Former Government Adviser Proposes New Repayment System for University Graduates
In a bid to address the financial instability in the student finance system in England, Tim Leunig, an economist and former adviser to the Treasury and the Department for Education under the Conservative government, has put forth a 10-point plan for reform. Among his proposals is the suggestion that all university graduates should repay a minimum of £10 per week, regardless of their income level.
Reforming Student Loan Repayment Terms
One of the key points in Leunig’s plan is to reduce the repayment term on student loans from 40 years to 20 years. He argues that the current 40-year repayment period is “absurd” and contributes to the financial strain on graduates. Additionally, he emphasizes that the debt should not continue to accumulate over time, ensuring that graduates do not face escalating financial burdens.
Financial Challenges Facing Universities
University leaders have expressed concerns over the financial challenges they face, particularly with frozen tuition fees for domestic students and a decline in overseas student enrollment. The cap on tuition fees in England was raised to £9,000 per year in 2012 and has remained at £9,250 since 2017. This stagnation in funding has created a funding gap that universities are struggling to bridge.
Proposals for Financial Stability
Leunig’s plan also includes a 1% “surcharge” for employers when they hire a graduate, aimed at generating additional revenue to support the student finance system. He further suggests the introduction of new maintenance grants of approximately £11,000 for students from families with incomes below £25,000. These measures are intended to alleviate financial pressures on students from lower-income backgrounds.
Calls for Increased Government Funding
In addition to the proposed reforms, Leunig advocates for a £2,000 increase in university funding per student, funded directly by the government rather than through raised tuition fees. He asserts that this approach would provide a comprehensive solution to the financial challenges faced by both students and universities. The economist emphasizes that his reform package offers a sustainable solution without additional costs.
Support for Reforming Student Finance
Professor Eric Neumayer, deputy president and vice-chancellor at the London School of Economics (LSE), commends Leunig’s proposal for its costed and principled approach to reforming student finance. He acknowledges the urgent need for radical changes to the current system, which has left all stakeholders dissatisfied. Neumayer emphasizes the importance of considering Leunig’s proposals for a fairer and more sustainable student finance regime.
Addressing Social Mobility Concerns
Professor Lee Elliot Major, an expert in social mobility at the University of Exeter, highlights the significance of creating a more sustainable and equitable student finance system. He applauds the proposed reforms for their potential to end the current system’s inequities, particularly for students from disadvantaged backgrounds. Major stresses the importance of addressing the issue of graduate debt to promote social mobility and equal opportunities in higher education.
Government’s Response to Student Finance Challenges
Education Secretary Bridget Phillipson acknowledges the complexity of the challenges facing the higher education sector and emphasizes the need for thoughtful and comprehensive solutions. While she cannot promise immediate resolutions, Phillipson is committed to addressing the issues and working towards a more sustainable student finance system. The government is expected to consider various proposals for reforming the university sector to ensure its long-term viability.
Conclusion
The proposal put forth by Tim Leunig offers a comprehensive and sustainable solution to the financial challenges plaguing the student finance system in England. By advocating for shorter repayment terms, increased government funding, and additional support for students from lower-income backgrounds, Leunig’s plan aims to create a fairer and more stable system for all stakeholders. As the government and universities grapple with financial uncertainties, Leunig’s reform package presents a viable path forward for ensuring the long-term sustainability of higher education in England.
