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Augar: government moves to slash rate of student loan write-off

Image: Melinda Nagy, via Shutterstock

The government has finally published its long-awaited response to the Augar review of post-18 education

The threshold at which students in England begin repaying their student loans is to be cut to £25,000, with the maximum period over which they are eligible to repay extended to 40 years, the government has announced. 

After a 1,000-day wait, the government published its full response to the Augar review of post-18 education and funding on 24 February. Ministers say that forcing students to begin repaying their loans earlier will help to reduce the amount that is written off.

Currently, students begin loan repayments when they start to earn just over £27,000, with any outstanding debt written off after 30 years. Reducing the repayment threshold to £25,000 and collecting repayments for a longer period will help plug a multibillion-pound hole in the student finance system, ministers say.

According to the Department for Education, students are too often “racking up debt for low-quality courses that do not lead to a graduate job with a good wage”. As a result, only a quarter of students who started full-time undergraduate degrees in 2020-21 are forecast to repay their loans in full.

Elsewhere in the government’s response to Philip Augar’s review, the department says that from the 2023-24 academic year, the student loan interest rate will be cut to the Retail Price Index rate of inflation for new students. Current borrowers pay RPI plus up to 3 per cent.

Ministers also announced that the tuition fee cap would be frozen at £9,250 for a further two years. Augar’s report had suggested that the fee cap be reduced to £7,500—although Augar has since distanced himself from that recommendation.

Augar also recommended that public funding for students on foundation years—pre-degree courses for which universities currently charge up to £9,250—should be withdrawn. In its response, the government appears to have stopped short of withdrawing finance altogether, saying that it will consult on reducing the tuition fee and loan limits for such courses. 

In a statement today, Augar said that the government’s package was “consistent with the spirit of the report of the post-18 education panel that I had the privilege to chair and forms the basis of a properly connected further and higher education sector”.

Consultation launch

Meanwhile, the Department for Education has also confirmed that it will launch two consultations. One will consider the possible introduction of minimum eligibility requirements, meaning that prospective students would not be able to access student loans unless they had achieved certain grades at school—essentially preventing many from attending university.

The consultation proposes two possible minimum entry requirements: at least two Es at A-level (or equivalent), or at least a level 4 pass in English and maths at GCSE (or equivalent). There would be some exemptions for particular groups, including mature students.

There are concerns that plans for minimum entry requirements could hit poorer students hardest, cutting them off from higher education altogether. Poorer students typically perform worse at GCSE and A-level: one analysis by the MillionPlus group of modern universities suggests that around 50 per cent of the most disadvantaged pupils in England do not achieve level 4—the equivalent of a C grade under the old system—at GCSE.

A second consultation will set out plans to deliver the lifelong loan entitlement, which aims to give adults access to student loans so that they can pursue education and training. It will also seek views on barriers faced by providers in offering and promoting level 4 and 5 courses such as higher national diplomas.

The reforms will be accompanied by £900 million in new government investment over the next three years, the department says, with that money directed to “providing more routes across higher and technical education and enabling lifelong access to loans”.

Some £750m of this investment will be in capital funding and strategic teaching grants. Among other things, these will provide more funding for courses that support the NHS, such as medicine, dentistry and midwifery, as well as science and engineering, the department confirmed.

Education secretary Nadhim Zahawi said universities were “key to levelling up opportunity by opening up access to a range of lifelong flexible post-18 options to help people train, retrain and upskill”.

“This package of reforms will ensure students are being offered a range of different pathways, whether that is higher or further education, that lead to opportunities with the best outcomes—and put an end once and for all to high interest rates on their student loans,” he added.

Alistair Jarvis, chief executive of Universities UK, said the government must ensure that “anyone with the potential to succeed at university has the opportunity to do so, and the country has the supply of highly skilled people that business and public services need”.

“The lifelong learning entitlement has the potential to be transformational, enabling mature learners, those in work and those looking to upskill with the funding they need to study flexibly,” he said.

Jarvis added that while the new money was welcome, the tuition fee freeze for another three years “leaves universities under even greater pressure to do more with less”.

More on the Augar response from Research Professional News

Augar: Universities UK warns of challenging future
Augar: responses from across higher education