Student fees/loans good for the poorest graduates

The distributional aspects of the UK government's loans/fees package looks attractive
Tony Curzon Price
Tony Curzon Price
13 December 2010

This graph is taken from the IFS report on the education reforms.

The graph shows how much graduates will repay depending on their lifetime income levels. If you are not well off – in the poorest 20% of graduate incomes (which is higher than the poorest 20% of all incomes) – then you are paying back much less than under the current scheme which so many want a return to. If you are in the poorest 10% of graduates and you initially borrowed £25,000 for a 3-year course, you end up paying back just one fifth of that, £5,000. Under the current system, you would be paying back around £10,000 in the same circumstances.

Thinking just about loans and fees (and not EMA), I do not know what there isn't to like about the reforms from a distributional point of view compared to the current system. Peter Wilby has been onto this argument and it needs serious consideration.

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