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Maintenance Grants Cut: Students Debt To Increase


Maintenance grant cuts will mean that the poorest university students will see their average debt rise from £40,500 to £53,000, according to the Institute for Fiscal Studies (IFS).

The government recently announced that they will be scrapping maintenance grants, which are currently paid to the poorest students who attend university.

Currently, around half a million students a year receive a maintenance grant. However, these are set to be replaced with a loan which they will be expected to pay back along side their tuition fee loans.

It has been estimated by the IFS that this will save the taxpayer around £2bn a year in the short run. However, it is estimated that only a quarter of the additional loans will ever be repaid, meaning that the long-term saving to the taxpayer would only be around £270m a year.

Sally Hunt, university and college general secretary claimed the scrapping of grants was a “tax on aspiration” and said that it exposes the government for “not being on the side of striders”.

These criticisms were dismissed by the Department of Business, Innovation and Skills by stating: “The changes announced in the Budget provide students with more money in their pockets to help with living costs while studying.

"Lifting the cap on student numbers also means that more people will be able to benefit from higher education than ever before."

Earnings threshold freeze?

Chancellor George Osborne is in the process of consulting on how much a graduate’s salary must be before they are expected to start paying back their loans.

Jack Britton, a research economist claimed that one of the biggest costs to students could be a potential freeze on the repayment threshold.

Mr Britton claimed that the freezing of the repayment threshold “will do more to raise loan repayments, and hence the cost of higher education”.

Currently, students do not have to make repayments on their loan until they are earning a minimum of £21,000, but is generally increased on an annual basis. If this threshold was to be frozen, then the IFS claim that loan repayments for the average student would increase by £3,800 per year.

Additionally, middle income students would be hit the hardest, as they would be expected to pay an extra £6,000 over the length of their loan.

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