The Guardian this week published statistics showing Universities to be in a state of serious debt crisis. Some, such as Manchester University, owe as much as £12.4million.
Despite this, Phil Harding, chairman of the British Universities Finance Directors Group, doesn't seem at all worried. He said, in the Guardian:
"I think we are borrowing with a degree of confidence and a reasonable expectation the cap on tuition fees will either come off or be lifted so that universities will be able to charge higher fees."
So, the plan is seemingly to spend now in anticipation of increased income from students in the future. The wisdom of this is questionable. With fees already in excess of £3,000 per year, is it fair to expect students to pay so much? An Equifax study last week estimated the average student starting university this year will graduate with £30,000 of debt. Yet the strategy still appears to be to solve institutional debt crisis by causing individual debt crises. We are educating our students into debt and that cannot be good. With consumer indebtedness at record levels, the culture of borrowing is one that should be counteracted, not encouraged.
The Liberal Democrats have a different theory about funding of higher education, which often makes them popular amongst students. Speaking in The Guardian, their higher education and skills spokesman Stephen Williams said:
"Universities should be making a plea for extra central government funds rather than anticipating passing the bill on to future students."
This standpoint makes more sense to me, as individuals shouldering such massive burdens of debt before even considering a mortgage, is surely undesirable. Donald MacLeod in the Guardian makes the point that "on the average graduate salary of £18,000, repayments are £5.19 a week. In that sense, it's more like a tax." If that is the case, then why not just rebrand it as a graduate tax? The Sutton Trust report claims that it is the perception rather than reality of debt that is deterring poorer students from University. As someone who has spent periods as a full-time taxpayer as well as a student, I would have no problems with paying extra tax to support future students through Higher Education.
Thames Valley University, where I am a student, was noted in the Guardian piece as one of the worst indebted. The Guardian reported the debt at £5.8million, whereas the Times Higher Education Supplement quotes a deficit last year of £6.5million.
Yet today, it was revealed the institution is undertaking a restructuring programme that will include a £60million spend on estates. Questions of priorities arise when, from a student's perspective, it appears money is being spent on repainting corridors when people struggle to find a functioning computer in certain faculty buildings. Within this development budget, is included a £6.7million grant from the government. It will be interesting to see if the results provide the 'value for money' the government demands from its public services.