20 Feb 2018

Financing French Higher Education via the Basic Income Fund

If we do decide to give an Unconditional Basic Income of €600 to all adults, we need to decide what to do for those who are under 18. My suggestion is that we might pay half the sum (€300)  to the parent(s) or guardian, and put the other €300 into a fund that would become available to finance personal projects on reaching the age of 18. Logically, this would amount to an impressive total of €64,800, which, when multiplied by the number of people reaching 18 in a given year (818 939 for 2017), adds up to a very large sum - over €53 billion.

How on earth could the French government possible afford such an amount?

In this post I would like to propose another radical reform which would effectively allow the state to finance the higher education system. It currently costs €11 510 a year to put a student through higher education in France. That's around €35000 for the 3 years needed to get a Licence (roughly the equivalent of a Bachelors degree), and €57500 to study for the 5 years needed to obtain a Masters degree.

Currently, essentially all the costs of providing University training in France are paid for directly by the state. Students only have to pay a very modest amount - €184 for a Licence (first 3 years of University), or €256 for a Masters (years 4 and 5). That is only around 1.5% of the actual costs.

77% of French youngsters currently get the Baccalaureat qualification which entitles them to attend University. And many of them do, with the result that the first years of university are often overloaded with students who might not really be convinced that university is for them - but at €184 a year, it is a good deal.

But imagine what would happen if the Universities were to charge the true cost of the teaching (€11 510) and that this could be paid by the students using their €64 800. Everyone would thus be able to go to University if they wanted. But they would know that they are using their precious savings, and that they also have the choice of using the money for something else if they wanted. They could, for example use the money to start up a business, either individually, or by getting together with a group of friends. I suspect that the percentage of youngsters going into higher eduction simply because is is an easy option could drop considerably - easing the pressure on the universities.

They might also choose to use the money to help them pay for somewhere to live. France is a country where there are still many rural areas where €64 800 can be enough to buy a modest house for cash.  Thus, young people would have a real choice at the start of their adult lives. Education, or starting a business, or starting a home. That sounds quite an attractive option to me.

The other effect would be to encourage those who finally decide to go to university to make a go of it. Currently, many students are only poorly motivated and end up retaking one or more years, with the result that it can take several years of study to get a degree that should normally be obtained after  just 3 years.

My guess is that such a shift from a higher education system which is provided for almost nothing to one where students pay the real cost, but where the state provides the money needed to cover the costs, could radically improve the efficiency of the system.

And I would note that this proposal is much better than the one that is currently used in the UK. Students studying at University in the UK are effectively paying close to the full cost of their eduction via a £9250 annual fee charged by the vast majority of Universities. But the only real choice for students in the UK is to borrow the money, meaning that by the time they have got their degree, they can easily have run up debts of  £50 000 or more. Indeed, total student debt in the UK has now reached a staggering £100 billion.   With my proposed scheme, you would be able to fund universities without anyone having to run up debt at all.

There is another interesting effect that might be obtained by introducing such a scheme. Currently, there a large numbers of young French people living in relatively deprived areas in the suburbs who are essentially disaffected and disatisfied with the society that they live in. Such people are often easy targets for radicalisation, and may end up joining a Jihad in Syria, for example. Offering them all a substantial starter pack on their 18th birthday could be precisely what is needed to avoid such problems.

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