Responding to today’s publication of the Government’s response to the Augar Review and new reforms to higher education, Ryan Shorthouse, Chief Executive at Bright Blue, commented:
“The Government is right to want to reform the student finance system to make it more sustainable. The ballooning cost of the subsidy on student loans, forecast to be nearly £20 billion this financial year, is borne by taxpayers, the majority of whom did not attend university. However, the package of policies announced today will generate relatively small amounts of savings, of approximately £1 billion per year.
“In terms of the distributional implications, there is the good, the bad and the ugly in these packages of measures. The good is extending the loan repayment period from 30 to 40 years, which will hit middling lifetime earners when they are middle-aged. But reducing the interest rate is a bad idea. This increases the cost of the government subsidy on student loans and disproportionately benefits the wealthiest graduates. The ugliest policy is reducing the starting salary for repaying student loans to £25,000, which is in effect an utterly avoidable and damaging tax rise for young graduates. Crazily, as a result of these reforms, all of tomorrow’s graduates will be paying more towards higher education than today’s graduates, apart from the 30% wealthiest graduates.
“The Government should have increased, not reduced, the interest rate on student loans, at least on the highest earners. Then they wouldn’t have had to reduce the starting salary threshold for repaying student loans. Freezing the level of the tuition fee is, under the new system, only beneficial to the 60% most affluent graduates.
“Restricting access to student loans is not the right way to reduce the government’s subsidy on student loans. It penalises prospective students, disproportionately those from Britain’s poorest families. The Government could instead impose a levy on universities with high subsidy rates that produce disproportionately more students whose student loans are written off.
“Thankfully, the lifelong loan entitlement could be a transformative policy, supporting adults to upskill and reskill whatever their age. But it will be crucial to enable access to this entitlement for as wide a range of qualifications as possible, including those that are equivalent or lower in value to qualifications someone already has.”
Two Bright Blue policies have been adopted by the UK Government in their official response to the Augar Review:
To arrange an interview with a Bright Blue spokesperson or for further media enquiries, please contact Joseph Silke at joseph@brightblue.org.uk or on 07948 420 584.
[Image: Pixabay]
