Scrapping student fees 'benefits high earners most' - IFS

Written by Tom Freeman and Agnes Chambre on 5 July 2017 in News

Institute of Fiscal studies report shows three quarters of graduates in England will never repay their growing debt burden, but says scrapping fees would benefit richer students more

Jo Johnson - PA

Labour's policy to scrap university tuition fees in England would benefit high earners most, the Institute of Fiscal Studies (IFS) has said, even though high fees south of the border are creating unmanageable debt for students

Labour's manifesto at the general election contained a pledge to scrap tuition fees, as the SNP have done in Scotland.

New research by the IFS shows three quarters of students will not repay the full amount they borrowed for tuition fees and graduates from poorer backgrounds will face the biggest debt burden.

According to the report, 77.4 per cent will not repay what they owe - compared to 41.5 per cent before the 2012 hike in fees.

The IFS also found that changes to the student loan system have wiped out a £1,500 boost for the lowest-earning graduates when fees were tripled to £9,000 a year.

Jack Britton, one of the report’s authors, said Labour’s policy to scrap university fees altogether would help the top earners most, while increasing public borrowing.  

“Recent policy changes have increased university funding and reduced long-term government spending on HE while substantially increasing payments by graduates, especially high-earning graduates,” he said.

“There is probably not much further to go down this route, but proposals for reducing student fees tend to hit the public finances while benefiting high earners the most.”

First Secretary of State Damien Green this week suggested there needed to be a "national debate" on fees, but other ministers denied the UK Government was planning a rethink of the policy. 

Shadow Universities Minister Gordon Marsden claimed the IFS analysis vindicated Labour's plan. 

“This report shows that any argument that the current fee system is progressive is absolute nonsense," he claimed.  

"From scrapping the maintenance grant to freezing the repayment threshold, this Government has increased the debt burden of students from disadvantaged backgrounds, who will graduate with debts in excess of £57,000.

“Under the Tories, student debt continues to rise with no end in sight, and students in the UK will now graduate with a shocking average of over £50,000 in debt."

SNP Education spokesperson at Westminster Carol Monaghan MP said the comments by Green revealed internal divisions with the UK cabinet.

"UK government minister Damian Green is now admitting that student debt is a ‘huge issue’ – the penny dropping after the Tories saw young voters desert them in droves – because of the crippling debt many students in the rest of the UK face. The cynical and panicked response from the Tories to have a ‘national debate’ is just another sign that they are reeling from the election.
 
“For the SNP Scottish government free university tuition is an absolute commitment and have ensured Scottish students don’t leave university with a £27,000 debt."

Universities Minister Jo Johnson said students from poorer backgrounds in England were going to university at a record rate.

"The government consciously subsidises the studies of those who for a variety of reasons, including family responsibilities, may not repay their loans in full," he said.

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