Is the new student loan system more progressive than its predecessor?

Claire Crawford and Wenchao Jin, authors of the new Sutton Trust/IFS report, discuss their findings in an article for The Conversation.

Nearly three-quarters of graduates will not clear their student loans before the end of the repayment period. This means the large majority of those who go to university aged 18 or 19 will still be paying off their loans well into their forties and early fifties.

The new higher education finance system, introduced in 2012, will leave graduates with much more debt than under the system it replaced. But graduates who do less well in the labour market will actually end up paying back less than before, while middle and especially high earners will pay back much more. In that sense, the system is more progressive than the one it replaced and looks, for most graduates, rather like a graduate tax.

A new report published by the Institute for Fiscal Studies, and funded by the Sutton Trust, examines the implications for graduates of the new student loan system that accompanied the higher tuition fees introduced in 2012.

These reforms increased the cap on undergraduate tuition fees for UK and EU students from £3,375 to £9,000 per year, while scrapping teaching grants paid by the government to universities for most students.

Read the full article here.