Graduates should repay student loans over 40 years, review recommends

Philip Augar, who led the Augar Review into Post-18 Education and Funding speaking in central London.
Philip Augar, who led the Augar Review into Post-18 Education and Funding speaking in central London.
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Graduates will have to repay their student loans over 40 years under plans for university funding reforms.

The proposal, which could see them paying off the debt into their 60s, comes as part of a raft of recommendations made in the Post-18 Education and Funding review.

An independent panel led by Philip Augar also proposes that the tuition fee cap should be cut to £7,500 from £9,250 a year, and that the interest rate on loans should be reduced to the level of inflation.

The panel further recommends the reintroduction of maintenance grants for disadvantaged students, of at least £3,000 a year.

Prime Minister Theresa May welcomed a number of the recommendations in a speech at the Policy Exchange in London on Thursday.

She said: "I was not surprised to see the panel argue for the reintroduction of means-tested maintenance grants both for university students and those studying for higher technical qualifications.

"Such a move would ensure students are supported whichever route they choose, and save those from the poorest backgrounds over £9,000.

"It will be up to the Government to decide, at the upcoming Spending Review, whether to follow this recommendation.

"But my view is very clear: removing maintenance grants from the least well-off students has not worked, and I believe it is time to bring them back."

However, Mrs May noted that decisions about whether and how to implement the recommendations will fall to the next Government, and not her.

She added: "But regardless of the debate to come, there can be no doubt that this report represents a major landmark.

"And that the data, analysis and insights it contains will help us to deliver a post-18 education system that truly works for everyone."

But the plans to cut fees received a mixed reaction.

Robert Halfon, chairman of the Education Select Committee, welcomed the review, adding: "In terms of fees, I will want to look at the report more closely, but I am cautious of subsidising lower fees which might help the middle classes, when this money could instead be used to promote and support degree apprenticeships."

Bill Rammell, vice chancellor of the University of Bedfordshire and a former higher education minister, said: "The cumulative impact of the panel's recommendations will greatly harm the sustainability of universities, their work to widen access to the most disadvantaged in society, and the experience of our students."

While Josh Hardie, CBI deputy director-general, warned that a change to tuition fees must not lead to a cut in higher education funding.

He said: "A reduction in the graduate contribution, without a top-up from the Treasury, could bring into question the financial sustainability of many universities, jeopardising quality and the high-skilled talent the UK economy needs and which businesses value.

"Undermining the financial sustainability of universities would be a national tragedy given the crucial contribution they make to skills and innovation."

Dr Augar, chairman of the panel, said: "Our work revealed that post-18 education in England is a story of both care and neglect, depending on whether students are amongst the 50% of young people who participate in higher education or the rest.

"The panel believes that this disparity simply has to be addressed."

The review also makes a number of recommendations relating to further education.

It says the reduction in the core funding rate for 18 year-olds should be reversed, and that the Government should provide FE colleges with a dedicated capital investment of at least £1 billion over the next Spending Review period.

A total of 53 recommendations for Government cover the 50% of young people who do not attend higher education, as well as the 50% who do.

Mrs May, who launched the review last February, concluded: "I have always believed and I still truly believe that, if this is to be a country that works for everyone, then we have to make education work for everyone."

Tuition fees in England were trebled in 2012, and the vast majority of courses now cost the maximum, £9,250 per year.

According to estimates by the Institute for Fiscal Studies (IFS), the average student can now leave university owing more than £50,000.

But the panel is recommending the cap on the fee chargeable should be reduced to £7,500 per year, and could be introduced by 2021/22.