Mark Ross, Opinion Editor
The student loan system is changing. In order to slash the government’s extortionate tuition fee bill and reduce graduate numbers, some students will now pay back a larger percentage of their loan.
Arguably fair enough? Not when it is poorer students, not the highest earners, who are the ones paying up.
In a recent speech, the Universities Minister Michelle Donalan announced several changes to the way we pay back our loans. Firstly, from next year, new students will have their loans written off after 40 years, instead of 30 as it currently stands.
Today we announced our fair deal for students, graduates and taxpayers - which will safeguard universities and build upon our drive to increase quality. And enable people to learn throughout their lives with LLE. Read my speech#Universities https://t.co/9TiWEybO1o— Michelle Donelan MP (@michelledonelan) February 24, 2022
Students will also begin paying back their loans when they earn over £25,000, instead of the current threshold of £27,295.
And interest rates on loans will be matched to inflation. This means that students will not repay more than the value of their loans in real terms.
Given that, as of last March, the government had £161 billion of outstanding student debt on its books (expected to rise to £500 billion by 2043), these measures may seem justified. But these reforms will impact lower-income graduates the most.
This is because wealthier graduates typically pay-off the entirety of their loans within the allotted 30 year period. This new policy therefore only milks more money out of those who do not earn enough to do so – lower-income graduates.
A generation of children have been educated under the Conservatives.— Bridget Phillipson (@bphillipsonMP) February 24, 2022
Record class sizes
Funding cut time & again
Inadequate recovery plan
And now, for those who go on to university, higher costs for longer
The Tories have failed our children. pic.twitter.com/bmr1dU9tpR
In fact, due to the interest rate freezes, graduates in the top 10 percent of earnings could actually see their lifetime repayments decrease from £53,000 to £39,000. All this while those with ‘Lower-middle earnings’ cough up nearly £19,000 more.
These changes slash repayments for the wealthy by increasing the burden for those less able to pay. It seems that the Conservatives truly are a party of ‘low tax’, so long as you are already wealthy.
No wonder ministers want to deter people from attending university
And these inequalities stretch beyond the rich-poor divide. On average, women will pay £6,600 more under the new system, whereas men will pay £5,500 less (due to the difference in working patterns between the two).
Taking a step back, one reason for these changes is to reduce the number of people choosing to attend university. Courses are oversubscribed, teaching quality is decreasing - and the government is paying for the whole thing.
For proof, look no further than some universities’ recent financial incentives to new students to defer their studies by a year. Space in lecture theatres and libraries is clearly at a premium.
As the late Education Secretary alluded, too many people are choosing the student life. No wonder ministers want to deter people from attending university.
Proposed minimum GCSE requirements for student loan access, caps on enrollment numbers and loan adjustments are all examples of the government trying to undo Britain’s obsession with higher education.
But regressive taxation is not the way to go about this. Instead of using financial barriers to deter future students (which usually results in the exclusion of disadvantaged groups) the government needs to offer attractive and sustainable alternatives to universities.
Specialised learning will therefore represent more bang for the government’s buck
Admittedly, Universities Minister Michelle Donolan has made some impressive progress in this area. She has targeted apprenticeships and vocational alternatives to university in an effort to wean students away from increasingly low-value degrees.
Donolan’s ‘Lifelong Loan Entitlement’, for example, allows working individuals to access a loan equivalent to that of a 4 year university course. This can then be used to fund individual modules or courses that can be taken at the convenience of an employer or employee.
The extension of the repayment term for student loans will mean that many future graduates will still be paying back their loans when they are close to retirement. 👵👴https://t.co/2kteov45No— i newspaper (@theipaper) February 23, 2022
This means that workers can target specific skills required for personal development. They can also organise their education around their work commitments; this means sacrificing 4 years of a career to attend university will no longer be necessary to achieving a qualification.
This will challenge universities’ monopoly over higher education. The loan suggests that it is possible to learn without attending university, encouraging more people to choose an alternative path.
This funding is also an efficient use of resources. Workers can borrow to fund a specific course which will directly impact their career, instead of blowing £27,000 on a general education which they may never actually use, nor re-pay.
This selective, specialised learning will therefore represent more bang for the government’s buck.
Offering these alternative paths to education will entice school-leavers and workers alike into choosing a working/learning hybrid over university. Schemes like these are a positive, egalitarian way to reduce the UK’s gargantuan graduate population.
Overflowing universities help no-one. Instead of clumsy attempts to shut the doors on new students, the government should continue to show that valid alternatives exist. Four years of debt-fuelled study isn’t the only way to succeed in life - if we were reminded of this, the flood of students choosing university would drain to a manageable trickle.
Feautured image: Towfiqu barbhuiya / Unsplash
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