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    • Thread Starter

    The new system

    The Coalition Government is proposing changes to how higher education in England is funded.

    * The upper limit on tuition fees will be raised to £9,000 with a lower threshold of £6,000. Courses charging between £6,000 and £9,000 will be subject to new requirements on widening access to the poorest students.
    * Tuition fees will not be paid upfront by either students or their parents. Graduates will make a contribution after they have left university.
    * The earnings threshold for graduate contributions will be raised from £15,000 to £21,000. The repayment rate will remain at 9 per cent. This means that no one earning under £21,000 will pay anything and graduates earning over £21,000 will pay back £45 less each month.
    * All outstanding contributions will be written off after thirty years. Over half of graduates will have at least some of their contribution written off. The poorest quarter of graduates will pay less over their lifetimes with the new system than they do under the old system.
    * There will be more support for students on low incomes: there will be a new £150 million National Scholarships Programme to help the poorest students into the top universities; maintenance grants for students from lower-income families will increase from £2,906 to £3,250; and partial maintenance grants will be available to students from families with incomes between £25,000 and £42,000.
    * Anyone earning under £21,000 will continue to have the interest on their loan subsidised by the government. A real rate of interest will be applied to the loans of graduates earning £21,000 or more. The rate of interest will rise gradually as a graduate’s earnings increase, reaching a maximum of the RPI (Retail Price Index) + 3 per cent for those earning £41,000 or more. This will provide extra revenue and mean that those who earn more, pay more.
    * Although reductions in government spending on higher education will help reduce the budget deficit, there will continue to be substantial public funding for universities. The balance of university funding will shift from 60 per cent government, 40 per cent private to approximately 40 per cent government, 60 per cent private.
    * For the first time, part-time students will be eligible for student loans. Until now, part-time students have had to pay fees upfront. Part-time students on their first degree will no longer have to pay anything until they have graduated and entered well-paid work, so long as they are studying a quarter as much as a full-time student.

    Helping Graduates

    Our plans will make paying off tuition fees more manageable and affordable for graduates.

    By increasing the income threshold for repayment to £21,000 a year, we are protecting those graduates on the lowest wages, whilst also reducing everybody else’s monthly repayments by up to £45.

    This table shows how graduates joining some typical professions will pay less each month (although most graduates will have to pay over a longer period):

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    MYTH 1
    I don’t have £9000 so now I can’t go to uni


    No one going to uni will have to pay anything up front with the new plans. You’ll only have to pay money back after you graduate - and then only if you earn over £21,000 a year.

    MYTH 2
    I won’t be able to repay the debt


    You don’t have to pay anything back until you start to make over £21,000 a year – and even then, the monthly payments will be linked to how much you’re earning to ensure they’re affordable. If you lose your job, or your earnings drop below £21,000, you won’t have to make any repayments until you start earning over £21,000 again.

    Your monthly repayments will also be less under the new plans.

    MYTH 3
    I’d be better off under the old system


    Under the old system, you started paying back money as soon as you earned over £15,000 a year – but with the new plans, you won’t pay anything at all unless you earn more than £21,000. In addition, everyone will have to pay back less a month, with most graduates being £45 better off a month, £540 better off a year.

    MYTH 4
    I’ll be paying off the debt forever


    Any outstanding debt will be written off after thirty years, regardless of how much you’ve paid back by that point. The new system is designed so that graduates on lower wages will have at least some of their debt written off, with the poorest quarter actually paying back less in total than they do currently.

    MYTH 5
    Tuition fees aren’t fair


    Graduates earn, on average, at least £100,000 more over their lifetimes than non-graduates, so it’s fair that you contribute towards your education.

    MYTH 6
    The poor won’t be able to go to uni


    With no upfront fees, no-one should be put off going to university on financial grounds. The new system will also give more assistance to poorer students:

    * Maintenance grants will be increased from £2,906 to £3,250
    * Universities charging more than £6,000 will have to prove they are taking more students from disadvantaged backgrounds.
    * £150 million will be invested in a National Scholarships Programme to get students from disadvantaged backgrounds into top universities

    MYTH 7
    Parents will have to foot the bill


    Parents will not pay any of their children’s tuition fees. The new plans mean that only the student pays for their tuition, and only once they have graduated and are earning enough to be able to afford it.

    MYTH 8
    Teaching will get worse


    The new plans will enable universities to spend more resources on teaching - not less. The Government will continue to pay 40% of the cost of higher education – and the changes will benefit universities by putting them on a more financially sustainable footing and making them more responsive to the needs of students.

    MYTH 9
    Universities will suffer


    The old system of university finance is unsustainable, which is why the Browne review was established in the first place. The new plans will give universities a sustainable funding stream and higher levels of income in some circumstances. They’ll also put in place a mechanism that rewards universities that respond to the needs of students, for example by encouraging teaching.

    MYTH 10
    Labour’s graduate tax would be fairer


    A graduate tax would mean poorer graduates paying more and richer graduates paying less - which is neither fair nor progressive. With the Coalition plans, you don’t pay anything until you start earning over £21,000; but under a graduate tax, you would start paying when you earn just £6,475 – so even those earning minimum wage would have to pay. At the other end of the scale, a graduate making say £60,000 a year would pay £3,500 with our plans, compared to just £1,000 with a graduate tax of 2 per cent.

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