Tory interest payments 'will hit poor hardest'

September 17, 2004

The poor will pay more than the rich to get degrees under the Conservative Party's new plans for higher education, according to a policy think-tank, writes Alan Thomson.

The Higher Education Policy Institute said that the party's plans to scrap tuition fees and fund universities by raising the rate of interest on student loans would hit women taking career breaks to have children and people in poorly paid jobs.

Hepi said: "The richer the student the smaller the loans they need, and the less they will therefore contribute to the cost of higher education.

"Poor students take larger loans, which will mean that they will contribute more to the cost of higher education. Those who take the longest to repay (women taking career breaks and those in poorly paid professions) will pay the most in real terms."

Hepi said that this would not arise under the Government's proposals, where loans are subsidised so that those who take the longest to repay will receive the largest subsidies.

The think-tank also said that the Conservative plans would not raise enough money to fund higher education. Hepi said the Conservatives' sums were based on generating sufficient cash to replace an estimated income stream from fees of £1.8 billion by 2009. But the sector would need between £2.3 billion and £2.7 billion by the end of the decade, the institute said.

Chris Grayling, the shadow higher education minister, wrote to Ivor Crewe, president of Universities UK, rebutting the Hepi figures.

Mr Grayling maintained that £1.8 billion was a realistic estimate of net income from fees and that Tory plans would raise a similar amount. He said that Hepi's higher estimates were based on projections of student growth that he did not accept. Hepi said it stood by its projections.

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