Former minister behind tuition fees hike urges Government to overhaul repayment costs
A Tory ex-minister who oversaw the hike in tuition fees to £9,000 a year has called on the Government overhaul its student loans repayments system.
David Willetts said the process whereby graduates pay back interest at 3% above inflation has become unsustainable given the sharp rise in inflation.
The former universities minister admitted he had not expected inflation to hit 3% and called on ministers to preserve a "viable graduate repayment system that is politically acceptable".
Writing in The Sunday Times, he said the Government should impose a shakeup of the current programme, which stacks thousands of pounds on an already heavy debt burden.
"For the greater good of preserving a viable graduate repayment system that is politically acceptable, the extra 3% on the interest rate should be dropped,” he said.
“It was done to collect more money from affluent graduates but there are limits to that.”
Students are charged interest based on the Retail Price Index (RPI) plus 3%, making a current total of 6.1%.
A Department for Education spokesman said: "Young people recognise that degrees gained from UK universities can lead to rewarding and well-paid jobs – graduates earn, on average, at least £100,000 extra lifetime earnings after tax
"Student loan borrowers only start paying back their loans when they are earning over £21,000, rising to £25,000 from April 2018, and that loans are written off altogether after 30 years.
“Unlike commercial alternatives, student loans are available to everyone, regardless of background or financial history.
“This approach ensures that costs are split fairly between graduates and the taxpayer."