Conservatives to replace university fees with more expensive loans
The Conservatives have today unveiled plans to abolish university tuition fees and top-up fees, replacing them with a new system of student loans charged at a higher rate of interest than at present.
Full details and costings for the plan, trailed on BBC Radio Four’s “Today” programme this morning, are due to be released later today.
Student loans are only charged an inflation interest rate at present. The Conservatives plans would see this replaced with a rate set at 2 per cent above the Bank of England base rate, up to a maximum of 8 per cent.
Furthermore, the universities themselves would be given responsibility for the loans scheme, enabling them to borrow against future income.
Conservative Shadow Education Secretary Tim Collins claimed that this system would be fairer than the Government’s arrangements: it would abolish the uneconomic system of subsidised student loans; it would relieve low-income students of the burden of tuition fees; and it would discourage students from taking out high-cost personal and credit card loans.
The universities would also benefit, Mr Collins argued.
“Not only do they get the same amount as the government plans but very substantial new sums. Up to £3 billion over the first three years. And £20 billion over 20 years”, he stated.
The Conservatives would implement their plans in the September after an election victory, he added.
However, the other parties have dismissed the plans as unfair.
Liberal Democrat education spokesman Phil Willis warned, “Tory policies will see poorer students being priced out of universities by huge hikes in the cost of student loans.
“By introducing commercial interest rates poorer students will end up with astronomic levels of debt and many will be put off going to university all together.”
Higher Education Minister Alan Johnson described the system proposed as “massively unfair”, arguing that it “would mean that repayment of student loans would not be based in any way on the ability to pay.”
