Why should most undergraduates live away from home?

Today's newspapers suggest that the cap on university tuition fees is likely to be completely removed, if Lord Browne has his way, paving the way for fees up to £12,000 a year. That would be a mistake: it would be more sensible to lift the cap to £7000 a year, the figure sought by Universities UK. At the same time, as predicted by this blog, the silly notion of a graduate tax has been abandoned in favour of a more income-related version of the current graduate contribution. But what seems absent at a time when we are fundamentally reviewing our welfare state is any questioning of the idea that undergraduates should be expected to live away from home while they study.

Let's be clear about this. It is not the norm in most countries - including in Ireland, where I gained my degree cycling to college from my Dublin home - to study in another city when one's local university offers the course one wishes to pursue. Given that we provide subsidised loans - with subsidies worth 23% of the value of the loan - for three years simply to enable largely better off young people to pursue a 'rites of passage' experience, surely we should start to question whether this should be the norm for a third of all young people. Adults who increasingly study as mature students don't expect it, so why should young people? Fair enough for those from poorer backgrounds who win a place in a Russell Group university or on a rare specialist course in another university - indeed, decent non-repayable bursaries should be provided for those students - but can we really afford to continue subsidising this experience for everyone else?

That's the sort of question that Ed Miliband should be asking as he seeks to stake out a credible alternative to the coalition ahead of the Spending Review. He could argue for lower fees instead of automatic living expense subsidies. But, having adopted the graduate tax in his leadership campaign, he chooses instead to play games with Lib Dem backbenchers. He may even win a Commons vote by doing so, but he will do so at the expense of his own credibility as a serious leader. Living expenses are certainly something the Treasury should be challenging instead of seeking to cut programmes with far more genuine impact on social mobility that benefit toddlers of school students. Instead, we are left arguing about the size of tuition fees and their repayment, whilst ignoring this extraordinary - and unusual - subsidy that has far less to commend it than universal child benefit.

This post also appears at Public Finance.