Firm finds Government Loan repayments outdated
An education research firm has found the government's calculations on the amount students will pay back to be outdated and misleading.
After a study by consultancy firm RedStart, they have found the government's calculations, under the post 2012 regime, to be outdated. This raises further questions to the claim that repayments are now fairer under the higher fees regime implemented in 2012.
According to the study, the government has vastly underestimated the cost of paying for a degree under the new regime they implemented, which saw students paying nearly three times as much a year for their university education. RedStart found for those who graduate under the new regime of fees this year, if they start on a salary of £29,000, the average RedStart found, over 30 years, graduates would pay £62,272, rather than the government stated £33,346 according to official figures.
Reported in the Daily Telegraph, if graduates were to earn £38,000 when they graduate they will pay around £100,146 over the same period. This is a long way off the £55,000, which was the number floated by official reports.
The government has faced criticism over the way it has worked out how much they will be paying in the future, with criticism resting on the government's use of high inflation.
Author of the Report, Frederick Patten, believes that this error believes graduates will be much worse off under the new fees system. Patten told the Daily Telegraph, 'Our numbers show that the average student will be around £30,000 worse off in today's terms from the changes. They are undeniably worse off from the changes to student finance, with people at all starting salaries experiencing a rise in the cost of the loan in today's terms. Only those from more affluent backgrounds will be able to pay the university costs upfront and avoid the substantial interest rate charges.'
Founder of Momneysavingexpert.com, Martin Lewis, has said that the issue is red herring because of an uncertain financial future and economy. Lewis said 'It's impossible for people to accurately work out how much student loan they will repay because it's all based on calculations that use assumptions. The size of the initial student loan is a red herring. There are no official estimates as the government won't build a calculator to predict this – it would get heavily criticised for spinning things if it did.'
By James Howell
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