Expert Proposes Radical Changes to England's Student Loan System
Former government adviser suggests cutting repayment term and increasing university funding in a comprehensive plan to address financial challenges in England's higher education sector.
A former government adviser has proposed significant changes to England's student loan system, aiming to address financial challenges faced by universities and students alike. Tim Leunig, an economist and former adviser to the Treasury and Department for Education, has outlined a 10-point plan to reform the current system.
Central to Leunig's proposal is reducing the student loan repayment term from 40 years to 20 years. This suggestion comes just one year after the introduction of the extended repayment period, which Leunig describes as "absurd." The plan also includes a minimum weekly repayment of £10 for all graduates, regardless of income, to enhance the system's financial stability.
These recommendations come at a critical time for England's higher education sector. University leaders have expressed significant financial concerns due to frozen tuition fees and a decline in international student numbers. Tuition fees have remained fixed at £9,250 since 2017, despite being raised to £9,000 in 2012.
Leunig's plan also proposes:
- A 1% "surcharge" for employers hiring graduates
- New maintenance grants of approximately £11,000 for students from low-income families
- A £2,000 per student increase in university funding, paid directly by the government
"This is the only zero-cost reform package out there – offering a proper maintenance package for students, shorter repayment periods for graduates and more money for universities. The new government should just get on with it."
The proposal has garnered support from some academic leaders. Professor Eric Neumayer, deputy president and vice-chancellor at the London School of Economics, praised Leunig's intervention as a "costed and principled proposal for radically reforming the current system of student finance."
It's worth noting that the UK's student loan system has undergone significant changes since its introduction in 1990. The average student debt in England now exceeds £45,000 upon graduation, making it one of the most expensive university systems globally. The Institute for Fiscal Studies estimates that only 25% of current students will fully repay their loans under the existing system.
The proposed reforms come as Universities UK (UUK) prepares to publish its "blueprint" for resetting the university sector. UUK has suggested linking fees to inflation, reintroducing grants for the poorest students, and increasing maintenance loan values.
While these proposals aim to address immediate concerns, they also reflect broader issues in UK higher education. For instance, Scotland abolished tuition fees for Scottish students studying in Scotland in 2008, while Wales provides partial grants to cover tuition fees regardless of household income.
The Department for Education has stated that the government is committed to ensuring the higher education funding system benefits the economy, universities, and students. They have promised to carefully consider all options before presenting proposals.
As the debate continues, it's clear that finding a balance between student affordability, university funding, and economic sustainability remains a significant challenge for England's higher education system.
