Analysis shows there will be less social mobility and nearly two-thirds of graduates will pay more for their degrees
The "triple whammy" of higher fees, real interest rates for loans and a longer period before the debt is written off is likely to represent a bad deal for taxpayers, argues million+, a university lobby group. The changes will leave between 60% and 65% of graduates worse off, with middle-income earners hit the hardest, it says.
Allowing universities to charge fees of up to £9,000 a year, with a basic threshold of £6,000, will result in many women ending up in debt for most of their working lives, while pupils from poor families will be put off applying, and mature students may also be deterred, it says.
A male primary school teacher from a middle-income home could find himself between £15,000 and £25,000 worse off than today, the analysis found. On average, graduates will be approximately £5,000 worse off, the thinktank argues, based on economic modelling carried out by international consultancy London Economics.
Million+, which represents 28 former polytechnics, said the findings discredited the coalition's insistence that the moves were progressive and would boost social mobility.
The report points out that, although ministers will raise the amount graduates must be earning before they start repaying loans – from £15,000 to £21,000 – the higher figure refers to earnings in 2015-16, when it will be worth less than in today's money.
And it claims that the changes – which will also see state funding for university teaching cut by 80% by 2014-15 – will leave taxpayers worse off because the government will have to borrow more to fund higher loans and pick up a bigger bill for debts that are written off after 30 years. Write-off costs are likely to rise from 27.5p in the pound to at least 36p, it estimates.
"It is difficult to see how the proposals provide a long-term, sustainable framework for the funding of higher education and universities in England," the report says.
It also accuses the government of using simplistic measures to define social mobility, such as the number of students on free school meals who go to Oxford, rather than assessing whether a having degree helps those from deprived backgrounds get better jobs.
An Ipsos Mori poll last week found that fees of £6,000 a year – the coalition's proposed basic threshold from 2012 – will lead to a dramatic fall in the number of students from disadvantaged families going to university.
"There is undoubtedly a real risk that participation in higher education and, in particular, participation by those from lower socio-economic groups and mature students will be undermined," the million+ report says.
Professor Les Ebdon, who chaired the group, said the findings showed there were "no real winners" from the proposals.
"Even where graduates benefit from making lower monthly repayments than at present, many more of them will never repay their loans," said Pam Tatlow, the chief executive of million+.
"The 25% of students who enter university in their 20s and as mature students are particularly adversely affected. A women entering employment as a primary school teacher at the age of 30 would … never repay and would still have outstanding debts of more than £21,000 at the end of the 30-year write-off period."
Dr Gavan Conlon, of London Economics, said: "There has been a very narrow focus on the loan system when considering progressiveness. What matters to students and their families is the total cost associated with participation in higher education."
Aaron Porter, the president of the NUS, said: "Rather than seeking to steamroller proposals through parliament without proper scrutiny, ministers should rethink this reckless approach and tackle the number of serious questions that require answers."
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