Political opinion with John Milne MP: Cost of student fees must fall
As today’s sixth formers consider their university applications, the one essential thing they should all be given is financial advice. Chancellor Rachel Reeves has declared that the earnings threshold for repaying Plan 2 student loans will be frozen till 2030. That is unacceptable.
In business, a retrospective change to a contract in this way would be illegal. Financial commentator Martin Lewis has rightly described it as ‘not a moral thing’. Just because the Conservatives also did this back in 2016 doesn’t make it right.
Under the new rules, Plan 2 graduates will pay 9% extra on an ever-increasing percentage of their income. For most students, this will have far greater impact than changing either the size of their loan or the interest rate, because they will never pay off the total debt anyway.
As a Lib Dem, I’m very aware that any mention of student grants stirs memories of the Coalition government. In 2010, the incoming Conservative-Lib Dem coalition raised tuition fees from 3k to 9k in response to the financial crisis. I’ll say straight away - we should never have done this. No matter what the pressures of the Coalition, it broke a key Lib Dem manifesto commitment.
But what is not generally understood is that, even after that increase, the deal for students back in 2010 was vastly better than it is now. Multiple changes by successive governments have left students with an outright extortionate deal.
Most importantly, there was the abolition of maintenance grants under the Cameron & Osborne government. That added another 9k pa to student costs, pushing the cost of a 3-year degree from 30k to 60k.
So what’s to be done? As announced last weekend, the Liberal Democrats would immediately scrap Labour’s threshold freeze. For key public sector workers such as doctors and nurses, we would give a partial debt write-off. We would restore maintenance grants of £ 3,500 per year for disadvantaged students. And overall, we would replace RPI (Retail Prices Index) with a fairer measure for calculating interest rates. This is affordable within current budget constraints.
Crucially, we also have a package of measures to rescue universities from impending bankruptcy, which will surely bring down many institutions if no action is taken. We also give more support to non-university skills and training.
Ideally, we’d simply cancel the debt in its entirety. But that would cost £267 billion - more than the cost of the entire NHS. It’s just not doable. I accept that students should contribute something to the cost of a degree. But what we’re seeing today is unacceptable.