The average full-time university student in England today will graduate with £45,900 of debt. This huge burden is the end result of two decades of debate about how to fund higher education, dating back to 1998 when the New Labour government introduced tuition fees.
Labour hoped to use tuition fees to fund more university places, and, in doing so, to relegate the idea of higher education as a preserve of the elites to the past. In 2010, the Lib Dems under Nick Clegg pledged to abolish fees, but upon entering coalition with the Tories, ended up trebling them to £9,000 a year instead. This decision caused mass protest, recast the previously popular Clegg as the personification of an untrustworthy politician, and contributed to the Lib Dems’ subsequent electoral near wipeout. Seven years of Tory rule later, many thought that the conversation was over, until Labour’s 2017 manifesto boldly pledged to abolish fees entirely at a cost of £9.5bn.
But all this debate masked the fact that tuition fees now account for only a part of student debt. Around 40 per cent of the debt comes instead from maintenance loans, which are paid out directly to students and used to cover accommodation, food, and other living expenses. Labour’s 2019 manifesto did propose re-introducing means-tested maintenance grants, but there was scant detail about eligibility and the level of support, and, crucially, the plan failed to create headlines to the extent that tuition fee abolition did. Three years on from the 2019 election defeat, Labour must adopt a different approach to reforming the student finance system: with difficult spending choices to make, maintenance grants, rather than tuition fees, should be the party’s focus.
The maintenance loan system as it currently stands creates huge disparities in the level of debt a student will accumulate based on their household income. While those from families with the highest parental income are only eligible to borrow around £4,400 per year (with parents expected to make up the difference), the poorest students are eligible for £9,488. This may seem progressive on the surface – however, in a system that is almost unique by international standards in containing no grant support, this actually means lower income students are simply saddled with more debt at the end of their degree, whilst still living on an income lower than the minimum wage during their studies. Furthermore, those whose parents may be technically able to support them but do not do so face abject poverty. The system is simply inadequate, particularly given the current cost of living crisis – a recent NUS study found that one third of students have less than £50 a month to live on after paying rent and bills and 11 per cent are using food banks. An Office for National Statistics survey last month found more than nine in 10 students were worried by the cost of living, with 45 per cent saying their mental health had suffered as a result.
By introducing maintenance grants that cover the vast proportion of the living costs of the poorest students, Labour could eradicate a significant proportion of their graduate debt, while simultaneously dramatically improving their standard of living. Every university student living away from home should be eligible for £13,300 of student finance (the annual salary based on a 35-hour work week, on the National Living Wage, for the 40-week academic year), with more available to those studying in London. Similar to the current system in Wales, everyone would receive part of this as a grant, but the proportion of grant to loan would be based on your household income, with lower income students receiving significantly more grant support. The proportion provided as a grant could be steadily increased in future years to slowly reduce the quantity of debt that students graduate with.
This policy would also ensure that under a Labour government, no university student would have to work alongside full-time study (which is already actively prohibited by top-tier universities such as Oxford and Cambridge). It would lower the opportunity cost of education compared to full-time work and significantly reduce debt for the poorest graduates. This is particularly important given that debt has been shown to deter entry into higher education for those from lower income households. And at the next election, scrapping the promise to abolish tuition fees would reduce the risk of Labour being viewed as fiscally irresponsible.
No student should have to live on an income less than the living wage simply because they chose to go to university. If Labour truly believes in a right to higher education for all that wish to pursue it, it must make a fairer maintenance system a priority. We need a policy on student finance that is progressive but sensible, and which raises standards of living while tackling graduate debt.
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