Graduates’ protests against rising higher education fees have revealed a sleepy discontent about the impact of loans on students’ welfare, despite Timo‘s arguments in their favour. In this post, I compare loans for HE in Britain and Sweden, arguing that British system provides insufficient support – and that this directly leads to a higher level of inequality in the experience of higher education. Moreover, there is a general problem of over-dependency on debt: even though this system has been set up during the previous UK government, the changes in policy settings proposed by this coalition risk of worsening the precarious situation of graduates’ welfare.
Comparing welfare sources for graduates in Sweden and England
The comparable data from the Eurostudent survey show an interesting difference in the distribution of welfare sources by looking at the “contribution of individual income sources.” In Sweden the contribution of the state is 63%, with job and family providing, respectively, 24% and 14% of the income source; in contrast, in England the state contributes 43%, therefore providing 20% less state support than Sweden, with a higher contribution coming equally from job participation (34%) and from the family (24%). English graduates appear more dependent on private sources (job and family), while Swedish graduates on a public source of welfare.
Table from: Eurostudent, p.94
The different relevance of public and private forms of dependency reflects the level of universality and the settings of the Swedish and English system of graduate loans (data come from Eurostudent national profiles, Swedish student aid and the British website on student finance). In the UK, the maximum student loans for maintenance in 2010 was about £5000 for students leaving away from home (about £6000 for students in London); in both the cases the amount of money is insufficient to cover housing and living costs. In Sweden the general support is currently about £11000 pounds per year, about £3600 of which are grants (the rest consists in loans). Albeit resulting in a higher level of debts of maintenance, this system allows to better cover students’ expenses and it is, by definition, universal – it does not depend on the student income and therefore does not assume a residual role of the family in contributing to higher education.
As underlined by Barr, in the absence of tuition costs, the system of loans in Sweden is sufficient to cover living costs and does not take in consideration parental income. On the contrary, in England: “provision is made for a means-tested contribution towards living costs through subsidized loans, although most students will need to supplement their loan through parental contributions, part-time jobs and private loans” (Furlong & Cartmel p.39).
Given the insufficiency of state support British graduates are normally dependent on jobs and family sources, but not in an equal fashion. The different settings have a great impact on the student experience of graduate studies: in both countries a relevant proportion of graduates have part-time jobs (almost 50% of Swedish graduates in 2007 as indicated by Statistics Sweden), but English graduates are much more dependent on this source of welfare as indicated by Eurostudent.
Moreover, as underlined by the recent findings of HECSU in the UK young people from lower socio-economic backgrounds tend to be extremely dependent on jobs; according to studies in education (see Metcalf) this determines a different experience of graduate studies for young people from lower socio-economic backgrounds, which normally have to combine job and education activities. Graduates’ welfare is currently challenged also by exogenous factors: if we consider the rise of graduate unemployment in the last year in the UK (HEPI), the insufficiency of the graduate support risks to have a serious impact on those coming from a lower socio-economic background, with a lower possibility of using family sources.
In Sweden 90% of graduates use the same level of public loans (Statistics Sweden) and therefore the experience of transition is equal across the graduate population. The presence of insufficient means-tested loans in the English system leads to the use of family or, in alternative, of part-time jobs as a residual source of welfare, both of which stratify the experience graduate studies of young Brits. As underlined by the studies of Furlong and Cartmel, not surprisingly, the burden of debts is particularly relevant in England among young graduates of working class backgrounds that, lacking family sources, accumulate private debts, with the negative consequences of facing high interests and in feeling pressured during the job search (Furlong & Cartmel).
What has changed with the last reforms: is this the last drop?
The system of loans has been introduced in the 90s and since 2004 graduates can take loans to cover their tuition fees. The burden of debts has since then increased and, consequently, a higher level of tuition fees risks of worsening the insufficient level of available graduates’ welfare. This coalition has also proposed reforms on the general level of living grants and loans that are summarised here.
The system of grants, guaranteed to everybody in Sweden, in England is residual: a grant up to £2800 for incomes below £25000. The original goal of current reforms was to make the system more “progressive”, but it seems that the system has become more residual: for students with parents earning up to £25000 there is a slight rise of maintenance grant of £27 per month. Families with income up to £42000 will be entitled to a partial grant – the threshold has therefore decreased (it used to be £50020 per year) and the system is becoming increasingly residual.
Given the traditional inequalities of the British system, an insufficient means-tested system of loans and grants risks to increase, rather than decrease, inequalities in the entrance to education, but most importantly in the experience of graduate studies. The recent policy changes of this coalition, albeit not revolutionary, risks of worsening, given also the impact of exogenous factors, the welfare of British graduates.