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Student Debt in England Exceeds £200 billion for the First Time on Record

The non-departmental public body that provides UK students with funding towards their university education has declared that the balance of government-backed loans for students in England has reached £205 billion.

As the Guardian reported, this level of debt has been reached twenty years earlier than previous government forecasts, as the number of young people choosing to pursue undergraduate and postgraduate study ‘continues to outstrip expectations.’ Present government forecasts, which have been cited by the House of Commons Library in their analysis of the alterations in university funding over the last thirty years, state that the total level of student debt in England will reach £460 billion by the mid-2040s.

As well as the continued swelling of the number of students opting for a university education after finishing their A-Levels, the COVID-19 pandemic encouraged many undergraduate students to undertake postgraduate study amidst a stultified graduate jobs market alongside a total economic shut down as central and local governments attempted to halt the spread of the disease through the implementation of total and partial lockdowns.

However, the main reason for the ballooning increase in student debt over the last decade is a result of the Coalition government’s decision to increase the cap on annual domestic undergraduate student tuition fees from £3,600 to £9,000 in the 2012-2013 academic year. The cap was raised again to £9,250 in 2017. The Student Loans Company now estimates that the average graduate in England owes approximately £45,000 in student debt.

The devolved nature of governance in the United Kingdom has allowed for the burden of higher education finance to be unevenly carried amongst citizens. In Scotland, citizen students do not pay a penny towards tuition fees and averagely have £15,400 to pay back after graduating. In Northern Ireland, the average student pays £24,500, and in Wales, the figure is £35,500.

Divided union

One of the motivations behind lifting the cap on tuition fees was to bring about the process of marketisation within higher education institutions. Coupled with the cap lifting was a desecration of government funding for undergraduate teaching, placing greater financial responsibility on the individual that pursued higher education. According to openDemocracy, the ‘idea was that the “top” course would charge the max, while “lesser” institutions would compete with lower fees.’ This situation did not materialise. Almost every course at every institution increased their fees to the highest rate and did so again in 2017.

The UK government also abolished the cap on the number of students that universities could accept. This led to significant fluctuations in enrolment numbers each academic year, forcing universities to employ teaching staff through precarious contracts that could allow for academics to be ‘laid off’ if course numbers remained unfilled, or rapidly hired if student numbers increased. Academic pay has fallen twenty-five percent in real terms since 2010 and has been the motive for many of the strikes that have caused chaos for both the institutions and the students over the past decade.

University strikes

The UK government has also decided that, from 2024-2025, undergraduate students will begin repaying their student loans when they earn £25,000 per year, rather than the current threshold of £27,295. Their loans will also not be written off by the UK government after the current thirty-year period. New undergraduates will have theirs written off after forty years.

It is expected that these recent changes will save the UK government tens of billions of pounds. However, many individuals that work in the higher education sector have expressed that the current funding model for institutions is ‘broken’ as universities increasingly depend on international students. The domestic fee cap will remain unchanged for a further two years, meaning that the current £9,250 tuition fee cap is now worth approximately £6,500 after adjusting for inflation. State funding has also been slashed since the 2008 Great Recession. In 2009-2010, the UK government invested £13 billion into the higher education sector. In 2022, it invested less than £5 billion. Moreover, as a result of Brexit, many world-class universities will miss out on key research funding. Oxford and Cambridge were once given over £130 million in European research funding programmes per year. They will now receive £1 million between them each year.

This has major implications for the way in which the UK’s higher education institutions can conduct research and attract students from around the world. The number of EU students coming to the UK to study has halved since Brexit, and ‘fewer European lecturers are applying for jobs’ at UK universities. Furthermore, the UK spends just 0.5 percent of its Gross Domestic Product on higher education, significantly lower than India, Canada, France, Germany, Holland, Turkey, the USA, and the Nordic states. English universities are significantly more reliant on private funding compared to any other wealthy country.

The leader of the Labour Party, Keir Starmer, has declared that there are ‘no easy options’ with regards to student loans and higher education funding. Those demanding change to the current situation have advocated for the return of maintenance grants for either the most financially strapped or to encourage individuals to undertake courses that will lead to the reduction in particular domestic labour shortages in industries such as teaching and nursing. The shadow education secretary, Bridget Phillipson, is determined to overhaul the proposed Tory changes for new graduates in 2024-2025. She mirrored the opinion of those that believed the system was ‘broken’, however stopped short of committing to completely scrapping tuition fees. Tuition fees were first introduced by the New Labour government in 1998.

Bridget Phillipson

A Labour government in 2024 would reverse the proposed Conservative changes to the funding system. They have accused the government of ‘hammering the next generation of nurses, teachers, and social workers.’ As the rising number of graduates continues to battle in an ever-competitive job market, another domestic fee increase could be politically unpopular amidst a cost-of-living crisis and rising inflation. It may also contribute to another government forecast on student debt levels being reached earlier than anticipated.  

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