Loud cheers for Universities UK's apparent acceptance ("Access myths refuted", THES , March 22) that "better-off students profit by taking out interest-free student loans".
Interest subsidies do not help students because only graduates repay loans. They do not help low-earning graduates because unpaid debt is cancelled after 25 years. They do not help higher-earning graduates early in their career because monthly loan repayments depend on earnings. Interest rates have no effect on monthly repayment size but only loan duration.
Subsidies help only mid-career higher-earners, whose loan repayments are "switched off" earlier.
Graduates should pay an interest rate equal to the government's cost of borrowing - not the credit card or overdraft rate. The present value of the resulting savings is £700 million a year - enough to finance generous targeted grants. The National Union of Students' defence of interest subsidies will benefit those who need it least. That is unacceptable.
London School of Economics