The general election brought many changes. Theresa May’s slim majority vanished, while Jeremy Corbyn solidified his position as Labour leader.
YouGov analysis of the vote revealed some stark generational differences. Labour was 47 percentage points ahead among first-time voters, while the Conservatives had a 50 percentage point lead among the over-70s. The issue of student finance and Labour’s promises undoubtedly played a part and the result has ushered a new dialogue on tuition fees.
The result was a wake-up call for the Conservatives, who have for a long time fostered policies to appeal to their base of older voters but done little for younger ones. Where the Conservatives ruled out a review of tuition fees, Labour promised to abolish them altogether and make education free for all.
Disillusion with the fee system has been building for some time. Sutton Trust research shows English students had the highest levels of debt in the English-speaking world, owing around £44,000 when they graduate.
When the government revised the system, turning maintenance grants into loans, this increased debt at graduation to around £50,000 on average – £57,000 for the poorest students. In turn, our research highlights that most graduates will not pay back this debt until well into middle age, with many never paying it back in full at all.
This creeping debt adds to the growing number of difficulties that young people face, especially those from disadvantaged backgrounds. It is already difficult for young college leavers to be hired into graduate roles immediately after university or to take their first step on the housing ladder and, for many, £50,000 of student debt acts as a further barrier to getting on in life.
With that in mind, the Sutton Trust welcomed the prime minister’s announcement to raise the repayment threshold from £21,000 to £25,000. We have long called for an increase, especially given that the freeze in the threshold was a retrospective change to student loan terms. This will make a real difference to those on lower salaries.
However, the changes do not go far enough and do little to lower the overall debt burden. Our polling has found debt puts poorer young people off university. Half (51%) of young people intending to go to university are worried about the cost and, more worryingly, the proportion of those from “low affluence” households (61%) planning to attend university is the lowest in seven years for which we have data.
The student finance changes have a big price tag for the Treasury of around £2bn a year, with the resource accounting and budgeting charge – the difference between the cost of creating student loans and the estimated value of repayments – rising from 31% to 45% from 2017. Not only do the changes do little to reduce student debt, but they also come at a time when public finances are under immense strain.
The existing student finance system does not work – that much is clear. It urgently needs review to include the case for mean-tested fees. We know that the access gap at top universities is stubborn and wide, with those from disadvantaged backgrounds being less likely to go to university and, when they do decide to go, graduate with more debt than students from more privileged backgrounds. With fees back in the spotlight, politicians have a chance review fee levels and assess whether the student loans system, in its current form, is contributing to this.
A radical overhaul of student finance is needed if we are to improve social mobility and ensure everyone can access the same educational opportunities, regardless of their background.
The article was originally published by Public Finance and you can find it here.