34 replies to this topic

[Latecomer]

I know it's not theatre but hey it sometimes reads like a farce

http://www.bbc.co.uk...cation-20066813

As a maths graduate I've always said the sums don't work!

[Lynette]

Various metaphors spring to mind - one mentioning a brewery perhaps. Maybe David Hare can make a play out of it.

[Matthew Winn]

"Hepi is also concerned that the government has overestimated the future earning potential of graduates at £75,000 per year, down from an earlier assumption of £100,000."

Considering that you can get degrees in pretty much anything these days I'd have said that the earning potential of graduates shouldn't be expected to be much higher than that for non-graduates in the same career. Did they really expect that the average graduate would be in the top 2% of earners?

[igb]

Latecomer, on 25 October 2012 - 06:41 AM, said:

I know it's not theatre but hey it sometimes reads like a farce

http://www.bbc.co.uk...cation-20066813

As a maths graduate I've always said the sums don't work!

HEPI are hardly disinterested observers, and they should be careful with their doom-mongering.  If, as they say, the value of a degree is over-stated, then people might reasonably ask both why they are doing them and why degrees are being funded by the state at all.  Which is not, I suspect, the narrative HEPI's stakeholders want to hear.  "See, your scheme is in the red because degrees aren't worth very much anyway, especially not those from newer universities" isn't an argument for a return to the old system of HEFCE funding, it's an argument for closing a large number of newer universities, and that really isn't what HEPI want.

Quote

Either future taxpayers will need to pay more, or other parts of the higher education budget will need to be cut, or student numbers will need to be held down even further than presently planned, or former students will have to repay more.

No shit, Sherlock.  "Either we spend more on it, do less of it, do it for fewer people, or charge users more".   Is there any government activity for which that isn't true?

[Honoured Guest]

Matthew Winn, on 25 October 2012 - 03:07 PM, said:

"Hepi is also concerned that the government has overestimated the future earning potential of graduates at £75,000 per year, down from an earlier assumption of £100,000."

Considering that you can get degrees in pretty much anything these days I'd have said that the earning potential of graduates shouldn't be expected to be much higher than that for non-graduates in the same career. Did they really expect that the average graduate would be in the top 2% of earners?

The above quote was BBC News's  garbled precis of HEPI's actual report which states:

Quote

... males at the end of the repayment period are expected to earn £76,500 pa on average, rather than £99,500. Though still very high, this is a move in the direction of greater realism.

So, average earnings, not earnings of the average graduate. I suppose it's possible if top-end earnings continue to increase, ever widening the pay gap between us and them. Total repayment depends on the distribution of earnings, not on the average. If Billy Banker is paid £3,000,000,000 pa and everyone else earns £20,000 pa, then average earnings may be high but only Billy Banker repays anything at all.

[Epicoene]

Lynette, on 25 October 2012 - 08:35 AM, said:

Various metaphors spring to mind - one mentioning a brewery perhaps. Maybe David Hare can make a play out of it.

Well, it's not actually the government is it, it's the civil service who have screwed up and calculated the wrong numbers, just like they did with Brason's railway bid. Ministers don't actually sit down and do all the calculations themselves, the current shower of innumerate arts graduate civil servants are largely the same bunch who were there under the People's Party last time.

[Honoured Guest]

The civil service cocked up the financial evaluation of the bids for the rail franchise with a series of howlers such as not rebasing future cashflows for inflation, doublecounting some figures, and failing to notice that projected passenger numbers would require many passengers to travel on the train roof and luggage racking. The Government must accept much of the blame for the design of an appraisal system which required bids to cover periods extending into the fairytale distant future so that bidders could win contracts by presenting ridiculously optimistic projections for the endtime and then skim off profits in the easy early years before withdrawing towards the end of the contract period when it inevitably went pearshaped.

With higher education fees and loan repayments, the projections are so far into the future as to be meaningless. The earlier calculations weren't wrong, but the assumptions have been revised in line with current forecasts of incomes, as they will be regularly in future. And again, it was Government policy which created this new fees and loan system, with the main purpose of pushing the costs out of current spending.

[igb]

Honoured Guest, on 25 October 2012 - 03:57 PM, said:

So, average earnings, not earnings of the average graduate. I suppose it's possible if top-end earnings continue to increase, ever widening the pay gap between us and them. Total repayment depends on the distribution of earnings, not on the average. If Billy Banker is paid £3,000,000,000 pa and everyone else earns £20,000 pa, then average earnings may be high but only Billy Banker repays anything at all.

Quote

males at the end of the repayment period are expected to earn £76,500 pa on average, rather than £99,500.

Assume the repayment model is 6% of income over £20K, written off after thirty years (which is about right).  

Assume that graduates start on £20K and thereafter their income rises at some rate for ten years then some lower rate thereafter, reflecting the typical experience of someone who rises in a graduate job to the top of a payscale and then carries on doing it.   Work in constant value pounds so we can ignore inflation effects both on salary and on debt.  Assume they borrowed £50K at 3% interest, which is again about right.

With a 10% pa salary rise in the first ten years, then 2% thereafter, the debt is never paid off, and £32K is written off in year 30 with them earning £77K per annum.



With 10% for ten years, 5% for a further ten years and then 2% per annum (remember, these are _real_ salary increases, not including cost of living, so this is someone making serious wonga) the debt still isn't paid off (£3K left), even though in year thirty they're making £100K.




So with 6% repayment over £20K, the debt is only paid off by people who end up earning more than most hospital consultants: 10% for the first ten years, then 5% thereafter:

http://www.batten.eu...n-five-five.jpg


You make make it work much better if you massively increase starting salaries.  Get people starting on £30K and even with my 10/2/2 model the repayment is made easily, but sheesh: £30K starting salary, with 10% realterms increases for ten years?  In which professions?

http://www.batten.eu...ten-two-two.jpg

[Latecomer]

Great work igb. I wish you were working in the government. And it's no use blaming things on civil servants. It is a bosses (politicians)  responsibility to understand what is going on. And hey, if I can see it's not going to work then they should be able to! Doesn't take a genius!

Oh and I am a graduate from Oxford, MA Maths, PGCE  who now earns £8,000 a year (part time lounger but even full time would be only £17,000) .....so lets hope I'm not typical in future or we are all dooooomed!

[igb]

Latecomer, on 25 October 2012 - 07:28 PM, said:

Oh and I am a graduate from Oxford, MA Maths, PGCE  who now earns £8,000 a year (part time lounger but even full time would be only £17,000) .....so lets hope I'm not typical in future or we are all dooooomed!

It's also slightly disingenuous to model repayments on men, when women represent about 60% of graduates now.

The problem is, I don't think there's an answer.    The 1950s and early 1960s takes us into a world in which LEAs have the power of life and death over prospective students, and your chances of getting a grant depend on your postcode and your chosen subject.  The 1960s and early 1970s provide generous funding for the lucky few that go, funded by the vast majority that don't.  The later 1970s and 1980s make most undergraduates heavily dependent on their parents' willingness to pay.  The 1990s piles increasing amounts of long-term debt into either arms'-length agencies or the government itself.  The US model relies on parents scrimping and saving from very early in their child's life, and also gives a massively stratified system which makes the distinction between Durham and Derby look like comparing two Oxford Colleges.  France and Germany have extremely expensive and inefficient systems which don't, outside a few exceptions, actually provide any sort of social mobility (cf. the role of the Grandes Ecoles in France).  And so on.

The Robbins principle is, to me, sacred: higher education (in fact, education in general) "should be available to all who [are] qualified for [it] by ability and attainment".  The idea that we should ration education to improve the value of it to those that it's given to strikes me as immoral; should we deny literacy to 20% of the population to keep the wages for secretaries up?  Education's a common good, and if you don't like the price of education, you should see the price of ignorance.  However, how we pay for it is difficult, and I don't think either of the simple solutions --- "the taxpayer" and "the student" --- will cut it.  But what the solution is, who know?