Conor Ryan, Director at the Sutton Trust, discusses new research on tuition fees in this Times opinion piece.

The Government has miscalculated badly on student debt. The trebling of university tuition fees was supposed to produce savings for the Treasury as graduates repaid the cost of higher education through a fairer loans system introduced at the same time.

However, new research by the Institute for Fiscal Studies for the Sutton Trust published today shows how the changes hit people on middle incomes hardest, leaving them paying off their loans into their early fifties. As the government looks increasingly unlikely to break even because of high defaults, the whole system needs to be rethought.

The lowest earners gain from a higher repayment threshold in the new system, while those on the highest incomes can pay back their loans faster. It is middle earners who face the crunch. In their twenties graduates will pay less per year than before, but three in four will still be paying into their early fifties, typically incurring a total cost of £35,000 at today’s prices, compared with £21,000 under the old system. Nearly half will pay back more than they borrowed.

Under the previous system teachers could clear their loans by the age of 40. In future, with real interest payable from day one, they will pay about £2,000 a year, equivalent to 5p on basic rate tax, into their early fifties.

As ministers recently admitted, nearly half of the loans are unlikely to be repaid, creating a double debt trap — longer repayments for middle earners and a loss for taxpayers.

The level of fees must now be revisited. Poorer students already get higher maintenance grants and tuition fees were means tested until 2006. Ministers must look again at what students pay and how much of university funds can be provided through teaching grants, rather than loans. This could allow lower fees for lower-income students, which would help to improve access. The number of disadvantaged young people entering higher education has continued to rise, but there is still a big shortfall at prestigious universities most likely to lead to good careers.

Some of the money raised in fees would be better directed at students still at school or college. Means-tested fees would encourage more bright students to apply to top institutions. As summer schools run by the Sutton Trust have shown, such interventions make a big difference. Ministers now have a chance to make the sums add up — and improve social mobility.

Conor Ryan is director of research at the Sutton Trust

See the orginal article here.

Read the Times coverage of the report here.

 

Media enquiries

If you're a journalist with a question about our work, get in touch with Sam or Rocky on the number below. The number is also monitored out of hours.

E: [email protected] T: 0204 536 4642

Keep up to date with the latest news