A leading think tank has predicted the rise in student loan interest rates to 6.1 percent will mean the average university student accumulating a debt of over £50,000 after graduation.
On average, the Institute for Fiscal Studies (IFS) report claims, most students will incur £5,800 solely in interest charges.
The author of the report, Chris Belfield, commented that the interest is “very high” for university students, especially “compared with market rates”.
The report bases its figures on a comparison between the 2006 student finance system, under which tuition fees were capped at £3,000, and the system in place from 2012 to the present, in which tuition fees amount to £9000 per annum.
The IFS concluded that students from the poorest backgrounds, commencing study in September 2017, will accrue debts of £57,000 (including interest) from their Higher Education process.
The report stated that the “combination of high fees and large maintenance loans contributes to English graduates having the highest student debts in the developed world”. In the document, this increase is attributed to the 2015 policy of implementing loans in place of maintenance grants.
In light of the figures forecasted by IFS, they also predicted that there will be an increase in the number of students unable to pay off their student debt, with approximately three-quarters estimated to have their debt written off after the standard 30-year period.
Furthermore, the report also considers how recent “reforms have considerably changed the landscape for UK universities”: average university funding increased by 25 percent in accordance with the 2012 reform changes.
The IFS raises the question of how universities may be incentivised in different ways by such financial distribution; funding by the government for “high cost” courses increased 6 percent between 2011 and 2017, whilst funding for “low cost” courses increased considerably more at 47 percent.
The findings detailed in this report have triggered a host of responses from UK politicians.
The Labour Party’s shadow education minister, Gordon Marsden, said: “Any argument that the current fee system is progressive is absolute nonsense.”
The Conservatives’ Boris Johnson, meanwhile, responded to the report by saying the Higher Education process “is a vital and deliberate investment in the skills base of this country, not a symptom of a broken student finance system”.
Writing for The Guardian, higher education minister Jo Johnson states that there is “some misguided speculation that the government [is] planning to abandon our successful higher education funding framework”.
Photograph by John Walker via Flickr and Creative Commons