AT THE TORY conference last month, Theresa May promised to review the UK’s highly contentious student loan system. However, her promises have fallen upon deaf ears among the student community. Many undergraduates are unaware of the immense benefits which the prosposed changes reveal.
The government have immediately paused the plan to increase fees from £9250 to £9500 and changed the repayment threshold in which graduates start to repay their loans from £21 000 to £25 000. The Institute for Fiscal Studies has estimated that this change in government policy will reduce average graduate lifetime repayments by approximately £10 000. To put that into perspective, this could put down a deposit on a house or alternatively buy 10 000 Lowther bombs. Speaking to Nouse, Alcuin College resident Jasper told of how he believes students are “unaware” of the positive decisions made by the Tories. The IFS predicted that there could be benefit by a £500 reduction in annual repayments. Many students are therefore overlooking that their future disposable income may increase drastically.
However, others believe that Mrs May’s reforms do not go far enough. Vanbrugh College resident Amy told us how she thinks that student loans should be “abolished completely”. The Labour Party campaigned during the General Election in June to scrap the current loan system for students starting at university this autumn, winning them an overwhelming proportion of the youth vote. Conversely, Labour now seem to have back-tracked on their promise. Shadow Chancellor John McDonnell has stated that the policy proposal is merely an ambition. Perhaps this is because the plans have been estimated to cost between £7-11 billion. The Labour Party had only suggested to use increases in corporation tax to fund this but many economists have argued that an increase in taxes on businesses would be catastrophic to the UK economy, especially during periods of Brexit uncertainty.
Despite criticism, the student loan system has worked. Overall there is little evidence to suggest that poorer students are deterred from further education and universities now have more sustainable funding boosting the UK academic profile. So, is there really a problem to fix?
Theresa May’s plans seem the only logical solution to satisfy government finances as well as to please students who are continually constrained by rising inflation and other expenses. The reforms that are proposed still represent a significant contribution by the government to higher education (£2.3bn a year) but is less of a burden on the taxpayer than a complete abolition of the system. Conservatives have argued that it is ‘fair’ that graduates contribute towards the cost of the degree as numerous empiri cal studies have p r o v e d that an individual’s e a r n i n g capability is vastly i m proved if they are in p o s session of a degree.
The future of student loans is not wholly reliant on the immediate plans that the government have set out. Former secretary of State for Education Nicky Morgan, who currently chairs the Commons Treasury select committee, has launched an inquiry into the issue which will analyse the policies introduced by the coalition government, the current lack of a maintenance grant for low-income students as well as the highly controversial rate of interest on student loans. This committee will then report back what it finds and the government will be answerable to or recommendations they make.
W i t h these plans now in place, it is highly likely that future of s t u d e n t financing and the loans system will look s i g n i f i cantly different to the initial steps May has put in motion.