Would reducing tuition fees favour poorer graduates?

Would reducing tuition fees favour poorer graduates?

“What we shouldn’t be doing is just going for a blanket cut in the cost of tuition fees because actually, that makes the system much, much less progressive.” – Nicky Morgan, the Former education secretary.

The claim that cutting tuition fees for university students without changing anything else is being questioned. A ‘progressive system’ is one whereby people pay more the richer they become. For those lower-income graduates, they may never have to repay their loans within 30 years whereas higher-income graduates would be repaying their loans quicker if there were to be a reduction in tuition fees.

Currently, graduates have to pay 9% of their taxable pay above £21,000 a year (rising to £25,000 later this year) in loan repayment. The maximum cost of tuition fees for the year is £9,250 a year in England and interest is paid on top and interested is charged on top of maintenance loans, too.

Repayments are made over 30 years from the April you finish or leave the course and after that time, any remaining debt is written off. If a person never earns over £25,000 then for the 30 years, they will never have to pay anything back. This means that for lower-earners, changing the tuition fees will make no difference to them.

The Institute for Fiscal Studies says that 83% of graduates will not have paid all of their loans by the end of the 30 years, a huge number of graduates. Those graduates who will be earning over the amount and will have to repay back their student loans, they will benefit from a reduction in tuition fees. If the lowest-earning graduates are the only group who wouldn’t benefit, then this is not progressive in the economy.

Despite the rising tuition fees over the years, research does show that applications to university have continued to rise. Millennials are still feeling inclined to continue on to higher education, which is a positive factor in the ambition of the youth of today.

However, for a lot of college-leavers, the idea of having an excess of £50,000 debt after completing university is extremely off-putting, which means a lot of students are less inclined to pursue their dreams and continue studying.

In Scotland, there are no fees for Scottish students. In Wales, the fees are up to £9,000 and in Northern Ireland, the fees are approximately £4,000.

Only time will tell what the best outcome is and how millennials will benefit or not from these changes. For most, it is a concerning paradigm, one that doesn’t look like it’s set to improve anytime soon.

Written by Gemma Smith