The Tory government has backed off from its talk of reducing university tuition fees to £7,500, or of trying to enforce a range of fees differing markedly between universities.
The only retreats it will make are to increase the income threshold above which ex-students start repaying from £21,000 a year from £25,000 from April 2018, and to leave the maximum fee from September 2018 at £9,250, rather than raising it to £9,500 as previously planned.
The Government had previously planned for the threshold to be frozen indefinitely, so as to make it easier to sell off the student loan book to financiers, but now suggests that the threshold will rise in line with average earnings.
The higher threshold level will remain at £41,000. The interest rate charged on loans during study and up to the April following, and on outstanding balances when your income is above the higher threshold, will remain at RPI plus 3%, currently 6.1%, at a time when mortgage rates are more like 4%.
As your income rises between the lower and the higher threshold, the interest rate charged increases from RPI to RPI+3. You also get charged the higher RPI+3 rate if the Student Loan Company is dissatisfied with your response to demands for information.
The increase in the lower threshold will not apply to students with pre-2012 loans. That part of the loan books has been, or is in the process of being, sold off, and the government dare not seem to cheat the buyers.
Selling off the post-2012 loan book is for now in the Government’s “too hard” basket. The system of high fees and student loans reduces spending as it appears in government accounts, because the government gets an “asset”, a promise of a future stream of repayments, in return for every loan. Yet the Government still pays out £14 billion a year and will not get most of it back. Current estimates are that 75% of ex-students will fail to make full repayments.
Labour's policy of scrapping tuition fees reduces inequality of opportunity and, in real terms, adds little public cost.
Teenagers, even from poor backgrounds, are still willing to go into huge debt to get to university. But the fees-loans system has brought the number of part-time students down by 60% since 2006, and the number of older students down by 50%.