Time for a university fees shake-up?
A review of education in England has put student financing under the spotlight yet again.
The review suggested several major reforms in response to growing criticism of the level of university tuition fees. While these reforms focused on the system in England, they could prompt a response from other parts of the UK as well. The main proposals were:
■ The cap on university tuition fees should be reduced from £9,250 to £7,500 a year by 2021/22, frozen for 2022/23 and inflation linked from 2023/24.
■ For new students from 2021/22, the annual income threshold at which loans start to be repaid should be cut from £25,000 to £23,000 (in 2018/19 values). The loan repayment rate should remain at 9% of income above the threshold.
■ The maximum repayment term for these new students would be extended from the current 30 years to 40 years.
■ Means-tested maintenance grants should be reintroduced and the eligibility thresholds revalued in line with inflation.
A surprising consequence of the proposals would be that the total repaid by the highestearning graduates would be less than under the current rules. But those on ‘middle of the range’ graduate earnings could end up paying a lot more as a result of the ten-year extension of the repayment term. These proposals would change important aspects of student fi nancing, but most graduates would still start their working lives with a substantial amount of infl ation-linked debt. Some will end their working lives 40 years’ later in a similar situation.
If you have children or grandchildren heading for university in the coming years, you should factor their education costs into your planning.
The information in this article does not constitute advice and should be used for informational purposes only. This content has been provided to Helm Godfrey by Taxbriefs.