House of Commons Library

Student loan statistics

Published Friday, July 20, 2018

Student loans are the main method of direct government support for higher education students. More than £13 billion is loaned to students each year, this is expected to grow rapidly and reach around £330 billion (2014-15 prices) by the middle of this century. The expansion of loans has raised questions about graduate repayments and ultimately the cost of the system to the taxpayer

Jump to full report >>

 

Review of Post-18 Education and Funding

On 19 February 2018, the Prime Minister announced  that there would be a “wide-ranging review into post-18 education” led by Philip Augar. The review is to look at how future students will contribute to the cost of their studies, including “the level, terms and duration of their contribution.” The Prime Minister discounted the idea of moving back to a fully taxpayer funded system. It is expected that the review will report in early 2019.

This paper will be updated with any relevant information or changes that come from the review process.

More detail on the review and associated briefing papers can be found on the page: Review of Post-18 Education and Funding

Student loans are the main method of direct government support for higher education students. Money is loaned to students at a subsidised rate to help towards their maintenance costs and to cover the cost of tuition fees.

Currently more than £16 billion is loaned to around one million students in England each year. The value of outstanding loans at the end of March 2018 reached £105 billion. The Government forecasts the value of outstanding loans to be around £450billion (2017‑18 prices) by the middle of this century. The average debt among the first major cohort of post-2012 students to become liable for repayment was £32,000. The Government expecys that 30% of current full-time undergraduates who take out loans will repay them in full.

 

In his summer Budget 2015 the Chancellor announced that maintenance grants would end for new students from 2016/17 and be replaced by loans. He also announced consultations on freezing the repayment threshold for five years, allowing some universities to increase fees in line with inflation from 2017 and a review of the discount rate applied to the accounting treatment of loans. These are the biggest changes to student finance since 2012. When fully implemented they will mean more money is loaned, both per student and overall, and increase the amount that is repaid by middle and lower earning graduates.

On 1 October 2017 the Prime Minister announced that there would be changes to the student finance system: the fee cap would be frozen at £9,250, the repayment threshold would rise to £25,000 and a there would be a review of the student finance system.

Graduates repay these loans to the government after their earnings exceed the threshold level. These loans are therefore private contributions towards the costs of higher education. The student loans system aims to ensure that upfront costs do not deter potential students. Graduates repay student loans and they generally have above average incomes. In the past the loans system has been criticised on a number of different grounds including not covering living costs, excluding part-time students, being too expensive, targeting its interest rate subsidy at higher earning graduates and putting off those who are concerned about graduating with large debts.

This note gives a background to student loans, statistics on their take-up, total value owed, repayment, public expenditure, arguments for reform and factors that affect take-up. It does not look in detail at the repayment system in England for new students from 2012/13 which is included in the note Changes to higher education funding and student support from 2012/13.

Commons Briefing papers SN01079

Author: Paul Bolton

Topics: Higher education, Loans, Students

Share this page