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Debt could be reduced by 75% for poorest students

Debt could be reduced by 75% for poorest students

Social mobility charity, The Sutton Trust, have released a report encouraging the government to rethink how they are tackling the student debt crisis. The report advises that tuition fees are to be allocated on a means-tested basis so that students from poorer families are left with less debt. This means that if you are from a family with an income of under £25,000 you would pay nothing for tuition fees, but if you come from a family with an income of over £100,000 you could pay up to £12,250 per year. Family incomes within these brackets would be assessed using a sliding scale.

Restructuring tuition fees in this way could cut the average student debt by one third, with debt for the poorest student being reduced by 75%- to just £12,700. What’s more, if the means-tested system goes through, the average student debt repayment could fall to £30,200 with the poorest 40% of students paying back four times less than the richest fifth.

These developments have emerged after the controversial announcement by PM Theresa May last month that the threshold for repaying student debt will be raised from £21,00 to £25,000 per year. So, whilst graduates were previously expected to repay an average of £69,500 in their lifetime, this will fall to £54,900. As a result, 45% of student debt will never be repaid, with 4/5 of graduates not paying back their student loan in full.

It’s estimated that the new system would cost the Treasury £3.2 billion to implement, deeming it almost as controversial as Jeremy Corbyn’s plans to scrap tuition fees entirely in the last general election.

The chairman of Sutton Trust, Sir Peter Lampl, justified the proposal of a means-tested system by stating “It’s an absolute scandal that the poorest students graduate with the highest debt. A typical graduate will leave university with whopping debts of £46,000 while young people from households in the lowest 40% of earners will graduate with debts of nearly £52,000. These debt levels are almost double those of American university graduates.

We are proposing that fees should be means-tested and maintenance grants reintroduced so that those from low income families incur the lowest debts. Our proposals are an affordable and fair alternative to the current system where fees are not means-tested and there are no maintenance grants.”

So, what do students think of these changes?

Abby, a Chemistry student at Bristol, told Student Life Guide, ‘I think it’s great that the issue of student debt is being spoken about again. As someone who comes from a poorer family I can’t even describe how much of a relief it would be to have the burden of student debt eased.’

Max, a Durham Medic, disagreed, stating, ‘This is completely obscene. I come from a higher earning family but earnt my grades and place at university through hard work and good grades. Why should I be punished because my parents are doing well? This is reverse discrimination at its finest’.

What do you think? Should debt be allocated on a sliding scale? Share your thoughts in the comments below!