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Report Urges Ministers to Scrap Tuition Fee Loan Interest

Posted by Richard Ward in ,

Image courtesy of Flickr, Creative Commons

A centre-right think tank has proposed interest on student loans should be scrapped and the time to pay back outstanding debt be increased.

The report was co-authored by businessman and Leave.Eu co-funder Richard Tice, who suggests the current system could lead to a student loan debt crisis in the mid-2020s.

The UK 2020 report suggested the measures would help to bring down costs for students and graduates. The report also said that raising the payback limits from 30 to 50 years could save taxpayers billions of pounds.

Ministers are currently reviewing the student finance system after the PM recently abandoned plans to increase tuition fees next year.

In a report submitted as part of the review, UK 2020 is proposing that interest on all student loans is scrapped. It's estimated this would reduce unpaid student debt by around 10% on average.

The report also suggested that, combining this with pushing back the current 30-year limit on debt repayment to retirement age would significantly increase the number of loans recovered, from 25% to 80%. This would save the taxpayers billions of pounds.

Former education minister Lord Adonis, welcomed the "innovative contribution" to ideas on student funding.