Poorest English graduates have the ‘world’s highest student debt’

5 Jul 17

The poorest English graduates have the world’s highest student debt, research by the Institute for Fiscal Studies has found.

In a review of student finance, it found that students now graduate with average debts of £50,000 - and up to £57,000 for the poorest students.

“The combination of high fees and large maintenance loans contributes to English graduates having the highest student debts in the developed world,” the IFS said.

Replacing maintenance grants with loans in 2015 meant that poorer students were now borrowing more than their more affluent counterparts to see them through a three-year degree course.

Steady increases in tuition fees and the end of maintenance grants meant that loans now constitute 96% of up-front government support for students.

As a result, higher education’s contribution to the deficit had fallen by £5.7bn since 2011 – equivalent to around 10% of the current deficit - while university funding had increased but the taxpayer contribution had decreased by around £3.1bn.

But uncertainty surrounded the long-run taxpayer contribution as this had become heavily dependent on graduates earning sufficient to cross the threshold to repay loans, and the number that chose to save money by making early repayments.

The IFS said that if graduate earnings were two percentage points lower than expected, the long-run government contribution would rise by 50%.

Universities minister Jo Johnson said: "The government consciously subsidises the studies of those who for a variety of reasons, including family responsibilities, may not repay their loans in full.  

“This is a vital and deliberate investment in the skills base of this country, not a symptom of a broken student finance system.”

He added: "And the evidence bears this out: young people from poorer backgrounds are now going to university at a record rate - up 43% since 2009.”

The Department for Education said the proportion of young people from disadvantaged backgrounds going to university was 19.5% last year against 13.6% in 2009 and university application and entry rates for English 18 year olds had increased in every year since 2012, with 32.5% now going to university.

Labour promised to write off student fees for university starters from this autumn in its general election manifesto last month.

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