Nearly half of working-class students considering university applications are deterred by concerns about the value for money, a recent poll has shown. The research conducted by the Good Growth Foundation (GGF) found that 45% of 16 to 18-year-olds from lower-income households (C2DE) believe that the costs associated with tuition fees and resulting debt make pursuing a university education not worthwhile. In contrast, 40% of them are not dissuaded by the expense, whereas among wealthier households, 60% still view a degree as a worthwhile investment, with only 33% expressing doubts.
Overall, over a third (38%) of students aged 16 to 18 in schools and colleges in England and Wales are reconsidering applying to university due to financial constraints. Currently, universities are permitted to charge a maximum annual tuition fee of £9,535, with plans for further increases in line with inflation, potentially nearing £10,000. Amid concerns over escalating costs, the Education Secretary has signaled a review of Plan 2 student loans.
The GGF proposes a “Graduate Guarantee” to rectify the student loan system imbalance, allowing graduates to retain more of their earnings amidst the ongoing cost-of-living challenges. This initiative suggests raising the repayment threshold from £29,385 to £33,542, restoring its real value from 2018 and ensuring annual inflationary adjustments akin to the pensions triple lock mechanism.
Under the proposed plan, graduates with Plan 2 loans earning below the threshold would cease repayments, while those earning above it could save £374 annually. Louisa Dollimore, Director of Strategy at The Good Growth Foundation, emphasized the necessity of revamping the student loans system to alleviate concerns about long-term debt implications on individuals’ financial stability.
Responding to these concerns, a government spokesperson highlighted ongoing efforts to enhance the fairness of the inherited student finance system, targeting poor-quality courses, reintroducing maintenance grants, and capping interest rates on loans. They assured that the system protects low-earning graduates by linking repayments to income and forgiving outstanding balances and interest at the end of repayment terms.
