I have recently received a number of e-mails raising concerns about the state of student funding.
It is important on the issue of student funding that we take care to create a balance that ensures a fair deal for students, universities and taxpayers. It remains a fundamental principle that a borrower’s contribution to the cost of their education should be linked to their ability to pay. Higher education continues to be a worthwhile investment and graduates will go on to earn more on average than those without higher level qualifications. It is with this in mind, that from the 2016-17 academic year, maintenance grants have been replaced by maintenance loans for new students from England. This will help strike a fairer balance for graduates and non-graduates and help keep student funding financially sustainable.
The freezing of the student loan repayment threshold was an essential undertaking to ensure that higher education funding remained sustainable. After undertaking a full consultation, the Government decided to ask graduates for a greater contribution to the costs of their study rather than to ask taxpayers to do so. To ensure that the costs of the student loan book remain affordable in the long term, the loan repayment threshold is being kept at £21,000 for five years. This threshold remains higher in real terms than the threshold for loans taken out before 2012.
As outlined in the 2017 manifesto, a major review will be launched on the matter of tertiary education funding. This will look into how we can ensure that students get access to financial support that offers value for money, is available across different routes and encourages the development of the skills we need as a country.
The overall maintenance support available to low income students is increasing to £8,430 a year for those starting courses in 2017/18 who will be living away from home and studying outside London. This means all new students, irrespective of income, will have access to more cash-in-hand than ever before to help meet living costs. As you may know, there is a progressive repayments system for student loans and graduates only start repaying them when they earn over £21,000. Repayments cease if earnings fall below this amount. To ensure the cost of providing student loans remains affordable in the long-run, the loan repayment threshold is being frozen at its current level of £21,000 for five years. Grants for students who are carers, disabled or have dependants will continue to be available.
Taken together, these changes will help ensure our world class universities are sustainably funded, enable more people to benefit from a higher education, and uphold the principle that students do not need to pay up front for their tuition.
Thank you once again for contacting me on this important issue.