View guides

Fee Change Will Save Students More than £15k

Posted by Richard Ward in , ,

Image courtesy of Flickr, Creative Commons

A study by the Institute for Fiscal Studies, suggests raising the earnings threshold for repaying tuition fees in England could save students up to £15,700.

The think tank analysed the impact on how much students would save over their working lives after Theresa May revealed the policy change last weekend.

Under the new proposals, students will pay back tuition fee debt when they earn at least £25,000, rather than £21,000.

In addition to raising the threshold, the latest fee increase will also be cancelled. The IFS say this will save students around £800 and reduce costs to the government by around £0.3bn.

However, the IFS warned that freezing rates indefinitely is "unsustainable" as it would leave universities without adequate funding.

The think tank indicated that raising the repayment threshold will result in a much larger saving for students, but will cost the government significantly more.

The IFS estimated that a typical graduate would pay back £15,700 less over 30 years, at which point any unpaid loans are written off.

It also means that 83% of graduates will not pay back all their debts, which will result in long-term costs increasing by 41% for the government. The IFS also said, it would mean 45% of the value of loans to students would not be recovered.

Commenting on the change, Chris Belfield, research economist at IFS, said altering the repayment threshold seems like a small change, but it will save students up to £15,700, at a considerable cost to the taxpayer.