Student fees policy likely to cost more than the system it replaced - Shiv Malik, The Guardian, 21 March 2014

The proportion of graduates failing to pay back student loans is increasing at such a rate that the Treasury is approaching the point at which it will get zero financial reward from the government’s policy of tripling tuition fees to £9,000 a year.

New official forecasts suggest the write-off costs have reached 45% of the £10bn in student loans made each year, all but nullifying any savings to the public purse made following the introduction of the new fee system.

The universities minister, David Willetts, speaking in response to a parliamentary question from the shadow education minister, Liam Byrne, confirmed that the write-off figure – the resource accounting and budgeting (RAB) charge – is rapidly approaching the 48.6% mark. This is the threshold at which experts calculate that the government will lose more money than it would have saved by keeping the old £3,000 tuition fee system.

The coalition’s decision to introduce higher fees shortly after it formed led to rioting on the streets and forced a dramatic decline in the Liberal Democrats’ poll ratings, from which the party has never fully recovered.

Lower pay for young adults, an over-supply of those with degrees and the worsening economic outlook have all contributed to the revised civil service forecasts which conclude that far fewer graduates will earn enough to pay back their loans over their working lives. Four months ago Willetts notified parliament that the rate had risen to 40% from 35%. In 2010 the estimate was 28%.

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