22 July 2016

Uni fees to rise to £9,250: What does this mean for you?

The government has announced that from 2017, unis in England and Wales will be allowed to rise tuition fees above £9,000. But how will this affect you?
tuition fee riseCredit Andrew Wales – Flickr
It’s been a pretty tough week for students! On Tuesday, we had to endure listening to Jo Johnson defend retrospective changes to student loan terms – a move that would’ve been considered illegal had it not been the government themselves making the change.

We learned that apparently the change is able to go through because it says somewhere on page 3 of the loan contract that the ‘terms can change at any time’. Great!

And as if that wasn’t enough to ruffle students’ feathers, on Wednesday unis across the country started advertising next year’s tuition fees as above the official cap of £9,000, before it’s even finished being debated in parliament (although we knew a hike was on the cards).

This increase will be calculated using a ‘forecast inflation’ of 2.8%, meaning that unis currently charging £9,000 will be able to charge £9,250 next academic year, and part-time students are likely to pay £6,935 instead of £6,750.

There’s a lot going on at the moment, so there’s a lot to take in. But whilst students should be angry about these changes and the way the government has gone about it, it’s important to be reassured that there’s very little that will change regarding how you pay back your loan (more on that later).

This is more a matter of principle than anything else: As one Labour MP said in parliament on Tuesday, Conservatives are teaching students a really tough lesson – that they cannot trust their own government.

Having trouble figuring out exactly what you’ll be repaying once you graduate? Find out everything you need to know in our Big Fat Guide to Student Finance.

Your questions answered

question mark

Is the increase definitely going ahead?

According to a letter released yesterday from students’ flavour-of-the-month, Jo Johnson, it’s looking likely. However, it’s still not officially set in stone (we’re clutching at straws here).

Many MPs have come out in strong opposition to the fee hike, and have said they’ll push for it to be debated in parliament before anything is made official.

We were pretty confused as to why universities would choose to advertise fees higher than the official cap before being given the go ahead (one Lib Dem MP dubbed the move as “disgraceful arrogance” from universities).

However, the BBC writes that according to consumer protection regulations, unis would have to announce the fee increase before the next application period (early sept 2016) to be legally allowed to charge higher fees in 2017.

Suppose that explains things, eh!

Who’s charging more than £9,000?

Originally back in 2012 when the coalition government trebled tuition fees, the idea was that unis would be charging between £6k and £9k per year dependent on quality, but as there was nothing put in place to regulate this, everyone jumped on the band wagon and started charging the higher bracket of £9k.

The government have recently admitted that this was wrong, announcing that they were introducing a new ‘teaching excellence framework’ that would permit universities offering a higher standard of teaching to charge fees above the bracket (rather than force unis deemed unworthy of £9k per year fees to reduce their fees).

A government spokesperson told the BBC:

The teaching excellence framework will allow universities to maintain fees in line with inflation only if they meet a quality bar, as set out in the recent Higher Education White Paper.

Well, the quality bar must be pretty low, as the BBC reports that so far no university has failed to meet the criteria to charge above the £9,000.

You’d be forgiven for thinking this ‘teaching excellence framework’ is basically just an excuse to raise fees (despite the government openly admitting that some universities weren’t providing teaching worthy of £9k a year).

Is university worth £9,000+ a year?

Poor-Student-RecruitmentThis one’s obviously subject to personal experience, but many of you have been complaining to us over the years that you don’t believe your tuition to be worth £9k, and the majority of you don’t think uni is good value for money.

As one of our readers Harry Dawes commented this week:

The standard of learning at some uni’s isn’t even worth £250 let alone £9,250!!!

Liberal Democrat university spokeswoman, Baroness Lorely Burt, has said:

Linking fees to teaching quality in this way is unacceptable. Enabling any university that scrapes a ‘meet expectations’ rating to increase fees by 2.8% shows that this isn’t about teaching quality at all.

If universities need further support then let’s have a proper discussion about where that money comes from, rather than pretending that this is somehow a quid pro quo for providing the quality of teaching students should already be able to expect.

We just published the results of our National Student Money Survey 2016 – find out more about the risky lengths students will go to in order to make ends meet.

Will the hike affect current students?

Unfortunately, it looks like current students could also be affected by the hike. If the fee cap removal goes ahead, universities will be able to increase fees along with inflation (estimated 2.8%) each year.

This means that if you are currently at university you could see your fees go up to £9,025 in 2017. Technically, this could increase further in following years with inflation, too – even above £10,000 per year for longer courses. Essentially, if the cap is removed, the flood gates are open.

The only current students that won’t be affected will be those graduating next year.

The good news!

Girl giving thumbs upBelieve it or not, there is some positivity amongst all the rotten news this week!

This won’t affect your monthly loan repayments

One thing we need to be clear about here is that regardless of whether your uni charges £9,000 or £20,000 a year in tuition fees – you’ll only ever repay 9% of your wage packet each month when you’re earning over £21,000 per year after graduating.

It’s easiest to consider the loan amount plus interest rates as quite separate from your repayments for this reason.

This increase in fees will only really affect high earners – those who will be earning enough to pay back their entire loan and interest before the 30 year period is up (after which the loan is wiped off). Anything you don’t manage to pay back before the 30 years is up will be written off – this is why many experts suggest thinking about your loan repayments as a ‘student tax’ rather than a debt.

From our rough calculations (which are difficult due to a number of unpredictable factors) only those who have a starting salary of around £35,000+ will be worse off in terms of repayments due to this fee increase.

The government’s recent choice to freeze the amount you need to be earning before you start repaying the loan at £21,000 (instead of letting it rise with inflation) is more likely to affect you, as this change means you’re likely to start repaying more of your loan and quicker – as a result, you’ll probably pay off more before the 30 years is up.

Maintenance Loans also due to rise

Another silver lining amongst all this (although it’s the least they can do, really!) is that maintenance loans are also due to rise with inflation, at 2.8%.

The government applied a token rise to maintenance loans this year to make up for scrapping maintenance grants, but you’ve shown us that the rise is nowhere near enough and barely covers rent for some students.

If this all goes through, next year students living at home with parents will receive £7,097 a year in loans (previously £6,904) whilst students living away from home and outside of London will get £8,430 (previously £8,200), and those living away from home and in London will get £11,002 (previously £10,702).

Got any questions about the tuition fee rise that we haven’t covered? Give us a shout in the comments section below or get in touch with us directly.

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