30th March 2011 9:00
By Blue Tutors
Calculations show that students could end up paying back over double the original cost of their student loan under the new tuition fee system. In a report on the BBC, three typical graduate salaries were analysed, and the results show that they would each pay back close to £80,000 after taking out a student loan worth £39,000 in total.
The figures are based on each student receiving £9,000 for tuition, and £4,000 living expenses per year, and then looking at the amount each would pay back, depending on the type of job they get, and how well they progress in that job. It was also assumed that the interest on the loans would be 3% (the current rate of inflation), and that hasn’t been decided yet; the government may choose to charge interest at a rate higher than that of inflation.
The lowest earner would pay back nearly £79,000 in 30 years, and still owe over £14,000, but that debt would be written off as the proposed plans only require repayment for a period of 30 years. The middle and higher earners would pay back nearly £84,000 over 25 years, and nearly £72,000 over 18 years respectively.
It argued that these figures are much higher than the amount paid back by current graduates, and will discourage students from applying to university. However, the figures above don’t take inflation into account, and the value of money will decrease, so in fact the value paid back won’t be double the original loan. The government also say that the new system of repayment is much fairer than before, the main difference being that graduates begin to repay their loan only on amounts earned above £21,000, rather than £15,000 as it is currently.