A large proportion of students about to start university will be still mired in student debt 30 years on, meaning they’ll be eligible for any remaining loan to be written off after this point. These students, the report claims, will be effectively paying an extra ‘tax’, straight out of their pay packets.
The report concluded that most students (7/10) will be worse off under the new system with average student debts rising to £37,658. The worst hit will be middle class families who, under the current system, are able to apply for maintenance grants. From September 2012, many will need to borrow the maximum loan in order to pay for living costs such as rent.
These students are also less likely to be eligible for fees waivers under the National Scholarship Programme which, according to NUS president Liam Burns, is “a con trick that will only benefit graduates who are earning enough to pay off their student loans within 30 years. They help the Treasury, who have to spend less on loans, but are of no benefit to students whatsoever.”
However, the Institute for Fiscal Studies report states that students will be ‘significantly better off while they study due to the increased generosity of student support’.
According to universities minister, David Willets, "students still at university, institutions, taxpayers and poorer graduates will be better off under the new system." He said: “The poorest 30 per cent of graduates pay back less, public expenditure is saved, and universities gain more funds.” (Note – we’re not sure what Willets means by “students ‘still’ at university.”)
This comes as UCAS release their
30 June Digest of university applications which shows university applications are down by 50,000. On further analysis, the UCAS data highlights the widening gap between the richest and poorest student. Teenagers from the richest areas are much more likely to apply for university than teenagers who live in the poorest areas. Furthermore, the data revealed that middle class students are the most deterred by the fees increase.