An analysis from the Intergenerational Foundation has raised concerns about the financial burden placed on young people pursuing higher education in England. The report, authored by Toby Whelton, examines how successive governments have shifted the costs of university education almost entirely onto students, with particular focus on the current loan repayment plan that took effect in August 2023.
According to the analysis, today’s graduates face substantially higher lifetime repayment obligations compared to previous cohorts. Average earners under the current plan are estimated to repay £56,240 over their lifetimes, compared with £25,700 under the earlier scheme. For lower earners, expected repayments have increased even more dramatically, rising from £6,430 to £42,070 when expressed in current prices. The report also highlights that graduates face effective tax rates exceeding 50% at higher income brackets, described as historically unprecedented and disproportionate.
The analysis documents how the government’s financial contribution to higher education has diminished significantly over the past decade. In 2015-16, the government’s contribution represented 46% of the total cost of a graduate’s education. Currently, that figure has dropped to just 8%, with the remainder falling on individual students. This represents a fundamental shift from what was originally conceived as a cost-sharing arrangement between the individual and the state.
The Intergenerational Foundation has proposed reducing the student loan repayment rate from 9% to 5% for both current and previous loan plan holders as a means of restoring more equitable cost distribution. This recommendation comes as education officials have indicated that reviewing the student loans system is a priority, with the Treasury select committee also calling for changes to the freeze on loan repayment thresholds. A Department for Education spokesperson acknowledged the system requires improvement and stated the government is considering responses to recent scrutiny.
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