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Government has underestimated public cost of university fees, says report

25 October 2012

The government has underestimated the cost to the public purse of its controversial changes to university funding, warns a report released today.

The report, from the Higher Education Policy Institute (HEPI), says optimistic assumptions made by the government over the average level of university fees and how much money it would get back from graduates' salaries mean the actual cost will be much more than the government budgeted for.
UCU said the report was further evidence that the government's decision to hike up university fees was an ideological move, rather than a financial one, and will cost far more at a time when the government is preaching austerity.
UCU General Secretary, Sally Hunt, said: 'This timely report highlights the inaccurate assumptions and optimistic predictions made by a government determined to push through higher fees, rather than properly consider the financial consequences of the move.
'We warned at the time that fees close to £9,000 a year would be the norm and that the calculations for repayment by graduates were flawed. We take little pleasure in being correct, but it is clear now that forcing the burden of paying for university education onto students was an ideological move, not a financial one.
'This report highlights how lower earners are likely to see their salaries rise at a far slower rate than the top earners, which is another reminder that we really are not all in this together.'
The report challenges a number of assumptions made by the government including:

  • The average tuition fees is closer to £8300 than the £7,500 predicted by the government.
  • The average graduate salary in real terms 30 years after graduating will be £75,000 per year, far less than the government's assumption of £100,000 - and still an extremely optimistic assumption given the nature of the world economy and the UK's in particular.
  • The rate of salary increases will be evenly spread among all graduates - despite the fact that over the past 30 years highest earning graduates have increased their salaries very substantially whereas those earning the median or less have had very much more modest increases, if any at all.
Last updated: 11 December 2015