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Who's afraid of big bad debt?

Are students really so averse to the idea of university top-up fees? Fran Abrams looks at the evidence here and abroad

An early day motion tabled by more than 157 MPs in protest against the Government's plans to allow universities to charge top-up fees is the model of moderation. It "recognises the widespread concern about the effects of variable tuition fees and the perception that debt may have on access to university" and asks ministers to look at other ways of funding higher education.

The measured language disguises the fact that, during the next few weeks, the Government faces the biggest backbench rebellion since it came to power.

Many Labour MPs are angry about the legislation proposed in last week's Queen's Speech which would enable universities to levy up to pound;3,000 a year in fees. They argue that poorer students will be excluded from HE and that graduates will leave with huge debts.

At first, and even second glance, their objections make sense. The Government plans to make graduates repay the cost of higher fees, and some estimates have put their likely average level of debt at around pound;30,000. The notion that potential students could be put off by the prospect of having to repay such large sums has received widespread support.

There is a respectable body of academic research to support the contention.

Among those who have backed it is Claire Callender, professor of social policy at London's South Bank university, who argued in a recent report for Universities UK and the Higher Education Funding Council for England that poorer students would be put off by the change.

She surveyed almost 2,000 students in sixth forms and further education colleges about their attitudes to debt, asking them if they agreed with statements such as: "Owing money is basically wrong" and "There is no excuse for borrowing money". The results showed students from professional or white-collar backgrounds were more relaxed about the prospect of debt than those whose parents had manual or unskilled jobs.

Professor Callender is convinced the prospect of increased debt will put off students from poorer backgrounds. "Fear of debt is a class issue," she says. "It puts off students from lower-income families more than it does those from well-off backgrounds." Students who are "debt-averse" are four times less likely to go to university than those with more tolerant attitudes to debt, she adds.

Yet a closer look at the evidence suggests the picture may be more complex than the headlines from her research imply. If the prospect of debt is a major factor in putting certain students off university, then surely we should be able to see that happening already. After all, graduates have had to repay loans for their maintenance costs for more than a decade.

Professor Callender's research revealed, for example, that women were more concerned about the prospect of debt than men, suggesting they might therefore be put off going to university by higher loans. But a glance at university enrolment figures over recent years shows the proportion of women rising, from 49 per cent in 1994 to 52 per cent in 1999. The proportion of mature students - another "debt-averse" group entering HE - did drop during the late 1990s, from 22 per cent in 1994 to 18 per cent in 2000, but provisional figures for 2003 show they have now risen again to their 1994 level.

Numbers of students from poorer backgrounds, too, rose during the 1990s as universities expanded. In 1985, at the beginning of that expansion and before the advent of loans, just 8 per cent of school-leavers from unskilled and manual backgrounds went to university or polytechnics. By 2000, that figure had risen to 18 per cent - a 125 per cent rise in the proportion of this group going into HE. At the same time, the proportion of school-leavers going into HE from white-collar households rose from 37 per cent to 48 per cent - a 33 per cent rise in the proportion of this age group entering university.

This apparent anomaly was highlighted by Bahram Bekhradnia, director of the Higher Education Policy Institute, in a recent analysis of projected demand for HE over the next seven years. He found no evidence that students were likely to be put off by top-up fees. The key factor, he said, was the level of support students expected to receive while at university rather than the prospect of making repayments later.

"My view is we should look at evidence of what people actually do, rather than what they say they might do," he says. "What is most important is cash in hand now - maintenance grants and bursaries for poorer students."

Ministers have failed to get across the message that students will not be asked to pay top-up fees in advance, he argues. If they had been more forceful, much of the current alarm could have been allayed.

It is impossible to know for sure how top-up fees will affect student demand until they have been introduced. But there is a growing body of evidence from other countries where similar changes have already been made and that, too, suggests poorer students have not been put off.

The most recent overseas evidence comes from Canada, where university fees have risen steeply over the past decade. The change had been expected to put off poorer students, but this month, the Canadian government's statistical service reported the opposite had happened. The only social group which increased its university participation in Canada between 1991 and 1997 was the poorest group.

Statistics Canada concluded that poorer students had benefited from recent reforms because they had been accompanied by generous scholarships and bursaries, coupled with higher limits on student loans. The poorest students had happily taken up the loans, buoyed by the prospect of a relatively comfortable experience during their time at university.

In Australia, too, there has been recent evidence that top-up fees have made little difference to university participation rates. A system very close to the one proposed in the UK, in which graduates will make income-related loan repayments, was introduced in Australia as long ago as 1989.

There has been little change in the proportion of poorer students going to university in Australia, according to the Centre for Economic Policy Research at the Australian National University. But there has been a striking increase in the number of women going to university from all social classes.

In America, where loans only partially cover the cost of fees and living costs, research has shown that students struggling with high levels of debt are more likely to drop out. But this is not inconsistent with the evidence from other countries. In the States, too, the participation and persistence of students from poorer backgrounds was dramatically improved by better financial support during their studies.

Nicholas Barr, professor of public economics at the London School of Economics, has been studying student funding for two decades. He believes the Government's current proposal encompasses two of the three elements essential to widening university access without eroding quality: variable fees deferred until after graduation, and a good loan scheme which covers both fees and maintenance costs.

The third element, he argues, should be measures to encourage more school pupils to think about university at an early stage. Pupils from poorer backgrounds are dropping out of the race long before the time comes to apply to university. Ninety per cent of suitably qualified pupils with professional parents go to university, Professor Barr says - exactly the same proportion as do so from manual backgrounds. But the majority of poorer students never even reach that point because they have chosen different paths at 16.

"Maybe they have never even thought of it, or maybe they think wrongly that they are not good enough for it," he says. "If we want to get real we must reach out into schools and demystify the process. That means better information, and also better schools."

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