OBR should examine student loans system, says panel

Independent Commission on Fees concerned by high write-off rate and impact on ‘squeezed middle’

July 30, 2015
Loan, money, savings

The Office for Budget Responsibility should launch an investigation into whether the student loan system provides learners and taxpayers with value for money, a report says.

The Independent Commission on Fees, which monitors the impact of charging up to £9,000 annually for tuition at English universities, says that the high predicted write-off rate of loans raises questions about the sustainability of the finance regime.

In a report published on 30 July, the commission says that the system also results in significant variation in the amount actually paid by graduates for their education. For example, middle- to high-earning individuals effectively subsidise those who earn less, as well as those who are wealthy enough to pay off the loans early and therefore avoid paying too much interest. There is a risk “that it is the hard-working ‘grafter’ in the middle who is shouldering much of the cost”.

The commission also argues that the widespread charging of £9,000 must involve significant cross-subsidy from arts degrees to science, engineering and medical degrees because of the difference in course delivery costs. It asks whether this is fair, especially when the earnings prospects of graduates are also different.

Will Hutton, the commission’s chair and principal of Hertford College, Oxford, said that three-quarters of students were unlikely to clear their student loans before they are written off after 30 years and that this figure was likely to increase with the abolition of maintenance grants and possible rises in tuition fees.

“It’s absolutely vital that the OBR establishes what the knock-on effects of the student loan system will be in the future on both students and the national finances, so we know whether the current system is offering us value for money and economic security,” Mr Hutton said.

The report raises concerns about the “significant amount of duplication” between individual universities’ widening participation programmes and calls for an independent body to be set up to ensure that activities are coordinated and effective.

A poll of 1,017, 16- to 18-year-olds conducted for the report found 77 per cent were concerned about the cost of living as a student, and 68 per cent were worried about high tuition fees.

chris.havergal@tesglobal.com

You've reached your article limit

Register to continue

Registration is free and only takes a moment. Once registered you can read a total of 3 articles each month, plus:

  • Sign up for the editor's highlights
  • Receive World University Rankings news first
  • Get job alerts, shortlist jobs and save job searches
  • Participate in reader discussions and post comments
Register

Related universities

POSTSCRIPT:

Print headline: OBR ‘should probe student loans system’

Have your say

Log in or register to post comments

Most Viewed

Most Commented

Lady Margaret Hall, Oxford will host a homeopathy conference next month

Charity says Lady Margaret Hall, Oxford is ‘naive’ to hire out its premises for event

women leapfrog. Vintage

Robert MacIntosh and Kevin O’Gorman offer advice on climbing the career ladder

Woman pulling blind down over an eye
Liz Morrish reflects on why she chose to tackle the failings of the neoliberal academy from the outside
White cliffs of Dover

From Australia to Singapore, David Matthews and John Elmes weigh the pros and cons of likely destinations

Mitch Blunt illustration (23 March 2017)

Without more conservative perspectives in the academy, lawmakers will increasingly ignore and potentially defund social science, says Musa al-Gharbi