A centre-right think tank has announced that scrapping student loan interest and extending the time on paying it back will avoid a future debt crisis.
The report published by UK2020 has argued that the move would leave graduates better off – even though they will have to continue paying off debts until retirement.
Established by former Conservative minister Owen Paterson, UK2020 is reviewing the student finance system and believe that increasing the payback limit would save billions of pounds of taxpayers money.
The new report states that student loan interest, currently around six percent, should be scrapped. This will not only reduce the amount of debt paid by students by ten percent but will also increase the number of loans recovered.
“It has become increasingly clear that the university merry-go-round of cartel fees and ever-increasing vice-chancellors’ pay is doomed,” said Lord Adonis, ex-Labour minister who backs the think-tank.
“For too long universities have had free rein to grab as much as they can from students, graduates and the taxpayer with precious little regard for the value they provide.”
Paterson said: “The country needs to fund superb universities that are fit to take on the global competition in the decades ahead.
“This has to be achieved in a way that works for the whole of society.”
UK2020’s last report, published last month, accused the government of running a “cartel”. They said they had failed to run enough two-year degrees that could cut graduate debt.
A government spokesperson said: “Sustainable university funding and student finance are a priority in delivering this government’s objectives on higher education.
“As the PM made clear in her conference speech earlier this month, we are reviewing the system and will be setting out further steps to ensure it remains fair and effective in due course.”
In other news, last week Theresa May rejected plans to increase university fees.