Ms ZiYou Intergenerational Unfairness
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What are we leaving the kids – Intergenerational Unfairness – Part 1 – Higher Education

Time is a great healer; all those injustices you felt in the past fade in importance in your life. But what happens when you see a bigger injustice as time passes? That future generations seem to have it even worse?

Intergenerational unfairness is a hot topic. We discuss and debate regularly the concept regularly in the press and social media.  The key question is: are we being fair and treating people from different generations the same? Everyone seems to have an opinion on this topic. Moreover, people tend to share how hard *their* generation had it – highlighting sufferings and sacrifices. But I want to move away from that and look at it more holistically.

Today I’m going to look at education – specifically higher education. Let’s look at how the costs have skyrocketed alongside the increasing demand for a highly educated workforce.

Tuition Fees

Year 1962

No universities charged UK students tuition fees – higher education was free at the point of delivery. Hence Baby Boomer and Gen X’ers all received free higher education, supported by generous maintenance grants. Higher education was seen as public good paid for by the government.

Year 1998

The government decided to introduce tuition fees for higher education in the UK in 1998. I identify as a Xennial: I started uni in 1998. As my intake was the first impacted – we were angry. In a why us type way, and we developed a healthy distrust of the government. Moreover, the Labour party certainly alienated a lot of students in our year, who should have been key supporters of the party.

£1000 a year tuition fees were born and allowed to increase with inflation. As the generations before had enjoyed free higher education and grants to support themselves, this felt unfair. And I think that is a correct statement – that the Xennial population had it worse than Gen X and Boomers in regards to education costs.

Year 2006

However, as fees were now the norm, increasing them was not a big stretch. And it did not take long for the costs to increase. A mere 8 years later in 2006, fees were increased to £3000. Now during this time inflation was not exactly rampant and the £1000 1998 tuition fees would be equivalent to £1218 in 2006. So in reality, after accounting for inflation the fees more than doubled. So the millennials then got it worse than my Xennial generation.

Year 2012

And that regime lasted a mere 6 years before, you guessed it – they rose again. Tuition fees were raised this time to £9000 (vs the £1491 inflation-adjusted 1998 fees). Which is a six-fold increase above inflation. From what I’ve heard the quality and resources of the universities have not changed at all to justify these increases. Therefore younger millennials and Gen Z’ers have it even worse.

Intergenerational Unfairness seems clear

The tuition fee landscape has been changing dramatically over the last 20 years. Accusations of intergenerational unfairness seem to be substantiated.  Baby Boomers and Gen X’ers got a free higher education and generous grants. Xennials had to pay a bit, Millenials even more and as for Gen Z? With the precedent being set, I can see fees continuing to rise above inflation.

For more details and a full history of tuition fees see the Wiki article: Tuition fees in the UK.

Student Loans

Now we have established that fees are increasing exponentially, how do students actually fund university? Enter student loans. These are government backed loans that all UK students are eligible for – no credit check takes place. UK student loans are repaid like a graduate tax, as a percentage of your income over a threshold – currently 9% of your income over £25k. And they are written off 30 years after graduation.

Student loans have obviously been increasing in line with tuition fees – they are designed to cover both the fees and living expenses. I finished uni with around £15k of student loan debt. This felt manageable and as I did not earn much in my twenties, I was well into my thirties before I paid off my student loan. At the time, this felt like the norm – lots of people had student loan debt. Students in the generations after me will have larger balances – with today’s students expecting to hold £50k of student loans upon graduation. However, as the debt is wiped away after 30 years, graduates earning less than £35k are expected to never have to pay it all back.

Generational Comparisons

Again, that is a humungous raise from £15k to £50k in student debt over twenty years – and the intergenerational unfairness radar pops up again. Does the prospect of £50k debt worry you? Would it deter you from going to university? UK Student Loan debt is now over £100bn. Which is a massive number now rivalling US student loan indebtedness.

I do believe student loans are good debt. As they are debt used to increase earning potential. However, we are encouraging future generations to see debt as the norm, which is something I have concerns with. If people have £50k of debt already, what harm can adding a few £ks more do?

If you want more factual details on the latest student loans from MSE  here is a great guide: Student Loan Mythbusting.

Impact of Increasing Fees

Unsurprisingly, research has found that students from lower income families are more concerned about taking on this debt burden. They are put off attending university more than better off students, due to the costs. These families typically have not been to university themselves and may not fully understand the benefits. Hence these students grow up with a negative perception of a university education and fixated on the immediate financial cost.

On the other hand, the wealthy are able to easily subsidise their children, give them another leg up and remove any money concerns. The middle class can perhaps help out a bit financially. But more importantly, they can articulate the benefit of attending university and set that as a key aspiration for their children. And then help them understand the often complex student loans process.

Ever increasing tuition fees are thus causing those from disadvantaged backgrounds to avoid university. Those who don’t have the aspirations to attend and don’t have parents able to coach and guide them through the process are at risk of missing out.  I am the first person from my Dad’s side of the family to go to uni. And I saw first hand how alien they thought the process was, alongside comments on getting above one’s station.

But I was lucky – my Mum has been the first in her family to go, making me the second on that side. And the difference was stark. For kids that only get the no uni perspective, I can easily see how they chose to not attend. It’s easy to get pressured into starting work and making an immediate financial contribution vs accumulating debt. The full long-term benefits can be hard to comprehend when you have not seen them in action.

Increasing Student Numbers

You may have heard someone joke that all office jobs need a degree nowadays. And it’s not far off the truth – lots of non-traditional graduate jobs today require a degree. You routinely see roles in the admin field such as receptionist advertised as needing a degree. These roles have existed for years and been expertly filled by people with the ideal training and skillset and no degree. So why do you suddenly need a higher education to do these jobs?

It’s simple supply and demand economics. We produce more graduates than there are traditional graduate occupations. Hence we have an abundance of graduates. Once employers realise there are more graduates around they are free to raise the bar for roles. So some non-traditional graduate jobs now need a degree. In my parents’ generations degrees were for the educational elite, less than 10% of the population. Now we are approaching 50%.

Is a Masters the new norm?

Which leads to how do the academical elite differentiation themselves today? A trend that’s been increasing over the last few decades is for a master’s degree, once seen as an academic badge of honour, to become essential criteria for traditional graduate jobs. Which then involves more tuition fees and student loans, increasing students debt burden.

Privilege Check

And yes – this is a very middle-class perspective and first world problems. But they are important problems as they impact social mobility and deny people equal opportunities. Our education system used to be one of the great equalisers – allowing everyone equal opportunity of access based on personal academic ability rather than family wealth. Now that is under threat and we are in danger of not getting the most out of children who were born into disadvantaged families.

What is the way forward?

Hopefully, we can all agree that an educated population is a good thing. And raising the bar all round will benefit society as a whole. But do we want to explore different learning models? Is a traditional degree, with the high and increasing costs, in itself really necessary?

Personally, I am a fan of MOOC’s and using new technology to educate. I feel EdTech has the potential to bring new flexible and lower cost solutions. And this is one area where I feel the intergenerational unfairness is in favour of Gen Z and millennials. In the history of the world, there has never been so much material readily available as there is today on the internet.

Over to you

  • What are your thoughts?
  • Do you think we have issues with intergenerational unfairness?
  • How do your tuition fees/student loans compare with other generations?

Thank you for reading – please leave a comment below and join in the conversation. You can also connect on Twitter or contact me privately.

27 comments on “What are we leaving the kids – Intergenerational Unfairness – Part 1 – Higher Education

  1. I have a real issue to be honest with the current system .

    I went to private school and the accepted norm was to go on to university. Two of us didn’t want to. I wanted a year out and my colleague wasn’t academic and wanted to learn a trade. There was no help for either of us we were just told we still had to apply which was solely down to league tables.

    Fast forward 20 years and I heard at a chamber of commerce business meeting that the new vocational trainers were being actively prohibited by heads from coming into the school, both for league table and snobbery reasons as parents team it to be a lesser qualification. Nonsense some of the wealthiest people i know are trades people.

    A large proportion of people going to uni have no business being there imo . I completely agree entry should be based on academic ability but it isn’t at the moment. There are courses for every level My friend got onto a uni course with one e at a level. He dropped out after a year and a half. If the bar was set higher then there could be a scholarship system to support the poorest with smaller fees for the rest.

    We have to get over this notion that everyone has to go to uni. I didn’t even though it was the accepted norm i went into insurance did my exams and moved into the commercial side. I earn over 90k a year It took a little longer to get there (i was 32) when i started earning decent money but on the job training should not be seen as inferior

    1. Hey FBA – I agree the private system seems very skewed towards pushing pupils into university (and also propping us those who need serious tutoring to get there).

      I went to a comprehensive school which has a mix – some were encouraged to leave asap, some went to college, some to jobs, some to apprenticeships and some to uni. There was no one size fits all approach and there was no real class divide – academic abilities and friendship groups were all a mixture of working/middle class. [Obvs the few upper class sent their kids to the private schools to avoid us plebs].

      And yes – it saddens me that you can easily buy your way into to uni – and that is getting so much worse. But I do also believe that educating everyone more is good – a more educated population will benefit us all and help us realise the benefits of AI and automation.

      1. Yep i agree the class system is alive and well in private schools. Even the teachers. Most of my friends went to the local comp and i dont keep in touch with anyone from my primary or secondary school.
        Which is a shame as i went to school with the future Kings consort I might have got an invite!

        I actually chose my secondary school as although private it was alot cheaper and did lots of scholarships so was alot more diverse There were even people from different countries who. weren’t Arab prince’s How bohemian! 😉 Its funny as my dad was working class that he should want me to go to schools like that but I said to him (and i think quite mature for 10 years old) that if i carried on in that type of elite school I’d never be able to relate to normal people. Being able to talk to a wide variety of people from different backgrounds really helps in my sales career so I’m glad i did it

        1. That is very interesting -you were a very socially aware young boy – at that age I had no real idea of the lay of the land. Everyone seemed kind of similar in my world.

  2. You make a valid point that education can be an investment in yourself, potentially leading to higher future earnings.

    Student debt should be viewed through a similar lens. Will the benefit of taking on that debt outweigh the costs associated with servicing it?

    Investing £50k to become a hedge fund manager or software engineer probably makes economic sense. Investing the same £50k to become an early years childcare worker or a yoga instructor probably would not.

    Obviously not all benefits are financial ones.

    Another option open to anyone sufficiently motivated is to apply geographic arbitrage to tertiary education, study overseas where the fees are lower but the qualifications gained have equivalence with the domestic alternative.

    1. And that is the challenge that you have outlined well – some degrees are financially worthwhile and lead to jobs where they prove useful. Other degrees are just an expense rather than an investment. However, as you say, there are the non-financial benefits, additionally for kids now degrees are assumed necessary for most white collar jobs.

      I like the geo-arbitrage idea, but I think our lack of language skills as a country would know that one on the head. And I don’t think the US or Australia are any cheaper.

  3. I think that this is a very good summary of some of the intergenerational unfairness that in my mind differentiates Millennials vs. Xennials (sp?)

    I managed to get out of university with £15k or so of debt and “broke even” so to speak within a year of graduation (but student loan remainder around for a few years).

    University now must seem like a gamble for kids these days, especially since it’s been shown that over the years the benefits have reduced and there are easy examples of people raking it in doing working class jobs like plumbing.

    The rigid class based mentality in the UK means that university is seen as the destination and all other avenues are either for other peoples’ children or for failures.  This needs to change and it should not be just by making 3rd level education so expensive that those without deep pockets and generous parents can afford to go.

    1. Hi GFF – wow you did well after uni then paying off your student loans so quickly.

      I agree today it’s much more of a gamble – you have to pay a lot and hope you see a return on that investment – or alternatively, try and keep your income so low for 30 years you’ll never have to pay it back.

      I’m not sure I agree that there is a class-based system for parental univeristy expectations – maybe I have been lucky – I was only expected to go to uni as I was top of the class, not due to my parents jobs. My brother wasn’t expected to go, but did as they let him in after a few years at college.

  4. Some of my school-friends had parents who went to college, but not all. By the time it was our generation, everyone went to college. About half of my school-mates have masters degrees. And many of them stay at home (I went to an all girl’s school) and don’t work. People just go to college because everyone else is.

    I, like you, am a xennial. Started college in 1998. In India – that explains the difference in percentages. And I hardly paid any fees (Education is subsidized in India if you are good at it). I guess it is way costlier now.

    1. Hey BusyMom – that’s interesting – in the UK only half the population go to uni today – is India similar? Of my generation, only academics or career changers did Masters – it just was not considered a thing then.

      Sounds like you may have had a self-selecting group there if everyone went to uni and half have masters now!

        1. I guess your world is more divided than mine – my school was a mix of middle and working class – and less than half went to uni.

          And today I’m friendly with plenty of people that went and plenty that did not go.

  5. Hi,

    As a teacher, I thought I would weigh in with a few thoughts…great article btw

    1). There is currently a huge mega massive construction boom on Uni campusses
    2). A lot of this building is to provide dorm style accommodation to 2nd/3rd years at less than the hmo rent, so the uni are the landlord for the duration. This has made some “student areas” ghost towns
    3). Many students I teach are now looking at what I see as “white collar apprenticeships”. Some have gone into accenture, GSK , the big four etc….
    4). There has been a BOOM in unconditional offers. There are basically no entry requirements to some UK universities. Obv the elite ones can still demand the best but anyone can write a letter and get into dogshithampton University to do Mickey Mouse studies. If you can pay, we don’t care what a levels you get seems even more so be the mantra.
    Once these unconditional offers are received many students just coast through the rest of year 13
    5). University deans are the new fat cats…

    1. Hi QT – this is very interesting

      I did not know 1 & 2 & 4. What are the unis building for? Are they profiting off these dorms or doing some social good? I guess the locals might be appreciative of the student ghettos diversifying a bit?

      The unconditional offers is weird. I got unconditional offers but I had passed enough exams anyway – they are really giving offers without any higher level exams? This is scary.

      And yes – I’ve seen the Deans getting a fair bit of flack, and struggle to justify their salaries. Public servants that earn more than the prime minister are always going to struggle – at least CEO’s have financials they can use to attempt to justify obscene incomes.

      1. To be honest, the quality of the dorms seems to be to a lot better than the rat infested dump I was in. I wasn’t judging the rationale behind these dorms. They are building because they have cash, derelict buildings and as with all these things there is probably a back hander or two going on somewhere.

        In our day, unconditional offers were (if I remember rightly) a sign that you REALLY impressed on interview. These days everyone can get into somewhere. Bums on seats is the requirement now as they only get the cash that way.

        Private industry CEOs can get any pay they demand. Those who work for the public good should never get paid more than the PM, although it’s strictly not a fair comparison. I bet Theresa’s savings rate is better than yours! It’s not like she can nip to the cinema or the pub for a few!!

        1. Thanks for sharing this – indeed a worrying trend.

          I’m sure Theresa has an awesome savings rate – free housing, lots of business travel and her hubby is a banker.

  6. It is somewhat unfair, but life isn’t fair. That’s what I tell my son and it’s true. The young generations have many advantages too. They are computer savvy and know how to navigate the world at a younger age. It was harder for the previous generations.
    Tuition is a bit out of control in the US. I’m hoping our son can get some kind of scholarship or maybe he can go abroad. We’ll see in 10 years…

    1. Indeed Joe – life is not fair. And it’s fairer for some but not others. I like your stoic attitude -it will bode your son well.

      I’m not denying future generations have it better on labour saving devices and access to information; we also have it much easier than our grandparents.

      The US tuition is even more obscene and scary how it is outpacing inflation. Let’s hope Junior RB40 fancies studying abroad.

  7. Great post Ms ZiYou. I echo what everyone else has said above! Particularly Quitting Teaching’s points 1, 3 and 5. On point 3 lots of professions are starting to do school leaver/college qualification routes (in my profession, accountancy, that is starting to get some weight behind it).

    Also, GentlemansFamilyFinances, I read your blog post about paying off your student loan. Congrats! Mrs YFG is close to paying hers off. I’ve paid around half of mine off – it looks unlikely I’ll ever pay the rest off. I feel sorry for younger folks, unless you earn over 60k you’ll never touch the principal. So you’ll be paying an extra 9% tax for most of your working life.

    1. Yeah – QT has really opened my eyes there – I had not realised or joined the dots on these before. I just can’t help thinking it’s commoditising a public good.

      Students loans are becoming more and more of a problem – congrats on paying it off GFF – that is awesome. I do really wonder how younger generations will cope, and what the point of these is when the public purse has the start writing them off.

  8. I’m Gen X and came out of uni with just around £5k of loans to pay off. Very modest by today’s standards. I am hugely appreciative of that almost free education. The fact is that everything changes and things will never be fair across generations. I intend to pay it forward by helping my children through university if they choose to go (while also making sure they have skin in the game). In other ways, I am sure they will “pay it backwards” to me – the same way that I help my parents whenever I can.
    It’s a similar argument to the situation with housing – previous generations have benefited enormously from rocketing house prices, whilst younger generations are struggling to get on the ladder. But many of the older generation will be helping their children either by being the bank of mum and dad or by allowing grown children to live at home. Is this a return to a more family oriented culture, where the generations help each other more because the government can’t afford to?

    1. That 5k does sound tiny by today’s standards scary how much things have changed in a few short decades.

      And while I don’t have anything against a family oriented culture per say, I do think it causes more inequality when assets and wealth are transferred across generations. Then we get into entrenched inequality.

What do you think?