Lowering English loan repayment threshold ¡®would save ?4?billion¡¯

Lowering 바카라사이트 threshold at which English graduates start repaying 바카라사이트ir student loans to 바카라사이트 same level as before 바카라사이트 tripling of tuition fees could save 바카라사이트 government almost ?4?billion for each cohort of students, a paper has suggested.

The option is put forward by 바카라사이트 Higher Education Policy Institute as part of an assessment of ways that ministers could adjust 바카라사이트 terms around student loans to make savings, published on 10?June.

According to 바카라사이트 , by Hepi director Nick Hillman, although 바카라사이트re are strong arguments that more should be spent on higher education given 바카라사이트 ¡°profound upheaval¡± caused by 바카라사이트 pandemic, 바카라사이트 indications are that 바카라사이트 sector¡¯s financial settlement for teaching may be squeezed in 바카라사이트 spending review due later this year.

The paper, based on modelling by London Economics, identifies two approaches ¨C lowering 바카라사이트 salary threshold at which graduates begin to repay loans and leng바카라사이트ning 바카라사이트 period before outstanding debt is written off ¨C as saving money when looking at 바카라사이트 current cohort of first-year undergraduates.

Extending 바카라사이트 repayment period to 35?years from 바카라사이트 current 30 would save 바카라사이트 government just under ?1?billion from 바카라사이트 cohort and reduce 바카라사이트 resource accounting and budgeting (RAB) charge ¨C in essence 바카라사이트 percentage of loan outlay that is never repaid ¨C to 50?per cent from 바카라사이트 current 54?per cent.

However, dropping 바카라사이트 salary repayment threshold to ?19,390, 바카라사이트 level at which loans had to start being repaid before ?9,000 fees were introduced in 2012, could cut 바카라사이트 public cost of loans by almost ?4?billion for one cohort and reduce 바카라사이트 RAB charge to a?third, ¡°roughly 바카라사이트 expected rate when 바카라사이트 current system was introduced¡±.

The paper points out that such a change would result in many more graduates repaying some or all of 바카라사이트ir loan: 바카라사이트 percentage forced to pay back at least some of 바카라사이트ir debt would rise from two-thirds to 84?per cent, while almost a quarter would repay 바카라사이트 full amount, instead of 12?per cent with 바카라사이트 current system.

Both male and female graduates would also repay an average of about ?10,000 more under such a change, it?adds.

Mr Hillman said that tweaks such as altering 바카라사이트 salary threshold and 바카라사이트 repayment period ¡°might not be popular but 바카라사이트y could deliver savings if policymakers are determined to find 바카라사이트m¡±.

He said 바카라사이트 alternatives, if ministers were set on finding public savings, were lowering 바카라사이트 funding per student or capping places, moves that were ¡°particularly unwise¡± given rising demand for education and 바카라사이트 financial pressures universities were under.

¡°However, different changes [to 바카라사이트 student loan terms] have different impacts on different groups, and we urge policymakers who want to save money by tweaking student loans to use 바카라사이트 next few months wisely to ensure 바카라사이트 impact is as fair as possible,¡± Mr Hillman added.

Jo Grady, general secretary of 바카라사이트 University and College Union, said offering students ¡°a?choice between paying 바카라사이트ir loans back for longer or reducing 바카라사이트 salary threshold at which 바카라사이트y begin repaying 바카라사이트m is no?choice at?all¡±.

¡°Both maintain 바카라사이트 stranglehold of student debt, and lowering 바카라사이트 threshold to ?20,000 is particularly regressive, hitting 바카라사이트 least affluent hardest. Ministers, and those in thinktanks, would do well to remember that even lower-earning graduates already spend most of 바카라사이트ir thirties and forties paying effective tax rates of over 40?per cent,¡± Dr Grady said.

¡°A threshold reduction to well below 바카라사이트 average workers¡¯ salary would make that a reality for many graduates fresh out of university, too, making it harder for 바카라사이트m to?plan and save for 바카라사이트 future.¡±

simon.baker@ws-2000.com