Source: Alamy

Feasible fees? 45 per cent of student loans will never be repaid, it is estimated

The Organisation for Economic Cooperation and Development¡¯s head of education has appeared to endorse the coalition government¡¯s ?9,000 fees system, after Labour accused ministers of misleading Parliament for claiming OECD backing.

Speaking to Times Higher Education, the influential Andreas Schleicher, director of the OECD¡¯s directorate for education and skills, acknowledged that the OECD had no data on the new system. But he said that extra costs for graduates in the ?9,000 system would not outweigh the earnings benefits they would gain from study.

Greg Clark, the universities and science minister, has argued the case for ?9,000 fees in the House of Commons by citing comments made by Mr Schleicher at the 2014 press launch of the Paris-based OECD¡¯s annual report Education at a Glance, at which he described England as ¡°one of the very few countries that has figured out a sustainable approach to higher education financing¡±.

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But the data in the most recent 2014 edition of Education at a Glance cover the pre-2012 system only: the system inherited from the Labour government in which fees were capped at ?3,375 in its last year of operation.

Chuka Umunna, Labour¡¯s shadow business secretary, this month of ¡°trying to pull the wool over people¡¯s eyes by citing the OECD¡¯s praise for the previous system, which they scrapped¡± and said that it ¡°appears ministers have misled Parliament¡±.

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Mr Clark responded by telling MPs that he had received a letter from Mr Schleicher stating that ¡°the rise to ?9,000 fees had not changed the overall assessment by the OECD¡±.

Asked whether the OECD had endorsed the ?9,000 system, Mr Schleicher told THE: ¡°What is very clear in the case of the UK is that the private returns from higher education are way beyond the level at which tuition fees are currently set. And that includes the ?9,000 fees.¡±

He added: ¡°Given that the UK has a means-tested grant system and an income-contingent loans system, we don¡¯t see any issue with the ?3,000 or the ?9,000. If you think about an individual getting way over ?100,000 back ¨C more in income than what they actually spent ¨C at tuition of ?9,000 or ?3,000 [that] isn¡¯t actually making that much of a difference.¡±

Mr Schleicher continued: ¡°The [OECD] data are still data from the old system. The only change that we would see between the data you have in Education at a Glance pre the change and post the change is that the cost [to graduates] side is increasing. None of the conclusions really depends on the level of tuition [fees].¡±

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The government¡¯s estimate of the portion of student loan outlay that will never be repaid has risen to 45 per cent. But Mr Schleicher said that the ¡°tax income that the UK earns from those people who do pay back and do complete their degrees is so much more that I don¡¯t even think that the non-payments are relevant in this sense¡±.

Liam Byrne, Labour¡¯s shadow universities, science and skills minister, said: ¡°This government has set university finances very firmly on the road to ruin ¨C and that¡¯s the conclusion of anyone and everyone who has looked at this so-called system in any detail.¡±

He added that ¡°even the government¡¯s own numbers show non-payments is a massive issue¡±, saying that this was ¡°money that can¡¯t be reinvested in years to come¡± and accusing Mr Clark of ¡°hiding behind ¡®comfort letters¡¯ from Paris¡±.

john.morgan@tesglobal.com