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The Augar Review: What it Means for Universities and Students

After a year of waiting, the Augar Review has now been published. Whatuni investigates the key recommendations and what they mean for universities and students….

Eleanor Foulds
by Eleanor Foulds

Back in February 2018, Prime Minister Theresa May announced a “wide-ranging review in to post-18 education”, led by Philip Augar, a City of London banker turned financial writer and Government advisor. On 30th May 2019, the Augar review’s findings and recommendations were finally published. 

The review covered the entire higher and further education industry and is a massive 210-page report -  which you can read here.  But if you'd rather not (and we wouldn't blame you!) here's a breakdown of what Philip Augar and his review panel had to say.

Note: The Augar review covered the entire higher and further education industry. We won't cover everything here, but will focus on the key recommendations (and their impacts) for universities and students.

Recommendation: Cutting Fees to £7,500 per year

According to the Augar review,  a £7,500 fee ensures that no student pays more than what could be considered the reasonable cost of their course and allows better targeting of taxpayer investment. It would also reduce overall student debt and lower one deterrent to participation.”

According to the report, £7,500 should be enough for to cover the cost of providing lowest cost courses (humanities and social sciences) and the additional costs of providing STEM-based subjects (science, engineering, mathematics) should be funded to the university by a teaching grant.

The £7,500 cap would be set until 2022/23 and only increased in line with inflation thereafter.

Recommendation: Extend loan repayment period from 30 years to 40 years 

This is the flip side to the reduction in yearly tuition fees. It means that while a student will graduate with less debt, they will in theory pay more of their loan back – meaning less debt has to be written off by the government.

Note: The report does emphasise that this change would only be applicable to new students and any repayment terms for existing and past students would not change.

Recommendation: Remove the inflation+ 3% in-study interest rate

Augar “consider[s] it unfair that students should incur an above-inflation increase in their debt while studying full-time at a time when they are unable to generate earnings to start to repay their loan.” So they recommend it is changed to an inflation only interest rate.

However, he has not recommended any changes to the post-study inflation + 3% interest rate.

Recommendation: Post-study repayment threshold lowered

Augar recommends the repayment threshold, which is currently a fixed £25,000, should be changed to the 'median non-graduate earnings'.

Right now, that would mean lowering the repayment threshold to £23,000. By 2025 the median earnings is forecast to be £28,000 so the threshold will increase to that.

This will affect both prospective and current students and will mean that people will start repaying with lower earnings and those already repaying will pay an extra £180 a year.

Recommendation: Reintroduce maintenance grants

The review recommends a minimum grant of £3,000 per year for socio-economically disadvantaged students. This would not need to be repaid.

Recommendation: Lifetime repayment cap of 1.2 times initial loan 

To balance out the fact that students will face a longer repayment term (40 years), they propose to cap the repayment amount to 1.2 times the initial loan amount.

“Any borrower that reached the cap would have the remainder of their loan written off at that point (all of which would be accrued interest).”

The review stats that this cap would be brought in for those existing Plan 2 Student Loan borrowers, as well as all future borrowers.

Who Benefits from these Recommendations?

On the face of it the reduction in fees, the removal of in-study inflation, and the introduction of the repayment cap will benefit all students.

However, in truth only the highest earning graduates will see big benefits from all these changes. Not only would they have less debt to repay, they would pay off their loans more quickly.

Students from less well-off backgrounds will also see a benefit with the reintroduction of the maintenance grants. 

The biggest losers are those graduates with moderate earnings, who will likely end up repaying more over the extended repayment period than they would under the current system.

On the institution side, universities offering STEM related subjects will benefit from the added teaching grants, whereas those offering mainly Humanities and Social Science degrees will lose out from the reduced income.

Will These Recommendations Come into Effect? And If So, When?

The report makes a whopping 53 recommendations, but there is a chance that not a single one could make it in to real live law. 

This report was commissioned by Theresa May, who resigned just a week before it was published. It's currently unclear if her successor in the Conservative party will seek to implement these recommendations, or if they'll even get a chance to, if we head to another general election.

Whatever happens, the Whatuni team will be keeping an eye out and will report back any changes that could significantly impact prospective students.

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