Alex Broadhurst
University is a dream sold to young people that will give them the key to any doors they could possibly want to unlock. They are told anyone can attend no matter their financial background, due to the UK government’s student finance system. Tuition fees are paid and maintenance loans are granted so students can afford to move away from home and go to the top universities. But that’s just it, it is a dream that is sold. Once final year rolls around, what comes next? Is an undergraduate degree enough to secure you a job in 2025?
The Social Mobility Tax
University can provide incredible opportunities for experience and networking, and a degree provides a whole new world of jobs to apply for. Research from Universities UK suggests that by age 31, graduates typically earn 37% more than their peers who did not receive higher education. For people who come from lower socioeconomic backgrounds, the student finance system means they can afford this education, but it is a loan and all loans have to be repaid.
As of August 2023 you will only begin to repay student loans when your income is over £25,000 a year and you pay back 9% of your income. The government website presents this example:
-Source from gov.uk.
Instead of a loan repayment it acts more like a tax; it is money you never see, taken straight from your paycheque
£52 is a reasonably small amount of your monthly income, but that also means a very small part of your loan is paid off, therefore you make these repayments for longer and accumulate more interest. At 3.2% interest a year it is unlikely the monthly repayments made would actually go towards the original loan and more so paying the interest, making it near impossible to clear in its entirety. Instead of a loan repayment it acts more like a tax; it is money you never see, taken straight from your paycheque.
Of course not everyone needs to take out student loans so while student finance allows people from lower socioeconomic backgrounds to attend university, it also charges these people a tax to move up social classes.
Cost of Living Crisis
Student finance is calculated on the basis of what an individual’s parent or parents’ salary is. The maximum loan is for living away from home, but outside London is £10,544, a mere £1,667 more than someone living at home on the maximum loan could receive, and they would be expected to pay their yearly accommodation charge with this money. In the current cost of living crisis, this maximum loan is barely enough for rent (neglecting other costs) and not everyone receives this full amount.
There isn’t a lot of room for saving for a postgraduate course when students are struggling to fund their undergrad.
According to the government, an individual’s parents are expected to contribute the rest of the amount if a student is offered less than the maximum loan. However, this is a lot of pressure to put on parents who are currently having to pay more for everyday essentials than ever before. According to the Office of National Statistics the price of electricity alone has risen by 8% in the last 12 months. If the prices for bills are increasing how can parents be expected to pay for their children’s bills too? There isn’t a lot of room for saving for a postgraduate course when students are struggling to fund their undergrad.
Postgraduate Funding
whether they want to continue their studies or not becomes irrelevant.
Student finance works differently at a postgraduate level. If your masters course starts after the 1st of August of this year you can receive up to £12,858 in total, a sum which doesn’t even cover the costs of some courses. To study a masters in finance at the University of Manchester for example, it costs £22,600, which is nearly twice the amount of the student finance loan.
This prices out candidates from lower socioeconomic backgrounds so whether they want to continue their studies or not becomes irrelevant. Of course this is an example of a higher course cost and many fall within the parameters of the loan, but there is no money left over once the tuition is paid. This in itself limits students in which universities they can attend, most choosing a university closer to home so they can commute rather than pay for accommodation. Therefore, when choosing a university for postgraduate education, it becomes more about location than which course is the best for them.
Masters loans are repaid at a lower yearly income than undergraduate with repayment starting at an income of over £21,000 a year. 6% of your income is paid back on top of repaying undergraduate loans at the same time and so becomes a much larger chunk of your paycheque taken every month. This dampens the benefits of a higher salary.
It is a measure not of intelligence, but one of finances when it comes to who does and does not get to continue in higher education.
With the cost of living steadily increasing and student loans not rising to match them, it is no surprise when government statistics reveal that the progression of pupils who have received free school meals to higher education has fallen for two consecutive years and is a shocking 28.9%. If pupils can not afford even undergraduate education, what hope is there for postgraduate education? It is a measure not of intelligence, but one of finances when it comes to who does and does not get to continue in higher education. People born into lower socioeconomic backgrounds face barriers to social mobility when the education required for better jobs and opportunities are out of their price range or they are taxed for even attempting.
Alex Broadhurst
Featured image courtesy of Dom Fou via Unsplash. Image license found here. No changes were made to this image.
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