University tuition fees should be cut to £7,500 a year, government review says

30 May 2019

University tuition fees in England should be reduced to £7,500 a year and the student loan repayment period extended to 40 years, according to a new review.

The independent review commissioned by the government says that the current system is “unfairly punitive” on students and calls for fees to be cut from £9,250 to £7,500 a year from 2021 onwards.

It also calls for the repayment period to be extended by a decade to 40 years to ensure a greater proportion of student loans are paid back.

The interest rate on loans - which is currently 6.3% - should also be reduced to the level of inflation while students are still at university.

The review also suggests a cap on the growth of the loan at 1.2 times the initial loan.

Under the current system, graduates repay 9% once they earn above £25,250, with loans wiped after 30 years.

However, the proposals put forward by Dr Philip Augar could mean some students end up paying back their loans well into their sixties.

Alistair Jarvis, chief executive of Universities UK, warns the move to reduce fees could “prove to be a wolf in sheep's clothing”.

He says: "I recognise there are difficult choices to be made on public funding, but cutting fees without replacement funding would be a political choice which hurts students, limits opportunity, damages universities, decreases the number of highly-skilled employees that business needs, and reduces our international competitiveness at a time when modern Britain needs it most.”

The review says that public misunderstanding of student loans means the system should be renamed the “student contribution system”.

It also says the removal of maintenance grants is deterring some less well-off young people and recommends their reintroduction for socio-economically disadvantaged students to at least £3,000 a year.

In a speech in London, Prime Minister Theresa May welcomed the findings of the review.

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.”

Dr Augar says: “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.”

He adds: “Our proposals are designed to build on the considerable achievements of our universities – one of the UK’s world class industries – with a particular focus on the economy’s needs and improving value for money for students and taxpayers."

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