An interest waiver on student loans would boost intergenerational justice

The plight of university students during the pandemic has been viewed by the UK government predominantly through the prism of contract law. However, we know that much deeper issues are at stake: the immediate needs of our students as well as fairness between generations.

When students invest so much in their education, paying loans back over decades, the focus on fees is entirely understandable. Fee refunds have been the focus and are becoming totemic. There is no doubt that courses must deliver their learning outcomes for the benefit of every student and there must be clear routes of redress.

Some are rightly concerned that an across-the-board reduction in fees would lead to university closures if the government passed on the cut directly to universities. This is a real concern. Since March 2020, our universities have financially stretched themselves, running unprecedented financial deficits to support this generation of students to complete their studies and graduate. At the University of Essex, we have invested more than £15 million in online delivery, rent flexibility and creating Covid-secure campuses. As a result, our deficit will be £14 million this year – only the second time we will have reported a deficit for 30 years.

Some say universities must do even more because they are sitting on reserves of £46.2 billion across the sector as a whole. However, this misses an important point: reserves include the value of all assets. Notable among those assets are buildings, whose value is not ready cash that can be easily used. Most universities are running deficits and have seen their reserves of ready cash (liquid assets) fall; the Office for Students is concerned enough to have implemented a new requirement for universities to report to them if their liquidity drops below 30 days of operating costs.

One option to signal the government’s support for students is an interest waiver on student loans. With 15 months from initial lockdown through to the end of this academic year, a reduction in charges on student loans funded by the government would be seen as a significant gesture and would help graduates get off to a better start in the early stages of their careers.

Some argue that few current students would benefit from this, since 50 per cent are unlikely to repay all their loans. This misses the key points: that some would benefit; that it would be an action that acknowledges a very different university experience during the pandemic; and that it is symbolically important to a generation of students who feel forgotten.

But our plan for action must not solely focus on home/EU undergraduate fees and student loans. That would provide little benefit to our postgraduate or international students, whose skills and talents are crucial to driving the national recovery. A much broader response is necessary.

This is why a number of vice-chancellors have asked the government to play its part in championing fairness between the generations. The wealth and opportunity gap between the young and old is already unacceptably large – and the impact of the pandemic on students and their life chances is amplifying existing challenges. The government must increase its support for this generation of students through a range of measures that benefit all and not just some students.

One important measure is hardship support. The government has not done enough to support the unprecedented demand for hardship funds that universities are responding to. At Essex, we have more than doubled the funds we make available to support students in financial hardship this year, from £188,000 to £430,000, as well as making this the main focus of a fundraising appeal. We have also expanded the areas we support to respond to the needs of our students – so we are now assisting with the costs of access to technology, childcare and unexpected travel or accommodation.

We’ve also created extended laptop loans for students who don’t qualify for hardship support but who need equipment while self-isolating and are unable to access on-campus resources. There has been a 100 per cent increase in applications to these funds and we are only halfway through the academic year. The government has only allocated Essex an additional £166,000, equivalent to £10 per student. As a result of the pandemic, students face extraordinary mental health challenges, and 18 per cent of students lack access to a computer, laptop or tablet.

The additional hardship funding announced today is welcome – but the government has underestimated the pandemic’s impact on this generation of students and must not overestimate the benefit of any single action. We need a package of measures to ensure fairness between generations.

Students also need extra support to transition to work or further study after graduation. For a second year in a row, all our students will be entering into a desperately challenging job market and our universities want to help. Funding for bite-size qualifications, aligned to urgent priorities for higher-level skills, would make an immediate difference.

We are required to set aside over £500,000 annually via the Apprenticeship Levy, paid for by student fees. However, because of red tape and stringent conditions on its use, each year we can only spend around £100,000, with the balance paid over to the government. More flexibility in the rules would mean this resource could be redirected to support students in further training in the skills most in demand to drive our national recovery.

The scientific breakthrough that led to the Oxford-AstraZeneca vaccine has highlighted the impact our universities can have. From science and technological advances through driving up productivity and support for economic growth and start-ups, to the role of the arts and humanities in better understanding what it means to be human in our changing world, universities have a positive role that for far too long has been overlooked. The government has an opportunity to harness this potential – and will find us a willing partner.

The intergenerational contract requires a broad response: supporting current students who are experiencing unprecedented hardship; ensuring support for both UK and, importantly, international students; and recognising that the impact of this pandemic will not end when our students graduate. These proposals might not be everything the government can do, but they would be a good start. It would be an opportunity for the government to demonstrate that it is willing and able to play its full part in ensuring fairness between generations – by making sure that university students are not forgotten or left behind.

Anthony Forster is vice-chancellor of the University of Essex.