How Might Tuition Fee Changes Affect You?

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If you’ve caught sight of the news today you’ll have noticed the headlines about “tuition fees falling” or even the “end of student loans”. But, as always, headlines can be misleading, so check out our Q and As below to see how the proposed changes may affect you as a future university student.

Will changes to tuition fees definitely happen?

Today’s announcements come as a result of the 216 page Augar Review which was published today. The changes mentioned in the Report are currently only ‘proposals’ so nothing is yet definite. The Government will now consider the proposals and, with the current political mayhem, what happens next is anybody’s guess! But if we were to put money on it, we would say that any Conservative Government will likely take forward most, if not all, of the proposals in the Review.

When will the changes likely take effect?

The first thing to say is that: if the proposals take effect they would not be at all retrospective. In other words, those people who have already graduated or are currently studying will not be affected at all. Similarly, students applying to enter university next year (2020) will not be affected by any changes. The first students to be affected by the changes would be those entering university in autumn 2021.

What are the main proposed changes?

The headline grabber is that fees will be capped at £7,500 instead of the current £9,250. On the face of it this appears like fantastic news for students.

However, the other main changes are that repayment periods will increase from 30 – 40 years. Currently any remaining debt is written off after 30 years so the proposed changes will see the lower earning graduate making repayments for a decade longer!

Secondly there will likely be significant changes in the repayment rates and thresholds. Currently students repay 9% of everything they earn above £25,725. The new system proposes students will start repaying their fees at a lower income level (potentially £23,000). In addition, varying repayment rates would mean that higher earning graduates will be able to pay off their loans sooner, while lower earning graduates continue to pay what is effectively a “graduate tax” of 9% for pretty much the entirety of their working life.

Another major proposed change is that students from lower income families will be able to access non-repayable maintenance grants rather than current system of maintenance loans.

Will the changes be better or worse for students?

That largely depends on the individual student. It seems that those graduates who earn more will benefit more by being able to clear off their “loans” sooner. Those from lower income families will also benefit from not having to pay back their maintenance grants.

For most other students, at best there will be no noticeable difference and, at worst, they will see themselves repaying sooner and for longer. It is therefore, estimated that despite the fee levels being lower, most students will likely end up paying the equivalent of £180 per year more! The biggest winners will be students from low income families who manage to secure high paying graduate jobs!

Does the report mean student loans will end?

For a long time, many commentators, including Martin ‘the Money Saver’ Lewis, have long been vocal in saying that the term ‘student loans’ is misleading. They feel it is more accurate to use the term ‘graduate tax’. The Report simply agrees with the “graduate tax” terminology but the reality remains unchanged. Students will not pay fees upfront but will begin to pay them back once they start earning a certain salary.

Will it cost more to study different subjects?

Universities will be free to set their fees themselves but will not be able to charge UK students more than £7,500 in fees per year regardless of the subject. The likelihood is that universities will opt to charge the maximum fees for all subjects. Where subjects are costlier to teach (e.g. science and technology subjects), government funding will be used to top up student fees so that universities are not ‘out of pocket’.

Do these proposals affect all UK students?

The Report relates to English universities and arrangements for UK students attending those universities. Scottish, Welsh and Northern Irish universities are not subject to the Review.

Should I delay my university applications?

There is no clear-cut answer to this – it depends on your own personal circumstances. You should also remember that these are currently nothing more than suggestions to the Government and, with politics these days, anything can happen! Students from lower income households may benefit from maintenance grants that don’t need to be repaid. So that may be a big bonus and worth considering delaying your university entry. However, as explained above, the headline drop in fees does not necessarily play out in terms of lower repayments. So, overall, we wouldn’t advocate letting the publication of the Augar Report colour your university application plans.

However, stay tuned to developments, especially if you are looking to apply to university from 2020. Lots can change between now and then and you want to be in a good position to make the right decisions for your education and your future.

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