A review commissioned by the UK government has proposed that tuition fees in England should be reduced to £7,500.
With this drop, students are expected to incur less debt and interest payments. The latter would also no longer be charged at inflation plus three percent, but at the rate of inflation, according to the independent review of post-18 education in England chaired by the banker Philip Augar.
As part of the package of reform measures, repayments would start at a lower point – from annual salaries of £23,000 rather than £25,725 and the period will be extended from 30 to 40 years. Unpaid debts will be cancelled 40 years after graduation, instead of the current 30 years. The return of maintenance grants for poorer students and higher-level technical courses have also been proposed, as well as the introduction of a “lifelong learning loan allowance” to support students of all ages.
These proposals are based on the two main takeaways from the landmark review: university fees are too high and universities receive too much funding from the government.
It described that universities have seen “generous funding” and recommended for other sectors that have faced austerity, such as further education, to receive greater funding and loans.
Augar review: how will it affect post-18 education? https://t.co/cOsrEYekcN
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Tuition fees are a huge concern among UK students, as many are facing tens of thousands of pounds in debt. In a YouGov snap poll, 59 percent supported the idea of lowering fees. In the most recent general election, young people overwhelmingly voted for Labour, spurred by the party’s manifesto that promised to abolish tuition fees altogether.
A Financial Times analysis found that models in the Augar review would benefit wealthier students. This is because the richest fifth would end up repaying less (and saving on interest charges) while those in the lower and middle-income brackets would repay more.
“The wealthiest would be better off, because they would be able to repay in full earlier than the new 40-year duration. They would also benefit from a lifetime cap of total repayments of a maximum of 1.2 times the inflation-adjusted value of the loan,” it notes.
This concurs with the Institute for Fiscal Studies’ (IFS) findings, as reported by the BBC. The IFS estimates that graduates in the top 20 percent income bracket could cut payments by almost a third (30 percent).
Meanwhile, the extended repayment period of 40 years could lead to those earning less to miss the chance of getting their loans written off, as might currently be the case. The longer repayment period means they would have to pay off more of their loans.
The report countered that the maintenance grants and the reduction of “low value” courses (which lead to low-paying jobs) would offset these costs for poorer students.
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