Osborne plan to force current students to pay more for loans ‘unfair’

GuildHE is “absolutely opposed” to the government’s plans to freeze loan repayment thresholds for all post-2012 students and graduates in England, calling the move an “unfair retrospective change” that would prompt doubts among future students about whether to go to university.

The organisation, one of two representative bodies for UK higher education alongside Universities UK (UUK), also says the move will hit poorer and female students the hardest.

It outlines its opposition to the plan to make existing graduates and students pay more in its submission to a Department for Business, Innovation and Skills consultation, which closed on 14 October.

In a move announced by George Osborne, the chancellor, in his summer Budget, the government wants to freeze the threshold at which loan repayments start at £21,000 for five years.

Yet in 2010, David Willetts, then universities and science minister, told MPs as the government sought their votes to push through the trebling of tuition fees to £9,000: “We will increase the repayment threshold to £21,000, and will thereafter increase it periodically to reflect earnings.”

The five-year freeze, which the government has admitted is “a change from when the policy was first introduced”, would mean graduates paying an extra £2,800 over 30 years, according to estimates by the Sutton Trust.

GuildHE, whose chief executive is Gordon McKenzie, former BIS deputy director for higher education strategy and policy, says in response to the government’s preferred option of a freeze at £21,000 until April 2021: “We are absolutely opposed to this option.”

The submission adds: “This option would be an unfair retrospective change for current post-2012 students/graduates. The decision they initially made to take out a student loan was based upon the government’s assurances to students and to Parliament that the earnings threshold would be uprated every year in line with earnings.”

GuildHE says the change “will undermine the trust and confidence in the stability of the loan system for future students…and it will be more difficult to make an informed decision to go to university”.

The organisation’s opposition will increase scrutiny of UUK’s response, which has not yet been made public. UUK would face criticism if it backed charging existing students and graduates more to shore up the student loans system.

An independent student funding panel set up by UUK, and chaired by its then president, Sir Christopher Snowden, recommended in June that there should be a seven-year threshold freeze from 2016 if changes were needed to the student loans system.

Citing the Sutton Trust research, GuildHE says the five-year freeze would mean “students will end up repaying more and it will negatively impact the income of the lowest and middle earner graduates, women” as well as groups such as black and minority ethnic students, who tend to have lower rates of professional employment six months after graduation.

GuildHE says option two in the consultation – freezing the threshold for five years for new borrowers only at the level the threshold reaches in April 2020 – “meets the principle of transparency and fairness”. But it would still be “potentially indirectly discriminatory” against disadvantaged groups, the organisation adds.

On the third option of no change and uprating in line with earnings for all borrowers, GuildHE says it does not expect the government to favour that option, “but other stakeholders including students and post-2012 graduates are likely to do so, for understandable reasons”.

News of GuildHE's submission comes a couple of days after Sajid Javid, the business secretary, refused to rule out further changes to student loan repayment terms in this Parliament.

john.morgan@tesglobal.com