Nicky Morgan, the former education secretary, is to lead an inquiry into the rising costs of the controversial student loans system in England and its possible replacement by a graduate tax.
“Student loan debt is projected to be around £160bn within six years, and the government has announced that it will review the whole student finance system. The committee will scrutinise the current system and any future developments closely,” said Morgan.
The Treasury committee is to scrutinise the recent changes to student loans, including the repayment thresholds, interest rates, level of tuition fees and the impact on student finances.
But the committee will also look at more controversial areas, including the viability of a graduate tax to replace the loans system, as well as the government’s plans to manage and eventually sell its stock of student loans
The system introduced since 2012 means undergraduates take out loans of £9,250 per year for tuition fees, and maintenance loans of up to £8,400 a year for students living away from home outside of London (and £11,000 in London)
Graduates have to pay interest on the debt while studying and after graduation, of up to 6.1% based on income. But they only have to make repayments worth 9% of their income above £25,000, while those who earn less than £25,000 pay nothing
The Treasury committee’s first hearing will be held on Wednesday. The inquiry will run alongside similar hearings being run by the House of Lords’ economic affairs committee, which will hear evidence from Martin Lewis, the personal finance guru, on Tuesday.
Qualifi awaits with interest the outcome of the inquiry but in the meantime students wishing to enter higher education with the option of access to final year Honours degree (and Masters) without the need to take out c£27,000 of fee loans are invited to consider the alternative pathways that Qualifi Student Loan Company approved qualifications provide.