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Tuition fee changes 'to save students £15,700' | Tuition fee changes 'to save students £15,700' |
(about 13 hours later) | |
Raising the earnings threshold for repaying tuition fees in England could save individual students up to £15,700 over their working lives, says the Institute for Fiscal Studies. | Raising the earnings threshold for repaying tuition fees in England could save individual students up to £15,700 over their working lives, says the Institute for Fiscal Studies. |
The financial think tank has analysed the impact of changes to repayments announced by Prime Minister Theresa May at the weekend. | The financial think tank has analysed the impact of changes to repayments announced by Prime Minister Theresa May at the weekend. |
Students will pay back when they earn £25,000 per year, rather than £21,000. | Students will pay back when they earn £25,000 per year, rather than £21,000. |
The IFS says this change will cost the Treasury £2.3bn per year. | The IFS says this change will cost the Treasury £2.3bn per year. |
At the Conservative party conference, Mrs May announced changes to the student finance system, widely seen as an attempt to attract young voters. | At the Conservative party conference, Mrs May announced changes to the student finance system, widely seen as an attempt to attract young voters. |
These included cancelling an increase which would have taken fees above £9,500. | These included cancelling an increase which would have taken fees above £9,500. |
The IFS says this cap on fees will save students about £800 - and reduce costs to the government by about £0.3bn. | The IFS says this cap on fees will save students about £800 - and reduce costs to the government by about £0.3bn. |
Lower costs | Lower costs |
Although the IFS warns that freezing fees indefinitely is "unsustainable" as it would leave universities without adequate funding. | Although the IFS warns that freezing fees indefinitely is "unsustainable" as it would leave universities without adequate funding. |
But the think tank says that raising the point at which repayments are made will have much bigger savings for students and much bigger costs for the government. | But the think tank says that raising the point at which repayments are made will have much bigger savings for students and much bigger costs for the government. |
For a typical graduate, it would mean graduates pay back £15,700 less over 30 years, before any unpaid loans are written off. | For a typical graduate, it would mean graduates pay back £15,700 less over 30 years, before any unpaid loans are written off. |
This will also mean that 83% of graduates will not pay back all their debts, raising the long-term costs by 41% for the government. | This will also mean that 83% of graduates will not pay back all their debts, raising the long-term costs by 41% for the government. |
According to the IFS, it would mean that 45% of the value of loans to students would not be recovered. | According to the IFS, it would mean that 45% of the value of loans to students would not be recovered. |
Chris Belfield, research economist at IFS and author of the analysis, said altering the repayment threshold is a "seemingly small change" but it would save students up to £15,700 "at a considerable cost to the taxpayer". | Chris Belfield, research economist at IFS and author of the analysis, said altering the repayment threshold is a "seemingly small change" but it would save students up to £15,700 "at a considerable cost to the taxpayer". |
Reality Check analysis | Reality Check analysis |
Student loans are a tricky area for the government because what the IFS describes as "a big and expensive give-away to graduates" does not necessarily sound impressive. | Student loans are a tricky area for the government because what the IFS describes as "a big and expensive give-away to graduates" does not necessarily sound impressive. |
Theresa May's announcement on Sunday that the change in the threshold would be worth £30 a month is correct for 2018. | Theresa May's announcement on Sunday that the change in the threshold would be worth £30 a month is correct for 2018. |
If you're a graduate earning more than £25,000 a year, there is a £4,000 chunk of your income which will no longer be eligible for the 9% loan repayment - that's £360 a year or £30 a month saved. | If you're a graduate earning more than £25,000 a year, there is a £4,000 chunk of your income which will no longer be eligible for the 9% loan repayment - that's £360 a year or £30 a month saved. |
But on top of that, the threshold which was due to be frozen, is instead going to rise in line with earnings. | But on top of that, the threshold which was due to be frozen, is instead going to rise in line with earnings. |
Take the extra savings every month for the 30 years over which loans need to be repaid and you get to the IFS figure of a £15,700 lifetime saving. | Take the extra savings every month for the 30 years over which loans need to be repaid and you get to the IFS figure of a £15,700 lifetime saving. |
The government said these changes to the student loan regime would cost an extra £1.2bn between 2018-19 and 2021-22, but it's only later that the costs really start to mount up. | The government said these changes to the student loan regime would cost an extra £1.2bn between 2018-19 and 2021-22, but it's only later that the costs really start to mount up. |
Each new cohort of students entering higher education each year will cost the government an extra £2.3bn, according to the IFS. | Each new cohort of students entering higher education each year will cost the government an extra £2.3bn, according to the IFS. |
More changes may be on the way - the government says it's looking at the entire student finance system over the coming months. |
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