Improving Student Loan Choice would benefit Higher Education and all involved

A major set of stakeholders that are particularly nervous about Brexit include the British Higher Education establishment. On the one hand, universities are expecting diminished revenues not only in terms of research grants but also through a drop in the number of international students. To allay these fears, the government could liberalise travel, study and work restrictions imposed upon international, full-time students studying at British Universities but, in addition to this, there is also the opportunity to liberalise the student loans system for UK students. Currently, student loans granted by the Student Loans Company are generally restricted to those who are enrolled in British Higher Education institutions but a whole host of benefits can arise if domestic students are allowed to spend their student loans abroad.


More students would be educated and less of taxpayers’ money would be spent


The primary objective of offering government-funded student loans is to educate more students who would otherwise be unable to pay their own tuition fees. Nevertheless, many students are deterred by the prospect of a higher student debt burden alongside the sluggish growth in real wages. If they were allowed to spend their student loans on foreign institutions and could live abroad in countries that offer lower tuition fees and living expenses, they would incur significantly less student debt and, therefore, the average cost to the taxpayer for educating a student in Higher Education would diminish (more on that in the subsequent subsection entitled ‘This would diminish average student and graduate debt’).


British Universities would have more places available for both domestic students and foreign students. They could gain higher revenues and possibly lower UK fees.


Although some students may choose to take out their full student loan allowance (including tuition fee and maintenance) and ‘top it up’ abroad with some self-funding and/or other loan options by studying in countries that may, in many cases, be more expensive for UK students (such as in Australia, Canada, Japan, Singapore, South Korea and the USA), many more who choose to go abroad to study would opt to study in countries where the cost of education is generally lower (whether that be in Continental Europe, Brazil, Russia, India, China or South Africa, for example) where they see opportunities for development alongside a quality education.


Therefore, the competition would be less fierce amongst UK students for places at UK Universities and therefore more places would be available for UK students at home institutions. At the same time, if these places are not taken up, the Universities could increase their intake of international students (whom they already charge a significant premium to) and thereby increase their revenues whilst also maintaining the vibrant, necessary diversity of the Higher Education establishment. This would, however, only work alongside visa restrictions and application processes for international students being liberalised, streamlined and reformed.


There is also the possibility that if UK Universities take more foreign students (and thereby increase their revenues) and there is less fierce competition amongst UK students for places at home due to their newfound ability to study abroad (which would correspond to a drop in demand amongst British students for domestic places), then it may become both financially feasible and indeed desirable to reduce (or at least maintain rather than increase) the fees charged to UK students.


This would diminish average government-funded student and graduate debt


Given that many students would have the option of spending their loans abroad (whether that be for tuition fees or maintenance) in countries where both tuition and living expenses are less than the prevailing circumstances in Britain, it is likely that the average student debt burden would significantly decrease (though it is still possible that the total volume of debt could increase but to discern whether this might occur some more rigorous modelling and forecasting would be necessary).

To illustrate this quite simply, if all students are currently paying anywhere between £8500-£9500 in tuition fees per year and prospectives students are now given the option of spending their student loans abroad at institutions which may charge much less than that range (say, for sake of argument, up to £5000 per year), then if the number of students enrolling in Higher Education is held constant and some of them take out student loans to study abroad rather than domestically then the average student debt burden would decrease. Furthermore, even if some students choose to take out the full student loan allowance and study abroad at a more expensive institution, the excess fees would have to be funded by the student and that would mean that the average burden incurred from government-funded student debt would not increase.


However, if some of the available prices of Higher Education decreases for UK students (due essentially to a liberalisation of student loan use restrictions and the corresponding increase in accessibility to a greater supply of institutions), there is still the distinct possibility that whilst there would be a higher number of UK students receiving government-funded loans studying abroad, the number of UK students receiving government-funded loans that chose to study domestically would remain constant and, therefore, although the average student debt burden would decrease, the total volume of student debt would increase at an increasing rate (although it has already increased substantially under the current arrangement whilst the average student debt burden has also significantly increased).


It would diversify and improve young Britons’ skills, mobility and dexterity


In a global era where the vast majority of countries’ fortunes and prosperity is intertwined and interdependent, it is beneficial to be able to communicate effectively and understand other cultures. Although English is a language with unique global importance, vast markets remain inaccessible to those who can only speak English and no other languages. Indeed, Britons routinely underperform in multilingual prowess and dexterity compared to Continental Europeans (for example) and other regions where it is the norm to be able to communicate fluently in two, three and perhaps even several languages.


Being allowed to study abroad for a longer period of time in various countries, provides the unparalleled opportunity to learn languages such as Arabic, Chinese Mandarin, Cantonese, Dutch, French, German, Hindi, Japanese, Persian, Russian, Spanish, Turkish, Urdu and many more. Furthermore, learning to live abroad would mean a greater proportion of the British workforce would be more accustomed to communicating in an international context and therefore more adaptable to and productive in the rapidly changing circumstances of an increasingly globalised world.


Concluding Remarks


Ultimately, this is a rather generalisable suggestion for economic and education policy reform; the spending restrictions on government-funded education loans across countries should be liberalised. However, this is particularly pertinent for Britain as it enters a prolonged period of uncertainty since it will provide more options both for those who are looking to enter Higher Education and also for Higher Education institutions themselves. This aligns with the government’s commitment that Britain will remain “outward-looking”, “open” and not become “insular” as a result of Brexit. Finally, if this liberalisation included allowing young Britons to spend their loan money in various countries (whether they be European, North American, South America, Asian, African or Middle-Eastern countries), this would place Britain in a more amicable position in subsequent trade negotiations whilst also significantly improving the British workforce’s productivity.

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