One big test for any reform to higher education funding is whether students should be allowed to pay fees upfront. It exposes the political divide over how progressive the system should be. Here are the pros and cons:
Reasons for a ban: Allowing students to pay fees upfront is a rich kids charter. Those from wealthy families will be able to sidestep the burden of repayments placed on those from poor or middle income households. It will give the lucky a leg-up while giving the middle classes a sack of debt to carry. It will give a free pass to those without credit constraints while placing a tax on those who do. For all these reasons, it does not pass the political fairness test. Those who pay upfront will pay less in total than those who are forced to repay over 30 years. A duke will pay less than his university contemporary who turns to teaching in a primary school.
Reasons to allow upfront payments: A good higher education system must be open to all, regardless of means, and must provide a safety net to those who find their degree isn’t a ticket to a well-paid job. A ban on upfront payments does not help reach either of those goals. Indeed, as Lord Browne points out, it will make higher education financing even harder in the short term, as the government will have to fund more loans. The most important principle should be that students pay for their value of the course they attend — whether with the help of their parents or through repaying income-contingent loans. As long as the poor are protected — both as applicants and graduates — then differences in the rate of repayment for those earning more than £21K are irrelevant. These are people who will mostly be earning more than average income, so who cares if a banker pays slightly less than a teacher benefiting from a 30-year semi-subsidised loan? Student finance should not be an excuse for income redistribution — we have the income tax system to do that.