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More changes afoot for Student Finance?

A new report surfaces that seems to point in the wrong direction

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Image Credit: Mайкл Гиммельфарб (Mike Gimelfarb)

Since our last publication and article on the issue of student finance, a report has surfaced to suggest a different strategy for dealing with higher education and its financing. The Augar review, commissioned by the government two years ago, came out with many suggestions to update the system last changed in 2012. It has more than 60 potential changes included in the 216 page document.

One notable change that has hit headlines is to reduce the tuition fee from the current £9 250 to £7 500. This supposedly benefits borrowers, but in fact the changes made would generally make graduates worse off, and make them pay comprehensively more than the old system had.

This is due to the 30 year deadline for repayment being moved to 40, so adding an extra ten years before the remaining loan is madevoid. Moreover, the repayment threshold has been reduced from £25 725 to £23 000 which will mean starting repayment earlier. Many, including former Secretary of State for Education, Justine Greening, have suggested that these changes will explicitly benefit the highest earners and “come at the expense of lower and middle-earning graduates.”

She wrote for The Financial Times that graduates with the highest salaries will see their repayment reducing by £18 000, whereas lower and middle-earning graduates could see theirs increasing by £12 000.The report would help rebalance the government’s loan books (albeit not completely) but as some have mentioned, at the detriment of universities who would now be receiving a lower tuition fee under the implicit promise that the government would fund the shortfall.

As beneficial as balancing government books can be this seems to be in many ways a step in the wrong direction for the government, as the basis behind the tuition fee loans is to provide affordable further education for everyone. The Augar review (or ‘The Review of Post-18 Education Funding’) changes would likely, despite implied intentions, isolate many from going to university in the first place by making the final costs prohibitively expensive.

Some logical changes are suggested, such as the fact that interest rates for the loan during years of education will remain at the inflation rate and not the extra three percent currently being charged. It also mentions reintroducing means-tested maintenance grants of up to £3 000. This is a scheme that would likely benefit those poorest tremendously, providing them with direct fnancial support to help with accommodation, hidden course costs, and general supplies like food without the worry of having to pay this back over many years.

Otherwise, the review has generally received a fair bit of criticism because it ultimately fails to resolve the issue of social mobility and instead potentially worsens the problem by continuing to privilege wealthy students. The change, supported by Theresa May as a way to “reduce the burden of debt on young people”, could theoretically be implemented once a new Prime Minister has been elected, depending on the beliefs and legislative agenda of her successor.

These changes are in no way guaranteed to make it into actual British law, but they are an interesting indication of the priorities of the current ruling party given that they sanctioned a report to focus on balancing their budget. A different view might argue that they should focus on providing affordable higher education to the country’s young people, over restructuring.

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