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Poorest graduates 'will owe £53,000' after grants cut | Poorest graduates 'will owe £53,000' after grants cut |
(8 days later) | |
Students from the poorest backgrounds in England will graduate owing up to £53,000 after maintenance grants are replaced by loans, a think tank says. | Students from the poorest backgrounds in England will graduate owing up to £53,000 after maintenance grants are replaced by loans, a think tank says. |
Changes to student finance announced in the Budget will mean an initial £2bn annual saving for the government, says the Institute for Fiscal Studies (IFS). | Changes to student finance announced in the Budget will mean an initial £2bn annual saving for the government, says the Institute for Fiscal Studies (IFS). |
But the IFS estimates only a quarter of these loans will be repaid and the long-term annual saving will be £270m. | But the IFS estimates only a quarter of these loans will be repaid and the long-term annual saving will be £270m. |
The government says it is committed to "widening access in higher education". | The government says it is committed to "widening access in higher education". |
More than half a million students from poorer backgrounds currently receive a maintenance grant, at a cost to the taxpayer of about £1.57bn a year. | More than half a million students from poorer backgrounds currently receive a maintenance grant, at a cost to the taxpayer of about £1.57bn a year. |
From 2016, these will be replaced with loans, which they will be expected to repay in addition to loans for their tuition fees. | From 2016, these will be replaced with loans, which they will be expected to repay in addition to loans for their tuition fees. |
The IFS says the new loans will mean up to £550 more "cash in pocket" per year for those students, but they will graduate owing up to £53,000 in total, compared with £40,500 before maintenance grants were scrapped. | The IFS says the new loans will mean up to £550 more "cash in pocket" per year for those students, but they will graduate owing up to £53,000 in total, compared with £40,500 before maintenance grants were scrapped. |
In the short term, government borrowing will fall by £2bn a year, because spending on grants counts towards the government's borrowing, while spending on loans does not count in the same way, the IFS says. | In the short term, government borrowing will fall by £2bn a year, because spending on grants counts towards the government's borrowing, while spending on loans does not count in the same way, the IFS says. |
However in the longer term the IFS says savings will be much less than this, because it estimates that only a quarter of students borrowing an additional loan will be able to pay if off in their working lifetime, when they earn over £21,000. | However in the longer term the IFS says savings will be much less than this, because it estimates that only a quarter of students borrowing an additional loan will be able to pay if off in their working lifetime, when they earn over £21,000. |
IFS breakdown of maximum costs for poorest students | |
Chancellor George Osborne is consulting on how much a graduate must earn before paying back their loans. | Chancellor George Osborne is consulting on how much a graduate must earn before paying back their loans. |
If repayments were fixed at the present level of £21,000 for five years, not rising with inflation, the IFS estimates overall graduate loan repayments would increase on average by a further £3,800 per student. | If repayments were fixed at the present level of £21,000 for five years, not rising with inflation, the IFS estimates overall graduate loan repayments would increase on average by a further £3,800 per student. |
Middle income students are forecast to be hit the hardest, costing them an extra £6,000 over the repayment of their loan. | Middle income students are forecast to be hit the hardest, costing them an extra £6,000 over the repayment of their loan. |
Jack Britton, research economist at the IFS said: "It is the freezing of the repayment threshold which will do more to raise loan repayments, and hence increase the cost of higher education." | Jack Britton, research economist at the IFS said: "It is the freezing of the repayment threshold which will do more to raise loan repayments, and hence increase the cost of higher education." |
University and College Union general secretary Sally Hunt said: "It is little more than a tax on aspiration and exposes this government as certainly not being on the side of the strivers." | University and College Union general secretary Sally Hunt said: "It is little more than a tax on aspiration and exposes this government as certainly not being on the side of the strivers." |
A Department of Business, Innovation and Skills spokesman said: "Anyone with the ability to succeed should have the opportunity to participate, regardless of their background or ability to pay. | A Department of Business, Innovation and Skills spokesman said: "Anyone with the ability to succeed should have the opportunity to participate, regardless of their background or ability to pay. |
"The changes announced in the Budget provide students with more money in their pockets to help with living costs while studying. | "The changes announced in the Budget provide students with more money in their pockets to help with living costs while studying. |
"Lifting the cap on student numbers also means that more people will be able to benefit from higher education than ever before." | "Lifting the cap on student numbers also means that more people will be able to benefit from higher education than ever before." |
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