Mike Boxall, higher education senior advisor at PA Consulting Group is quoted in an article in The Financial Times which examines the debt facing students when they graduate.
The article comes as The Institute for Fiscal Studies published research which suggests that British graduates face the highest student debt in the developed world, raising questions over whether the student loan system is broken. The research found that over three-quarters of university leavers would never pay off their loans, even if they were still contributing into their 50s.
It states that there is a lack of transparency for graduates today, who don’t know how much universities receive and how much they will have to pay.
Mike states that: “Neither the government nor the student knows what the actual cost will be for 30 years.”
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He also adds that the costs for students are difficult to assess. “The [tuition] fee itself and the compound interest that is racked up are fairly notional given that the figure which really matters is 9 per cent of their earnings over £21,000.”
He concludes that there could be an alternative option – to reduce tuition fees to about £6,000 or £7,000. “This would allow some richer universities to work with banks to offer their own top-up financing if they want to charge more. I can imagine, for instance, a ‘Russell Group loan fund.”