Sutton Trust calls for means-tested tuition fees in England

Budget must address ‘scandal’ of debt burden faced by poorest students by linking fees to family income, says education charity

November 16, 2017
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Tuition fees at English universities should be waived for students from the poorest households, the Sutton Trust has said.

Ahead of next week’s Budget, the leading education charity has called on the government to reintroduce means-testing for undergraduate tuition fees and revive student maintenance grants, which were scrapped in September 2016.

The call follows the publication of a new report by the trust on 16 November, which suggests that tuition fees should be means-tested based on a student’s household income, with full fee waivers given to students from households earning below £25,000 a year. Students from higher-income households should have to pay a sum based on a stepped system of fees, with those from families earning £100,000 a year having to pay the current full fee level of £9,250 a year, the trust says.

This would massively reduce debt levels for students from the poorest backgrounds, says the report, titled Fairer Fees: reforming student finance to increase fairness and widen access.

Sir Peter Lampl, chairman of the Sutton Trust, said it was an absolute scandal that the poorest students graduate with the highest debt”.

“A typical graduate will leave university with whopping debts of £46,000 while young people from households in the lowest 40 per cent of earners will graduate with debts of nearly £52,000,” he said, adding that these debt levels are “almost double those of American university graduates”.

Calling for the reintroduction of maintenance grants for students from low-income families, Sir Peter said this would cut debt even further, to £23,000, at a cost to the Treasury of £3.2 billion per year.

However, Nick Hillman, director of the Higher Education Policy Institute, criticised the proposals as “unnecessary” and “not…a good use of scarce resources”.

“It is wrong that the poorest students currently graduate with the biggest debts, but introducing means-tested tuition fees alongside any new maintenance grants would have an enormous price tag,” said Mr Hillman.

“Means-tested fees mean poor people who end up on big bucks would have a student debt two-thirds lower than other rich graduates,” he added.

The report also revealed that four-fifths of graduates will not repay their loans in full under plans to allow them to start paying back their student loan when they earn over £25,000.

Under proposals announced by Theresa May at the Conservative Party conference last month, graduates will begin paying only when they start earning £25,000 a year, compared with £21,000 at present.

While this will save graduates an average of £8,000 over their lifetime, it will increase the long-term costs to the Exchequer by £2.9 billion for each student cohort, the report says.

This means that 45 per cent of student debt will never be repaid, up from 28 per cent under the current threshold, according to the analysis by consultants London Economics.

Sarah Stevens, head of policy at the Russell Group, said the report was “an important contribution to the ongoing debate”, but added “we should be mindful of the drawbacks of any system that depended on significant upfront funding from the Treasury given the many other demands on the public purse”.

“Tuition fees should not be a barrier to access as they do not need to be paid upfront and graduates who go on to earn less may not need to repay their loans,” she added.

The Sutton Trust's £3.2 billion package of means-tested fees and maintenance loans would slash debt among the 40 per cent of poorest students by 75 per cent, from £51,600 to £12,700, the report says.

The changes would also reduce the proportion of graduates never repaying their full loans from 81 per cent to 56 per cent and the proportion of debt not paid back would fall to 35 per cent, it says.

With changes to the repayment threshold in October, the average graduate currently repays £54,900 over their lifetime in cash terms (£25,200 at 2017 prices) compared with £69,500 (£33,200) before the threshold changes.

This would change to £30,200 (£15,400 at 2017 prices) under the proposed new system, though the poorest 40 per cent of graduates would likely repay about four times less than the richest fifth.

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