University Student Finance

Lord Willetts Excerpts

Tuesday 30th June 2026 Lords Chamber

[Baroness Smith of Malvern (Lab)]

Of course, the income-contingent nature of student loan repayments means that those on lower incomes are protected. They have been further protected by this Government’s raising of the threshold two years in a row. The fact that 30% of student loans will never be repaid and will be subsidised by the Government is a legitimate subsidy for students undertaking higher education and an investment in our higher education system and in the future of those who go to university.

[Lord Willetts (Con)]

My Lords, the Minister rightly referred to the recent IFS report showing that on average graduates will earn £100,000 more than if they had not gone to university. That is why a graduate repayment scheme is fair. Can I invite her to place in the Library of the House of Lords an updated version of the note produced by the Blair Government explaining why a graduate tax was unworkable and unfair?

[Baroness Smith of Malvern (Lab)]

I am not sure that I am going to turn the attention of the department to doing that, but I have outlined some of the reasons why I do not think that a graduate tax is the magic bullet that some people believe it might be. Notwithstanding that, I understand the concerns of graduates, in particular those who are repaying plan 2 loans, which is why this Government have already taken action to make them fairer, and we will continue to look at ways to ensure that higher education institutions, students and graduates get a fair deal out of higher education.