The House of Lords’ economic affairs committee has called on the government to reduce rates on student loans from 6% to 1.5%.
The step would help ease a total outstanding student debt worth £1.2tn by 2049–50, as calculated by the Department for Education.
Lord Forsyth, the chair of the committee, slammed the current system of higher and further education as “deeply unfair”.
“The accounting trickery attempted by the government in 2012, in which the high rate of interest on student loans created the fiscal illusion that government borrowing is lower than it actually is, has had a devastating effect on the treatment of students in England.
“It is unacceptable to expect future taxpayers to bear the brunt of funding today’s students.”
The report, released today, said that “a monoculture has developed around the primacy of the undergraduate degree” and that other types of education, such as apprenticeships, have been overlooked.
Forsyth said: “We must create a single system, including apprenticeships, that offers more choice and better value for money.”
The committee found that many graduates are in jobs that do not require degree-level education while many businesses have reported a shortage of skills.
As well as reduced interest rates, the committee championed extending maintenance support to all students studying for level 4 vocational qualifications and above.
“The means-tested system of loans and grants that existed before 2016 should be reinstated, and total support increased to reflect the true cost of living,” said Forsyth.
A Department for Education spokesperson said: “We agree that for too long young people have not had a genuine choice post-16 about where and what they wish to study.
“That is exactly why we have overhauled apprenticeships to focus on quality and why we are fundamentally transforming technical education, investing £500m a year in new T Levels that will provide a high-quality, technical alternative to A levels and make sure we can keep up with the world’s best.
“On top of this, we are undertaking a major review of post-18 education and funding, to make sure students are getting value for money and genuine choice between technical, vocational and academic routes.
“We will consider the report and will respond in full in due course.”
