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IFS Says Wiping off Student Could be Cheaper Than Government Suggests

Posted by Richard Ward in ,

Image courtesy of Flickr, Creative Commons

Analysis by the Institute for Fiscal for Fiscal Studies has suggested writing student loans could cost as little as £10bn.

The figure is much lower than the £100bn quoted by politicians. However, the study suggested immediately scrapping the debt for university tuition would add £20bn to government debt by 2050, but delaying the decision until the end of parliament in 2022 would cost an extra £60bn.

One option is to only write off post 2012 English tuition fee debt, which would increase national debt by around 1% of national income by 2050, equal to around £20bn.

A cheaper alternative is to write off only the amount in excess of the £3,465 charged to those going to university in 2011, which would add 'just' £10bn to government debt by 2050.

The £100bn figure has been quoted by both universities minister Jo Johnson as well as shadow education secretary Angela Rayner.

The IFS pointed out in their research note: "Suggestions that debt would rise by £100bn are wrong. £100bn is the outstanding value of all tuition fee and maintenance debt since 1998 - it is not the answer to the question: what would be the impact on public debt of writing off fee loans accumulated under the £9,000 tuition fee regime?"

The research also warned that those most likely to benefit from wiping out debts would be high-earning graduates, who pay back a higher percentage of their loans.

The IFS research comes as parliament's education select committee announced it is to hold hearings next month on the topic of value for money in higher education, including the well reported issue of high pay among vice-chancellors.