If you’re going to be applying to university this year, then the increase in tuition fees is likely to be a subject never too far from your mind. Following much violent protest, a few inter-party fallings out and some rather hazardous political U-turns, the government has decided to raise the cap on University tuition fees and charge undergraduates up to £9000 per year for their studies. Even if you have your ear carefully pressed to the ground, the rapid changes and constant to-ing and fro-ing may have left you a little confused. Never fear! Read on to find out everything you need to know about the tuition fee rises, how they will affect you and what you can do to make things a little bit easier once you graduate.
So what kind of figures are we talking?
From 2012 onwards, universities will be allowed to charge students up to £9000. Originally this number was only allowed to be charged in ‘exceptional circumstances’, such as if it was an intensive 2 year degree, but universities such as Oxford, Cambridge, Imperial, Exeter and Durham have all applied to charge the full fee rate, arguing that their degrees are worth this sum of money. More universities are set to join them. New regulations by the Office of Fair Access have demanded that a proportion of fees charged over £6000 be dedicated to widening access and giving scholarships and bursaries to poorer students. Cambridge, for example, is currently planning to introduce a means-tested waiver for the top £3000 of the fee. Under the current forecasts, however, a graduate who spent 3 years at university paying £9000 per year, could come out with a debt of up to £38,000 once maintenance loans are accounted for. On the brighter side, it is estimated that the poorest students will pay less in future than they do now.
Eek. Well then how do you pay it back?
Current plans are for graduates to have to pay a percentage of their salary above a certain threshold. This has been increased from £15,000 p.a to £21,000 and graduates will be required to pay 9% of their salary above this for thirty years. After 30 years, if the debt hasn’t been paid, it is written off (Just as their kids start going to university! Oh the irony…!). The amount graduates have to be earning before they start paying will be adjusted according to inflation every year, so as £21,000 buys less, the threshold for paying back the loan will increase. All in all, this means that if you earn say, £25,000 per annum, you will have to pay an extra £187.69 per month to pay off your debt. Experts have already predicted that only 50% graduates will be able to pay off their loan within 30 years: at the moment, you would need to be earning a salary averaging £48,850 over 30 years in order to pay back your loan in 26 years – and that’s only if you’re being charged £7500 per year. There are also likely to be penalties for people trying to pay off their debt faster and it is even estimated that 10% graduates will actually pay off more than they borrowed.
So why is this all happening now?
You’re probably tired of hearing this by now, but it’s the recession. Years of rising investment under the Labour government, which saw many more students going to university, have now given way to necessary spending cuts. It costs approximately £7000 per year to teach an undergraduate degree (and the tutorial-style system of teaching at Oxford and Cambridge as well as Medicine and Science subjects are even more expensive). Currently 29% of the universities’ funding comes from fees, a further 35% from the government and the rest from donations and endowments. The government have had to cut the amount of money they give to universities and the students need to make up the short-fall.
Is there light at the end of the tunnel?
There are certain things that may make you feel a bit happier if you are worried about how much you will have to pay. Some graduate employers are promising to be very generous: Pharmaceuticals giant GlaxoSmithKlein are offering to pay 100% of the tuition fees for its graduates who started their degrees after 2012. Accountancy firm KPMG are going to be funding 75 students through university and employing them afterwards. Many other large graduate recruiters are set to follow suit as their generous schemes will guarantee them the best graduates. This is definitely something worth keeping an eye on before you begin university and whilst you are there. If you’re worried about how much you will have to pay, it’s worth getting all the information you can. Speak to your school’s careers department and the universities you are thinking of applying to to find out whether you are eligible for any bursaries or scholarships. If you’re thinking of applying to Oxford or Cambridge, give us a call and we’ll try to give you any information we have from our own experiences.