By Madalina Dichiu
THE Student Loan company today insisted graduates are clearing their debts after a report claimed an increasing number were unable to meet their repayments.
Figures published by The Student Loans Company (SLC) show that students can afford paying back their loans, even if current reports argue the opposite.
Concerns were raised after a study made by The Higher Education Commission found that the system fails to help students repay their debt.
The Commission says that student debt will increase to more than £330 billion by 2044.
It said: “The Commission fundamentally questions any system that charges higher education at a rate where the average graduate will not be able to pay it back.”
The Student Loans Company argues that there is an “increase in the average repayment amount [which] is caused by income growth in the years after leaving higher education. In the tax years from 2005‐06 up to and including 2011‐12 the income threshold was pegged at £15,000.
“Hence, it reduced in real terms so any increase in earnings in real terms would lead to increased repayments. In tax year 2012‐13 the income threshold was increased to £15,795 leading to a drop in the average repayment amount.”
According to a report published yesterday by The National Union of Students the proportion of graduates failing to pay back student loans is increasing at such a rate that the Treasury is approaching the point at which it will get zero financial reward from the government’s policy of tripling tuition fees to £9,000 a year.
The report named “A Roadmap to Free Education” argues that higher education could be funded by collective public investment through progressive taxation, with an increase on tax of the richest in society.
Megan Dunn, NUS Vice President (Higher Education), said: “Not only is a publicly funded education system achievable, it’s also necessary in the current economic and political climate. Our roadmap seriously challenges those who want to bury their heads in the sand and pretend that the current broken system can be fixed with tweaks and tinkering. The clear fact is that the current system we have is completely unsustainable.
“The Government’s own figures show that the prospect of a huge black hole looming over the budget is very real. It’s time the government started taking this issue seriously and committed to a new deal for students.”
She added: “We are told that we can’t tax the rich because they are the ‘wealth creators’ but we know that the real wealth creators of our society are the teachers and lecturers who are building up the knowledge and the skills of our country. We should be investing in them rather than protecting those who have driven the economy to its knees.
“Forcing debt onto students as a way of funding universities is an experiment that has failed not just students, but our country. Politicians need to recognise that we will only achieve a sustainable higher education funding system if we abandon the discredited regime of sky-high fees and debts altogether.”
The “roadmap” is based on a more contextualised and long-term view of what higher education is for, who the main beneficiaries are, and what balance of contribution these beneficiaries should make in order to allow the sector to function most effectively.
A spokesman for the Department for Business, Innovation and Skills said the government would “look closely at the findings from the commission.
“The UK enjoys a world-renowned reputation for the quality of its universities, which we have protected and enhanced through our reforms.”