University fees – an unfair system?
Pressure is being put on the government to reduce the ‘outrageous’ interest rates of 6.1% levied on student loans, this is more than double the inflation rate. Ministers are also looking at shaming poor performing universities with high fees, by publishing information about employment prospects of graduates from different courses. The proposal is to scrap dead end courses which have a poor record of employment, ensuring students get their money’s worth.
The proposed overhaul of the controversial repayment system would mean that Chancellor Philip Hammond could replace the outdated Retail Price Index (RPI) inflation measure which is used to set repayments, and replace it with the lower Consumer Price Index (CPI). This change could save students up to £18,000 over their lifetimes, according to recent reports.
How things stand now
Currently the amount charged on student loans is redefined each September and is constructed around the RPI inflation rate from March of the same year. Tuition fees are a maximum of £9,250 per year which is funded by the student, usually paid through student finance. Students can apply for a tuition fee loan to cover their university costs.
Graduates will only be expected to start paying the loan back when they are earning over £21,000 per year. The amount you repay each month will depend on how much you are earning. For example, if you are earning £30,000 per annum, you will repay £804 a year (£15.46 per week). However, the interest which is being added to the loans can leave students with massive debts. Students will have accrued £5,800 in interest charges before they even graduate. With the rising charges in tuition fees and interest rates this would mean high earning graduates will pay interest charges of over £40,000 on top of the amount that they borrowed.
British inventor Sir James Dyson has recently spoken out about tuition fees and student loans saying:
“When tuition fees started, I don’t think anyone realised how big they would get – it ends up as £50,000 or £60,000. Can you afford to go on and do a Masters or a Doctorate after that? And can you ever afford to repay it? It’s the worst time of life to have a debt. I thought having a mortgage was a terrible debt, but now they can’t even get to the mortgage point.”
Help for those who need it
Universities UK, which represents higher education bodies, says: “the government must show it is listening to students”, and that students must have: “money in their pocket” while they are studying. There is growing concern that the current system is no longer fair to young people. The president of Universities UK, Prof Janet Beer, has called on ministers to look again at grants for students which are in most need of help with university living costs.