David Cameron gives the impression that all is going swimmingly with student funding. Higher numbers are going to university than ever and he is busy ‘uncapping aspiration’.       But Government changes to student funding have resulted in major problems for the Treasury. Back in 2010, the Coalition allowed universities to triple tuition fees to £9,000, assuming […]

David Cameron gives the impression that all is going swimmingly with student funding. Higher numbers are going to university than ever and he is busy ‘uncapping aspiration’.      

But Government changes to student funding have resulted in major problems for the Treasury. Back in 2010, the Coalition allowed universities to triple tuition fees to £9,000, assuming few institutions would do so. They were wrong, and as student fees rocketed so did the amount the Government needed to lend students upfront. According to The Sutton Trust, the average student now owes £44,000, a crippling debt that few will ever repay. A Commons Business, Innovation and Skills Committee revealed that the Government gets back only 45p of every pound lent.

The Conservatives are attempting to fix this by replacing the grants that poorer students receive with loans and freezing the income threshold at which graduates start repaying their debt at £21,000 for the next five years.

How these controversial changes have been sneaked through Parliament is seen by many as an affront to democracy. The Government made no mention of their intention to abolish grants in their manifesto, despite this marking a significant change of policy. Previously they had brought in more generous maintenance grants for poorer students to help offset tuition fee rises.

More shockingly, the removal of grants has not been debated in Parliament. Instead it has slipped through a committee of 18 MPs, meaning there has been little open debate and consideration of concerns, such as those reflected in an Institute of Fiscal Studies report that the debt of the poorest 40% of students will rise from £40,500 to £53,000 under the new system, and that abolishing grants will “do little to improve government finances in the long run”.

Similarly, the Chancellor ensured little publicity for his plans to freeze the student repayment threshold by not mentioning it in his Commons Autumn Statement speech. Students who took out a loan from September 2012 did so on the understanding that they would not start repaying their debts until they earned over £21,000 and that this threshold would rise in line with earnings. Due to Osborne’s freeze, graduates are likely to start repaying at a lower level of income than they would otherwise have done.

The retrospective nature of these changes has particularly incensed people, because the freezing of the threshold will not only affect new students starting this September, but also those who graduated last July and those currently studying. Money saving expert Martin Lewis points out that to change a financial contract after it has been entered into is something commercial lenders are forbidden from doing. He is so angry about this that he has employed lawyers to look into the legality of Government plans.

Lewis also worries that these retrospective changes will damage public confidence in student funding. After all, once one such change has been made to loan conditions, what’s to stop others? Interest rates on loans might be increased next, or the 30-year repayment cut-off removed, saddling graduates with debts into retirement. How can students plan for the future when the terms of their loans can change at any time?

And there are other concerns too. Students will be able to borrow more to help with living costs, but poorer students will be the ones taking out the greatest loans because they receive less financial support from parents. Lower and middle income graduates could end up repaying more than higher earners as well, because they’ll take longer to pay off their debts and so will accumulate more interest.

The plight of students should concern the rest of us, because if we allow our Government to act without proper public scrutiny and debate, we may one day find ourselves in the same position as students – at the wrong end of an unfair law and powerless to do anything about it.

Caroline Fletcher