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Published: 30th May 2019


University tuition fees should be cut to £7,500 to give the taxpayer better value for money, an official review recommends today.

The current cap is £9,250, which means students are paying “too much” for their degrees, and the report recommends axing the “punitive” interest payments that students face while they are still at university.

To ensure that a greater proportion of student loans are paid back, they should be written off after 40 rather than 30 years, the report says, meaning many will be paying off student debt into their 60s.

Graduates should start paying back their loans once they earn £23,000, rather than the current repayment threshold of £25,000, it adds.

The student loan system is “poorly understood” and should be renamed the “student contribution system”, the review says.

It says means-tested maintenance grants should be reintroduced, with the poorest students handed £9,000 over the course of their degree.

The Prime Minister ordered the review of post-18 education last February, after coming under pressure following Jeremy Corbyn’s general election pledge to abolish tuition fees.

In a speech today, Mrs May will endorse the reintroduction of maintenance grants, arguing that “removing [them] from the least well-off students has not worked, and I believe it is time to bring them back”.

She will say: “There is much to be said for the panel’s proposal to cut fees and top up the money from government, protecting the sector’s income overall but focusing more of that investment on high-quality and high-value courses.”

Last night the report threatened to turn into a costs row.

A Cabinet source said: “The cost of the measures outlined by the Prime Minister tomorrow come at £6 billion a year to the taxpayer. A future leader would have to think about the choices ahead of them and where best to spend the money.”

The publication of the review, more than a year after it was commissioned, will be seen as part of Mrs May’s attempt to stitch together a domestic legacy before she steps down in July.

The report’s findings are likely to be adopted by whoever wins the race to succeed Mrs May, as winning younger voters has been earmarked as a priority for all leadership candidates.

Led by Philip Augar, the former  equities broker, the review is the first one since 1963 that the Government has ordered into higher and further education.

The “generous” and “undirected” funding that has been pumped into universities has come at “great cost to the taxpayer”, the report into post-18 education found.

The current higher education fee structure leads to “disappointment” for a “small but significant minority” of students, the review says.

The lifting of student number controls in England in 2015 gave universities free rein to recruit as many undergraduates as they see fit. But it has led to accusations they now act like businesses, seeking to maximise revenue by recruiting as many students as possible on to poor quality courses.

Around 50 per cent of 18-year-olds now take places at university, but the vast majority fail to pay back loans in full, leading to mounting concern about the cost to the public purse.

“Generous and undirected funding has led to an oversupply of some courses at great cost to the taxpayer and a corresponding undersupply of graduates in strategically important sectors,” the review said.

“Our recommendations would restore more control over taxpayer support and reduce what universities may charge each student.”

The maximum amount universities can charge for tuition fees should be capped at £7,500, the review says, with additional funding for subjects that offer good value.

Mr Augar said that the post-18 study is a “story of both care and neglect”, with universities enjoying huge amounts of public funding while vocational and technical education has been subjected to a “steep, steady decline” in cash.

He recommends an injection of £1 billion capital investment in further education colleges, as well as the introduction of a “lifelong learning loan allowance” for higher technical or degree level qualifications.

Alistair Jarvis, chief executive of Universities UK, said that unless the Government gives a “cast-iron guarantee” on full replacement funding, the cut in tuition fees “could prove to be a wolf in sheep’s clothing”.

He said that while he welcomes some of the proposals, a cut in fees will “hurt students” and “damage universities”, as well as decrease the number of highly-skilled employees that business needs and reduce the UK’s international competitiveness.

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