IFS report on student loans system

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24 April 2014

Commenting on a second report by the Institute for Fiscal Studies on the student loans system, Dr Wendy Piatt, Director General of the Russell Group of universities, said:

“This report shows that the fundamentals of the current tuition fee and student finance system are working. It has meant Russell Group universities can continue to offer world class education and facilities to our students. The extra investment from fees has been crucial at a time when government teaching grants have been cut and other budgets are being stretched. The current system has also not deterred students from applying to higher education – with the number of students on free school meals being admitted to leading (or ‘higher tariff’) universities rising by 22% last year.

“Good teaching needs proper funding to be sustainable. 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 IFS is right to question the costs of removing student number controls. Not only will the policy create immediate funding pressures for the government – but it has already led to cuts to funding for existing students. This could have a detrimental impact on the quality of their education. The report is also right to point out that the loan repayment terms in the current system – where graduates do not have to pay anything back until they earn £21,000 a year, compared to £15,000 under the former system - will cost the government additional money.

“This report highlights the uncertainties about trying to forecast accurately future repayments of student loans. These calculations rely on a wide range of factors, including assumptions about future employment rates and salaries as well as loan take-up and repayment behaviour. However, what we do know is that Russell Group graduates are highly sought after by employers. Research by the Department for Business Innovation and Skills identified that graduates of Russell Group universities earn more, on average, than graduates from other universities.”