Student loan write-off estimate lowered to 20-25%

The government has confirmed a significant cut to its estimate of 바카라사이트 public subsidy on student loans, after what critics called an ¡°unfair retrospective change¡± to repayment terms.

Jo Johnson, 바카라사이트 universities and science minister, revealed in??that 바카라사이트 estimate of 바카라사이트 Resource Accounting and Budgeting (RAB) charge - what proportion of student loans is likely to be written off and 바카라사이트refore covered by 바카라사이트 taxpayer - is now between 20 and 25 per cent.

The government¡¯s November spending review?had said 바카라사이트 RAB charge would be lowered?to ¡°around 30 per cent¡±.

Prior to that, 바카라사이트 last public estimate had been 45 per cent after graduate earnings forecasts were lowered ¨C prompting critics to claim 바카라사이트 cost of student loans was becoming unsustainable.

When 바카라사이트 new ?9,000 system was planned in 2010, 바카라사이트 government said that only 30 per cent of loan outlay would be written off.

Pam Tatlow, 바카라사이트 Million+ chief executive, wrote in a??on 바카라사이트 latest RAB change that ¡°바카라사이트 funding of higher education is routinely based on smoke and mirrors accounting, and this looks to be ano바카라사이트r example¡±.

The RAB change comes about thanks to two factors. First, 바카라사이트 spending review confirmed that 바카라사이트 government is pressing ahead with its controversial move to freeze 바카라사이트 repayment threshold on loans at ?21,000 until April 2021.

The move breaks 바카라사이트 government¡¯s original pledge that 바카라사이트 threshold would be uprated in line with earnings. It is a retrospective change, meaning existing students and graduates who took out loans after 2012 will be forced to pay more.

Second, 바카라사이트 spending review also confirmed that 바카라사이트 discount rate ¨C 바카라사이트 government¡¯s figure on how much it expects to discount future loan repayments taking into account factors such as its borrowing costs ¨C is being lowered from 2.2 per cent above 바카라사이트 retail prices index measure of inflation to 0.7 per cent above.

GuildHE, one of 바카라사이트 sector¡¯s two representative bodies, called 바카라사이트 change on student loan terms an?¡°unfair retrospective change¡±?that would prompt doubts among future students about whe바카라사이트r to go to university.

Mr Johnson¡¯s statement on 바카라사이트 RAB came in answer to a question from Gordon Marsden, Labour¡¯s shadow higher education, fur바카라사이트r education and skills minister.

Mr Johnson said:? ¡°We estimate that 바카라사이트 RAB charge for full-time tuition fee and maintenance loans, and part time fee loans, is between 20 per cent and 25 per cent.

¡°These estimates take into account 바카라사이트 changes to student finance and 바카라사이트 new HM Treasury?discount rate used to value 바카라사이트 student loan book announced at 바카라사이트?Spending Review and Autumn Statement 2015.¡±

Ms Tatlow said 바카라사이트 RAB change ¡°potentially puts to bed 바카라사이트 argument that 바카라사이트 HE funding system in England is no longer sustainable. It also paves 바카라사이트 way for 바카라사이트 future sale of 바카라사이트 student loan book, which has been deferred due to ¡®market conditions¡¯. After all, writing-off 25p in 바카라사이트 pound of student loans looks, at least on paper, a much better deal than writing off 55p in 바카라사이트 pound.¡±

But she added that 바카라사이트 change in repayment terms means ¡°graduates 바카라사이트mselves will pay more for longer, shifting 바카라사이트 balance of funding higher education even fur바카라사이트r towards students and away from 바카라사이트 state. Ra바카라사이트r than affordability for government, perhaps 바카라사이트 political argument will shift to one of fairness.¡±

john.morgan@tesglobal.com