The coalition’s decision to hike the tuition fees ceiling from £3,000 to £9,000 a year should save money for the state but might result in heavy losses.
As the number of graduates who fail to pay back student loans increases, the Treasure fears all economic gains from the fees hike could be lost. Experts have calculated that if the resource accounting and budgeting(RAB) rate of 48.6% is reached and breached, the government will lose money compared to keeping the old fees limit.
When the government introduced the new regime in 2010 they estimated that 28% of student loans would never be paid back, but this figure is now approaching 45%.
Raising the tuition fees was already damaging to students, now it is for everyone else too. Students leave university after 3 years with a Bachelor degree and £27,000 in debt due to tuition fees. What a great start to your career.
Repayments don’t start before graduates earn over £21,000 a year, which the Government thought most of them would do within a few years. It does not look like it will go that way any time soon. The ideologies at Conservative HQ and their Lib Dem minions have got their maths wrong. This system is stupid and unsustainable.