Student loans: Challenges in reforming loan structure

The issue of student loans has been flaring up on both sides of the Atlantic quite recently, with some serious implications for higher education if many of the changes were to be implemented in the next few years.

In the US, the efforts of the administration to enact legislation that will ease the financial burden incurred on university students by way of their student loans and the federally subsidized grants has been a major point of friction with Republican opposition. Student loan debt is estimate to close to 1 trillion USD, increasing at a staggering rate of 300% in ten years , whereas the average debt load for the graduates of higher education is approximately $20,000 on average. Given the recovery phase of the US economy and the financial woes that have troubled it since 2008, it becomes obvious that debt restructuring is a key issue.

The importance is twofold. Student loans are proving to be a heavy financial burden, stifling entrepreneurship and forcing many graduates to abandon career aspirations and seek even low-paid employment in order to repay their loans; in the days of the financial crisis aftermath, many find themselves still unemployed and with a negative credit score, painting a rather bleak personal picture of the future. In addition the student loan apparatus involves the federal government, the universities and a series of market players, such as debt relief companies and others, which makes reform not only gruelling but also politically tense.

In the United Kingdom, the government will be conducting research on the issue of student loans, although the department of Business, Innovation and Skills has not confirmed a change in policy. The UK has a relative advantage to the US system since tuition for undergraduate study is capped at £9,000 per year. The system is also more generous, since it allows repayments only if the graduate is employed and earning over a certain amount and the debt itself has a 30 year write off term limit, with outstanding fees written off after that period has elapsed.

The proposed research will be exploring the possibility of making universities partially responsible in underwriting student debt. In theory, this would lead to a closer connection between the graduates and the university, perhaps increasing the investment and effort UK universities will need to put forth in order to ensure high employability rates for the students. It will also mean a shared and thus diminished risk taken on by the Treasury, reducing exposure for the government.

The key issue in the UK remains that if such moves were ever to be implemented, debt to earnings ratios within universities would shrink or even disappear, making universities less able to secure their financial position and thus undertake large and important steps in improving infrastructure, offer scholarships and bursaries to under-represented groups and of course continue to strive for improving educational services without the worry of debt repayment in a flux economic climate. In fact, any alteration to the student loan scheme would have to take under consideration the realities of tertiary education and the job market so as to ensure that the drive for minimal government exposure to debt would affect the teaching quality and outcomes in universities.

Record survey responses fuel QS World University Rankings 2011/2012

Tomorrow sees our latest results emerge on This year we have had the good fortune to attract record survey responses both of Academics and Employers. Over the 33,000 academics and over 16,000 employers have contributed their views to form this year’s response base. More detail on the survey responses is available here:

Academic Survey Response

Employer Survey Response

Fact files have been delivered this year with more detail than ever and international media are poised to publish and reflect on the results in the morning. You will notice something different about the presentation of our tables this year – and that is the emphasis on fees. Wherever we have been able to track down data we are publishing average undergraduate and postgraduate, domestic and international fees this year – giving prospective international students – particulalry those in countries where domestic fees are escalating – an invaluable resource to help make the best decisions.

More analysis here over the next few days.

Large number of English and Welsh Universities given go-ahead to charge domestic and EU students fees of £9,000

By Mansoor Iqbal, Education Writer

It has been confirmed that a number of universities in England will be allowed to raise their tuition fees for domestic undergraduates to the maximum permitted amount of £9,000. 47 out of 123 universities will be charging the maximum fee across the board, with just over 80 charging it for some of their courses.

Initial proposals to raise tuition fees allowed universities to raise their fees to £6,000, which would increase to £9,000 in ‘exceptional circumstances’. However, the only requirement universities had to meet in order to charge this amount was that they produced plans to widen participation with which Offa (the Office for Fair Access) was satisfied – the result was tidal waves of universities proposing fees significantly higher than £6,000.

Offa has not rejected the proposed fees levels of any universities, indicating that it is satisfied with the access agreements made by all institutions, for which it has been criticized by some parties.  Universities that do not successfully widen participation after the higher fees are introduced, however, will be penalized. It should be noted that Offa only had the power to approve or reject access agreements, not to set the fees.

Average fees are £8,393, or £8,161 when fee waivers – a key facet of most universities’ plans to widen access – are introduced to the equation. A small number of institutions’ average fees remain at £9,000, even after access schemes are taken into account, due to opting for bursaries and other forms of financial support rather than fee waivers. Read more

HE News Brief 15.3.11

by Abby Chau


  • UNITED KINGDOM: British Council’s “Global Gauge” places Germany as the best country for international study
  • HONG KONG: Do rankings encourage  Asian universities to “westernize?”
  • INDIA: Ministerial support for foreign universities establishing campuses reiterated
  • NORTH AFRICA: Do student protests work after all?
  • DENMARK: Foreign students priced out of courses

Read more

HE News Brief 15.2.11

by Abby Chau

  • A 346-page report on business school trends has just been released by the Association to Advance Collegiate schools of Business following an intensive three year study by deans and scholars from top b-schools. The finding show that business schools have an uphill battle in terms of successfully implementing internationalisation strategies. Many courses, particularly in the states, focus more on study abroad programmes than internationalisation strategies and concentrate on North American rather than global markets.
    Full Story: Chronicle of Higher Education

  • It looks like the Lib Dems will finally have some talking points about the tuition fee hikes – Universities Minister David Willetts announced that institutions who want to charge more than £6,000 must comply with requirements to admit more poorer students. As a strategy to counteract the tuition fee hikes due to commence in 2012, the coalition government has decided that universities charging higher fees must work with the Office for Fair Access (Offa) to establish targets for accessibility. Willetts also announced that institutions charging more fees will also have to participate in the National Scholarship Programme, which will eventually help 48,000 disadvantaged students. There are of course critics of the announcement who are saying such an initiative will not do very much to offset the damage the fees will in incur in terms of social mobility.
    Full Story: BBC News
    More: Guardian
    Read more

HE News Brief 8.2.11

by Abby Chau

  • With 45% of young people now vying for a place at university, competition is at its toughest. The Russell Group has just announced a list of A-level subjects which would make students more competitive at finding a place at top universities.  At least two core subjects such as English, maths, biology, chemistry, and geography are advised to be taken. This announcement comes at a time when a report published by the Higher Education Policy Institute shows that in 2003, 6% of applicants were not offered a place and in 2010, this has more than doubled to 14%.  The applicants who did not find a place were more likely to be less qualified.
    Full Story: The Economist
  • The Swedish Agency for Higher Education Services recently announced a drastic 75% decrease in the number of foreign applications to the fall semester. This is the first test of a series of new fees which includes application and tuition fees for foreign applicants. Non-EU, E.E.A or Swiss applicants must now pay $140 in application costs and some universities are able to ask them to cough up approximately $30,000 in tuition fees. Tuula Kuosmanen, director of the agency, said that Denmark saw a similar decline in foreign applications when they introduced fees in 2006, but applications eventually recovered.
    Full Story:  New York Times
    Read more

HE News Brief 25.1.11

by Abby Chau

  • Approximately 15,000 protestors descended on the Parliament in Hague to demonstrate against a proposed multi-billion austerity plan, which include plans to slash university budgets and increased fees for some students. A policy aimed at students who take longer to graduate is causing a commotion. Under the new proposal, students who take longer than 4 years to complete their three year undergraduate degrees will have to pay an extra $4,000 per year in fees. Starting from 2012, the government is hoping to save $501 million each year from this initiative.
    Full Story: Businessweek
    More: Edmonton Journal  
  • A survey of over 6,000 students at 62 institutions and 20 junior colleges showed that graduate employment rates in Japan has hit a new low since records began in 1996. 68.8% of Japanese university students found a job before graduation, which represents a 4.3% decline from the previous year. Those graduating in the field of science and engineering had the largest hurdle, with job offers dropping 7.3 percentage to 71.3 %. In response, the Japanese  government has announced new incentives for companies who employ graduates as well as plans for more career fairs.
    Full Story: Japan Today
    More: BBC News
    Read more

HE News Briefs 11.1.10

by Abby Chau

  • With tuition fees set to rise to up to £9,000 in 2012, applications for places in 2011 will see record levels. According to Ucas, there has already been a 2.5% increase in applicants. The figures also show that applications from under-18s have fallen while applications from older students have increased. Although ministers approved an extra 10,000 places last year, there is still a dramatic gap with one in three candidates not finding a place. Other trends show that the number of females applying have also increased, 199,000 compared to only 145,000 male students.
    Full Story: BBC News
    More: Guardian

  • Qatar is positioning itself as a new foreign higher educational hub with six US universities including the Carnegie Mellon University, Texas A&M University, and Northwestern University, already establishing branches there and interest from a French graduate school. The Education City is a 14 million square metre site boasting research facilities and  is a project of the Qatar Foundation, which is a private non-profit organisation overseen by Sheikha Mozah Bint Nasser, the Emir’s wife. According to the Foundation, opening foreign branches has successfully combatted the emirate’s brain drain, with more domestic students deciding to stay in Qatar.
    Full Story:  University World News
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