The student loan system has come under fire from peers after findings show male nurses and midwives will pay back up to £19,000 more than high-earners.
The House of Lords economic affairs committee say that the interest rates on student loans should be cut from the current 6% to 1.5% to prevent middle earners from paying back more.
According to figures from London Economics, male nurses and midwives will repay a total of £133,000 over their working life, which is far more than financiers, £127,000, and those in the legal profession, £114,000.
‘The way we expect students to access higher and further education is deeply unfair. We must create a single system, including apprenticeships, that offers more choice and better value for money,’ said Lord Forsyth of Drumlean.
‘The accounting trickery attempted by the Government in 2012, in which the high rate of interest on student loans created the fiscal illusion that Government borrowing is lower than it actually is, has had a devastating effect on the treatment of students in England. It is unacceptable to expect future taxpayers to bear the brunt of funding today’s students.’
‘We recommend that the interest rate charged on post-2012 student loans should be reduced to the level of the ten-year gilt rate. This would mean reducing the interest rate from around about 6 per cent today, to 1.5 per cent. No student should incur interest while studying.’
The University of Cambridge also said that it was middle earners, such as nurses and midwives, ‘those who just about repay their loan over 30 years—who pay the brunt of the cost.’
While the figures were published last year, they remain a source for criticism as the committee is still calling for reform – as they warn that by 2044 the student loan deficit will have grown to over £1 trillion, creating a huge burden on taxpayers.
The report concluded that: ‘When the net present value of repayments is considered, the student loan system does not appear as progressive as its advocates have suggested—graduates who only just pay off the loan within the 30 years will pay far more in real terms than higher-earning graduates who pay the loan off sooner.’
‘It confirms what many of us working in the sector have known for some time – the current student funding model is simply not fit for purpose,’ said Emily Chapman, vice president of the National Union of Students.
A Department for Education spokesperson said: ‘We are undertaking a major review of post-18 education and funding, to make sure students are getting value for money and genuine choice between technical, vocational and academic routes.’
‘We will consider the report and will respond in full in due course.’