David Davis 'urging Treasury to write off historic student debt'
David Davis is reportedly calling on the Treasury to scrap historic student debt, arguing that it is hampering young people from contributing to the economy.
So far the Government has only pledged to freeze fees at £9,250 a year and increase the salary threshold before repayment to £25,000 a year - a move which means fewer graduates will be paying back their loans.
Sources close to the Brexit Secretary told the Sunday Times he had made the argument that a commercial company would have already written off many of the loans as bad debt.
“With such a low repayment ratio, if the student loans book were an independent company its credit rating would be low and auditors would insist you write down the debt" one figure told the paper.
“Doing so will help the younger generation get mortgages and would give them more money to spend, which would raise tax revenues for the Treasury. The mythical debt dee presses everything.
“He would urge the Treasury to start with the answer and look at the financial structures to see if there was a better way for students that doesn’t leave the debt to hang over their entire life.”
But it would come with a hefty price tag, with the Institute for Fiscal Studies estimating that writing off extra debt incurred since tuition fees were trebled in 2012 would cost £10bn.
This comes on the back of an inquiry launched by the Treasury Committee into the impact of rising tuition fees and graduate debt on public finances.
Chair of the Committtee and former education secretary Nicky Morgan said: “Student loan debt is projected to be around £160bn within six years. The committee will scrutinise the current system and any future developments closely.”