THE TORY coalition government has rejected demands that it hold an urgent review into the student loan system, despite the system reaching ‘tipping point’, with a ‘black hole’ of £330bn opening up by 2044, making the entire system ‘financially unviable’.
The National Union of Students (NUS) responded by insisting that forcing debt onto students was a ‘failed experiment’ and that the only solution is to ‘abandon the regime of sky-high fees and debts altogether’.
The House of Commons Business, Innovation and Skills (BIS) Committee said the UK was reaching a ‘tipping point’ for the student loan system’s financial viability.
It had called for an urgent review of the system’s sustainability, and says it is ‘alarming’ this has been refused.
Committee chairman, Labour MP Adrian Bailey, said: ‘With the prospect of a large potential black hole in the government’s budget figures, it is all the more alarming that the government has refused to conduct a review of the current student loan system.
‘A review would offer the opportunity to assess the viability of the existing system before we stumble blindly into an unfunded student loans model which would leave students, universities, and taxpayers with a very raw deal indeed.’
The National Union of Students (NUS) commented: ‘NUS has continuously warned that forcing debt onto students as a way of funding universities was a failed experiment, and that public trust in higher education funding now urgently needed to be rebuilt.
‘The government’s own estimates indicate the size of outstanding student debt will increase to more than £330bn by 2044.
‘The proportion of graduates failing to pay back student loans is increasing at such a rate that the Treasury is approaching the point at which it will get zero financial reward from the government’s policy of tripling tuition fees to £9,000 a year.
‘The threshold at which experts calculate that the government will lose more money than it would have saved by keeping the old £3,000 tuition fee system is 48.6%.
‘Official forecasts suggested that the write-off costs for student loans had reached 45% of the £10bn in student loans made each year.’
Megan Dunn, NUS vice president (higher education), said: ‘It is outrageous that the government are once again refusing to listen to a long line of disappointing revelations that have consistently blown apart ministers’ claims that £9,000 fees would save public money.
‘The government’s own figures show that the prospect of a huge black hole looming over the budget is very real. It’s time the government started taking this issue seriously.
‘The fact that the government has refused to rule out changes to terms and condition by law is unacceptable.
‘Those who have taken out student loans should be guaranteed that interest rates and other repayment conditions will not be changed retrospectively, particularly not in order to make the student loan book more attractive to private financiers.
‘Politicians need to recognise that we will only achieve a sustainable higher education funding system if we abandon the discredited regime of sky-high fees and debts altogether.’
