University graduates in England could soon be required to repay a minimum of £10 per week under a reformed student loan system proposed by Tim Leunig, an economist and former adviser to the Treasury and Department for Education under the Conservative government. Leunig has put forward a 10-point plan aimed at addressing flaws in the current student finance system. His suggestions include reducing the repayment term from 40 to 20 years and ensuring that student debt does not increase.
In a paper published by the Higher Education Policy Institute (Hepi), Leunig emphasised the need for financial stability in the system by mandating all graduates, regardless of income, to contribute at least £10 weekly towards their loans. This move comes amidst concerns raised by university leaders about financial challenges stemming from static tuition fees for domestic students and a decline in international student enrolment.
The report also advocates for a 1% “surcharge” on employers hiring graduates, as well as introducing new maintenance grants of approximately £11,000 for students from families earning less than £25,000. Furthermore, Leunig proposes a £2,000 increase in government-funded university support per student to alleviate the financial burden.
Professor Eric Neumayer of the London School of Economics commended Leunig’s proposal, stating that the current student finance system is in need of radical reform. The plan has garnered support from various experts, including Professor Lee Elliot Major from the University of Exeter, who highlighted the importance of creating a fairer and sustainable student finance regime, particularly for students from lower-income backgrounds.
Education Secretary Bridget Phillipson acknowledged the challenges facing the sector and committed to addressing them, while Universities UK (UUK) is set to release its own recommendations for a reset in the university sector. UUK is advocating for linking fees to inflation, reinstating grants for the most disadvantaged students, and increasing maintenance loan values to support students during their studies.
Amidst these discussions, a Department for Education spokesperson assured that the government is dedicated to ensuring a prosperous future for universities as drivers of growth and opportunity. They affirmed their commitment to exploring all viable options and presenting comprehensive proposals to better serve the economy, universities, and students alike.