Theresa May announces huge review into university fees and finance
We're here to cut through the political spin and inaccurate press reports to bring you the facts.
Theresa May has announced an independent review of student fees and finance that could lead to reductions in the cost of tuition and the interest rates of loans.
In a move that many regard as a direct response to the huge turnout of young voters in support of Labour at the last election, the prime minister called for better value for students in England.
She said that the current system has failed to deliver competition on price, with the vast majority of university courses bearing a £9,250/year price tag.
As part of her speech on post-18 funding and education, the prime minister also called for an end to the “outdated attitudes” that favour university over technical education.
How might student fees and funding change?
It's important to remember that Theresa May hasn't announced any actual changes to the system… yet.
The year-long review is expected to bring about some significant changes to the cost of a university education, but as yet, nobody's quite sure what that means. That said, most people in the loop seem to think that tuition fees will be reduced.
A figure that we've heard bandied about a lot is £6,000/year. This would amount to about a third off the current cap, but would still be double what the limit was before tuition fees tripled in 2012 (just over £3,000).
One of the more radical suggestions, supported by Damian Hinds, Secretary of State for Education, is that tuition fees should vary based on the degree's perceived value to society as a whole. In other words, courses that lead to more obvious career paths (such as engineering) should cost more than those that don't (such as English).
For those hoping that tuition fees might be scrapped altogether, we have some bad news. Theresa May appeared to suggest that they'll remain in some capacity when she said:
I think it is important that both students and tax payers contribute.
There have also been calls for maintenance grants to be reintroduced for disadvantaged students. These were abolished by the government in 2016, but many politicians – including the then-education secretary Nicky Morgan – believe that they should be reinstated, as maintenance loans aren't enough to cover living costs.
The final major topic said to be under consideration is the interest rate on student loan repayments. Much has been made of the amount of interest that gets added to student loans, which for most current and recent students is RPI plus up to 3%.
Would these changes make a real difference?
It's hard to say for sure whether or not a reduction in fees would make a difference, as currently we don't know how much they're planning to reduce them by. However, if they were to drop to £6,000/year, it would still be of little to no benefit to the majority of students.
Under the current repayment plan, most students don't even get close to repaying their debt in full before it's wiped at the 30 year deadline (in fact, only one in five graduates are expected to do so).
While cutting fees would certainly reduce the psychological impact of student debt, only those on the highest salaries (i.e. those who would already pay off their debts under the current system, or those who would get relatively close to doing so) would benefit – for everyone else, their chances of repaying their student loans in full go from ‘very unlikely' to just ‘unlikely'.
Similarly, the furore over student loan interest rates is a real bugbear for all of us here at Save the Student. As much as we feel that the system needs a complete overhaul, one aspect that's actually pretty cushy for students is the way repayments are made.
Regardless of how big or small your debt is, you'll only ever repay 9% of however much you earn over the repayment threshold (currently £21,000/year, and £25,000 as of April 2018). So with the £21,000 threshold, if you earn £25,000 a year, you repay 9% of £4,000 (£360).
It wouldn't matter whether your total debt was £5,000, £50,000 or even £50 billion – you would only ever have to repay £360/year.
So even if the government decided to scrap interest on student loans, the chances are it wouldn't have much (if any) effect on you at all – your monthly repayments would remain the same, and you'd just have a smaller (but still massive) total figure to aim at.
I'd support any review of the current student loan system as it's been a bit of a shambles from the start. However, the changes that are being proposed are insignificant to the majority of students, so don't be fooled into thinking that lowering fees and interest rates will actually benefit you.
It's a shame that Mrs. May is avoiding the real issues at play, which are the fact that maintenance loans are pitiful, and that they're based on household income without being clear whether they expect parents to help you pay to live or not.
Overall these proposed changes only stand to benefit the wealthiest graduates. Don't believe the hype!
Jake Butler, Save the Student's student finance expert
As for reinstating maintenance grants, it's nice to know that the cost of living as a student is at least on the table as a point of discussion.
We've lost count of the number of times we've said that this is the real issue, and according to our National Student Money Survey, the average student's maintenance loan falls £221 short of what it costs them to live each month.
What the government doesn't tell you (or, at best, what it fails to make clear enough) is that the difference between your maintenance loan and your living costs is meant to be made up by parental contributions.
However, as countless students can testify, because maintenance loans are means-tested based on household income, the government often ends up assuming that parents can contribute far more than they actually can. As far as we're concerned, a wholesale review of maintenance loans should be top of the list of the to-do list for Theresa May.
What do students want to change?
The announcement of a review into student fees and funding was probably the worst kept secret in politics, so before Theresa May made her speech, we took to Facebook to ask you for your thoughts.
Perhaps unsurprisingly, most of you weren't especially kind to Mrs May. We asked you to tell us what needs to change, and the top-rated comment (by far) was:
Our PM if we're being honest. [sic]
Others were keen to point out that although the prime minister has come out and said that the cost of university is too high, it was her party that ultimately pushed for them to be tripled back in 2012. When parliament voted on the motion, she was in favour of it.
Politics aside, many of you feel that maintenance loans need a serious overhaul.
Lauren Brianna said:
Student loans should not be considered income when calculating universal credit. My partner, 2 children and myself have to live off less than people on benefits do due to this. They’re called loans because we have to pay them back.. it’s not an income! [sic]
Louis Vincent appears to be one of many students who have fallen victim to the way maintenance loans are calculated, commenting:
Bring back grants and change the thresholds on parents income, I’ve been living away for 2 years now and due to my parents earnings I only get £3500 loan to pay my rent, bills and food for the entire year.
If they had 10 other kids this wouldn’t change even though they would have no money to support me. [sic]
Finally, the cost of accommodation seems to be a huge issue for many students. Alex J Philip said:
The overall price definitely needs to be dipped to something more feasible, the 9 grand everyone is paying per year seems to go to expensive building projects, and yet the students are still expected to pay for accommodation on top of that. [sic]
Meanwhile, Kam Archer simply commented:
Accommodation costs need to go right down everywhere. Everywhere. [sic]
Clearly there's a lot of discontent out there for the student loan system, and we must say, we completely understand it! Here's hoping that this review will see the big problems put right (we're not holding our breath…).
Baffled by student finance? We don't blame you – it can be a bit of a minefield! Check out our big fat guide for the full lowdown.