be better.

          • Agreed….which is why I promote free university. And education in general.

            Education itself is undergoing a huge overhaul…a paradigm shift in fact…a ‘black swan’ even…..but it has to be both free and promoted.

            Otherwise, at the very least, the ‘west’ is toast.

  4. Get rid of the programs that do piss all — Bachelor of Arts. Really?

  5. Neither of these programs are designed to increase accessibility, or improve the education students receive. This is simply a shell game to attempt to win votes from students for politicians. Both systems will reward failure and punish success. Why would anyone go to medical school in Oregon knowing you’ll be spending the next 24 years subsidizing a bunch of Arts degrees who will probably spend most of their lives as net-tax-recipients?

    Not to mention that school administrations become completely immune to any accountability. They’ll simply spend-spend-spend to keep current students happy, knowing previous students are legally required to continue funding them, no matter how ridiculous the expenditures may be. Under the current system, you can at least take your education money and go spend it elsewhere. With both of these systems, that option is removed from the consumer.

    Why is it that people are so bloody averse to simply paying for something that they want, the way it’s always been?