Scrapping the maintenance loan will close more doors to the poorest in society

Osborne gets to choose who has the right to further education


Five years ago, protests spread across the country when the coalition government introduced proposals to raise university tuition fees.

With the cost of student tuition now standing at £9,000 per year or more, graduates are attempting to enter the world of work with the huge albatross of debt on their shoulders.

Now George Osborne has pledged to plunge future students even further into debt, with the abolition of the maintenance grant:

“From the 2016-17 academic year we will replace maintenance grants with loans for new students.”

It’s true that before the credit crunch there was a lot more money around to fund university places, and that Labour’s target to get 50 per cent of young people to go to university was both arbitrary and unnecessary.

But is creating more policies that will negatively impact on the lowest earning in society really the fairest way to move forward?

Student maintenance grants were available as a top-up to the general maintenance loan offered to assist students with living costs. Students from low-income households were offered this, up to the value of £3,387.

When this is scrapped, fewer and fewer potential students from low-income backgrounds will be able to afford to attend university.

Effectively, the government is giving some people the right to further education and not others.

The policy is hypocritical too, as the vast majority of MPs that have pushed through this policy will have been educated for free, at a time before tuition fees were introduced.

Osborne tried to offer an olive branch to future debt-crippled students by announcing the maintenance grants would be incorporated into the maintenance loan – and raised to £8,200 per year – ‘the highest amount of support ever provided’.

Thanks George: not only will students have to worry about the £9,000 of tuition fees, there’ll also be an extra 8 grand added on top.

The standard graduate will now leave a three-year course – likely unemployed and in their early 20s – with a £51,627 debt hanging over their heads for the next 30 years (and that’s before interest.)

Money Saving expert Martin Lewis has been a huge supporter of students over the years, even consulting with the government in the run up to the previous tuition fee hike in order to add some degree of fairness.

Thanks to his intervention, the rate at which graduates have to be earning before paying back their student loan was raised to £21,000.

It’s because of Lewis’ tireless campaigning that many low-income families were able to send people to university confident that, while the debt was large, the repayment terms were relatively fair and the financial support available was well publicised.

With such a sharp increase in this debt to future students, it’s difficult to see how people are now going to be able to justify landing themselves in such huge debt – especially with such a volatile employment market.

And that’s not all Osborne has up his sleeve. Alongside the scrapping of maintenance grants in the Emergency Budget, the tuition fee cap, which was set at £1000 a year before 2004, was also removed. So now the tuition fee can increase for ‘those institutions that can show they offer high-quality teaching’.

The government is clearly trying to re-coup some of the debt that student loans cause in the first place. Figures show that following the tuition fee hike, due to the fact that debts get wiped out after 30 years, the government is losing 45p for every £1 loaned out.

But the future of this country should not be compromised because of government incompetence and poor economics.

So what’s the solution? Clearly the Conservatives think that bigger debt leading to more interest and more repayments is enough to close the deficit. For those who are, rightly, unhappy with this, there are alternatives. Germany recently abolished tuition fees completely, realising that they were not financially viable, not to mention unpopular with the public.

How did Germany do this? Through protests, by an alliance of student groups, political parties, trade unions and community organisations, who refused to accept a compromise.

It may sound like a cliché, but the only way an unhappy population can be heard is by using their voices. Properly mobilised student unions have huge potential to effect change.

We need a strong and consistent message to stem the seemingly endless attacks on student finances. It may not happen immediately, but the louder the voice, the better the chances of being heard.

Ryan Smith is part of the content development team at Local Financial Advice, connecting people with independent financial advisers in their area.

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