Student Loans

Lord Hunt of Kings Heath Excerpts

Wednesday 13th December 2017 Lords Chamber

Asked by

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government what is their estimate of the number and percentage of students who will pay back their student loans in full.

[Viscount Younger of Leckie (Con)]

My Lords, the Government estimate that, following the increase from £21,000 to £25,000 in the repayment threshold that applies to post-2012 student loans, 30% to 35% of borrowers with higher education loans and 40% to 45% of borrowers with advanced learner loans will repay their student loans in full. Of those starting courses in 2016-17, that would equate to 135,000 to 160,000 borrowers with higher education loans and 35,000 to 45,000 borrowers with advanced learner loans fully repaying their loans during their 30-year repayment period.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to the Minister. What he said was that the majority of students will never repay their loans in full. We also know that up to 45% of the total loan outlay will never be paid. The poorer students end up with the biggest debt. Last week, the National Audit Office said that two-thirds of students consider that universities do not provide value for money and that proper independent advice is not available to them when they make these decisions, which have such a large financial consequence for them. How can we have confidence in the forthcoming review when the Government resolutely and so determinedly defend the present wretched system? Will the Minister accept that the current system is failing and that we need a new system that is fair to students?

[Viscount Younger of Leckie]

The noble Lord raises a number of points, but we believe that the student loan system is working well. There is always room for improvement. We believe that students do get good advice before they take on loans; indeed, they have to sign some papers for that.

On some of the noble Lord’s more major points, we are very keen to pursue the value-for-money approach, and Jo Johnson in the other place has made it clear that universities must provide value for money for students. The House knows that the whole graduate student payment system is designed with a deliberate subsidy in place, and we are on track with a complicated formula to achieve that.