The NUS has called it the "latest in a long line of disappointing revelations".
The NUS has called it the “latest in a long line of disappointing revelations”
The government is exploring plans which could hike tuition fees up even further.
Under the proposals, universities would take over control of loans taken out by their own students, allowing them to explore the option of abolishing the current £9,000 cap.
The research was commissioned by the Department for Business, Innovation and Skills, and although not official policy yet it appeares to have been welcomed by ministers.
Appearing on Newsnight, former Universities Minister David Willetts said: “”Why not give universities that wish it the opportunity of holding the loans belonging to their own graduates?”
He claimed this would create a “direct connection” between the university and the graduate.
But million+, the university think tank, condemned the plans:
“This would create a two-tier university system and would be opposed by the majority of university boards and vice-chancellors. It would deliver preferential funding to some universities and their students and is a recipe for inequality.”
And NUS President Toni Pearce said the government needed to “abandon the discredited regime of sky-high fees and debts altogether”:
“This report is just the latest in a long line of disappointing revelations that have consistently blown apart ministers’ claims that £9,000 fees would save public money, and confirms our long held view that the current system was ideologically driven and costs more than what it replaced.
“NUS has always said that it was dangerous to expand the sector on the basis of increased fees and debt for students.”
Currently, the treasury holds undergraduate debt through the Student Loans Company. However, the variance in rates of repayment – currently around 50 per cent – means that raising tuition fees across the board at present would simply result in more defaulted loans and therefore greater costs to the government. But if debt was transferred to individual universities, they could then judge whether it was likely loans would be repaid if they increased their fees – outsourcing the system.
The potential move follows Vince Cable’s unexpected unilateral announcement earlier this month that the planned privatisation of student debt would no longer go ahead because it was financially untenable.
The risk is that such a move would put universities at risk of potentially losing billions if they mess up their loans system or raise fees too much.
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