Nearly half of all working-class students considering university are deterred because they do not perceive it as value for money, according to new polling. Research by the Good Growth Foundation (GGF) found that 45% of 16 to 18-year-old students from lower-income households (C2DE) believe university is not worthwhile due to tuition fees and associated debt.
In contrast, 40% of these students say they are not put off by the cost of a degree. Among wealthier households, 60% still consider a degree good value for money, with only 33% disagreeing. Overall, more than a third (38%) of students aged 16 to 18 from schools and colleges in England and Wales are less likely to apply to university because of financial concerns.
Tuition Fees on the Rise
Universities can currently charge a maximum yearly tuition fee of £9,535 for standard full-time courses. Last year, the government announced that tuition fees will increase in line with inflation for the next two years, pushing fees closer to £10,000. The Education Secretary has stated she will review Plan 2 student loans following widespread alarm over spiralling costs.
Call for a Graduate Guarantee
The GGF is advocating for a Graduate Guarantee to rebalance the student loans system and ensure graduates retain more of their earnings amid the cost-of-living crisis. This would involve immediately raising the repayment threshold from £29,385 to £33,542, restoring the real value of the £25,000 threshold set in 2018 and reversing recent freezes. Similar to the pensions triple lock, the Graduate Guarantee would enshrine annual inflationary increases in the threshold by law.
Graduates with Plan 2 loans earning below the threshold would stop making repayments altogether, while those earning above would save £374 per year.
Expert Opinion
Louisa Dollimore, Director of Strategy at the Good Growth Foundation, said: “Choices about education should be determined by people’s talents and aspirations, not underpinned by worries about whether a degree will leave them saddled with debt until retirement, affecting their ability to get a mortgage or even just cope with rising cost of living. That is why the time has come to urgently reform the student loans system. The fairest way to do that is to raise the repayment threshold, which would ensure those on the lowest incomes don’t have to start paying back when they don't have the money and provide a decent cut in repayments for everyone else. It’s an immediate way to turn student finance back into the springboard for aspiration it was always meant to be.”
Government Response
A government spokesperson said: “We know some graduates are concerned about the cost of loan repayments, and it’s exactly why we’re making the system we inherited fairer. We’re cracking down on poor quality courses so that students can be confident they’re getting value for money from university degrees, while reintroducing targeted maintenance grants and capping interest rates on student loans. The student finance system rightly protects lower-earning graduates, with repayments linked to income and any outstanding balances and interest written off at the end of repayment terms.”
