Student loans are in principle a straightforward business. The government lends students money; after they graduate, they begin repaying it. From the perspective of politicians and the Treasury the advantage of loans over grants is clear: the money isn’t simply given away, it comes back over the lifetime of the loan. Even better, in the national accounts the loans are classified as ‘financial transactions’, not ‘expenditure’, and are excluded from calculations of the deficit.1 When in 2012 the coalition all but ended the direct-grant funding of undergraduate teaching in English universities and colleges, the move could be sold as consistent with fiscal austerity – it had the effect of reducing government spending. But the income of universities and colleges was spared the cuts made elsewhere because the gap was more than filled by higher tuition fees backed by loans.
Since 2012 English higher education institutions have been able to charge new full-time students from the UK and EU up to a maximum of £9000 per year for tuition.2 Anyone graduating from 2015 onwards is likely to owe £27,000 in tuition fee loans and more for maintenance loans, plus whatever interest accrued on the loans while they were studying. The Institute for Fiscal Studies reckons that on average student borrowers will owe £44,035 at graduation; for those who began their degrees before 2012, the figure was under £25,000.