BIS Select Committee report on student finance system

22 July 2014

Commenting on a BIS Select Committee report on the student loans system, Dr Wendy Piatt, Director General of the Russell Group, said:

“Whilst the Select Committee are right to flag up issues around the forecasting and collection of student loan repayments, it is important not to lose sight of the fact that the fundamentals of the student finance system in England are working. In the face of significant public funding cuts, it has helped Russell Group universities in their commitment to providing a world-class education and it has supported all students, whatever their background, to access higher education. Given the tremendous benefits most graduates gain from their degrees, it is fair for them, as well as the taxpayer, to contribute towards the cost, when they can afford to do so.

“The problems of the new student finance system have largely been caused by the terms and conditions of repayment: graduates now pay back a much lower amount each month, and so take longer to repay their loans than under the previous system. Graduates will now pay only 9% of their annual earnings above £21,000 – a far higher threshold than the £15,000 previously – and this is why projections for repayment are lower than under the old system. The Government can, of course, change these repayment conditions in order to increase the amount of money repaid, if they so choose.

"The Committee is right to raise concerns about uncapping student numbers. If the Government now no longer intends to use the sale of the student loan book to fund the uncapping of student numbers in England, then we would urge them to abandon this idea. We would be extremely concerned if the substantial funds required to pay for additional students were taken from the already very stretched budget for research and higher education. It would be very worrying if this policy leads to less funding per student. Good teaching requires proper levels of investment.”

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