Nobody in government can see around the corner on student finance

Conservative leader Kemi Badenoch had a go – four of her six allotted questions were on the Plan 2 student loans issue and her plan to cut interest.

But the closest that PM Keir Starmer came to answering was as follows:

I’m glad to learn that the leader of the opposition has finally admitted that they scammed the country on this and that applies to everything they did in government.

We inherited their broken student loans system. We’ve already introduced maintenance grants to improve the situation which they scrapped, and we will look at ways to make it fairer, and we will do other things within the economy to help students.

Obviously when he said “introduced” he meant “announced, and they’re two and a half years away”, and failed to mention both their miserly rate and restricted coverage. And as for the thing on helping students:

What other things they say? On the news this morning, energy bills coming down by £117 pounds for millions of families and young people struggling. That’s guaranteed money off bills in April driven by the action that this labour government has taken. We promised to cut the cost of living.

Most students in rented accommodation won’t see a penny of that – they’re on all-inclusive bills, so as we saw during the pandemic, their landlord will pocket that. The same landlord that’s likely to be in the process of jacking up their rent to cover perceived risks posed by the Renter’s Rights Bill.

Clip show

Earlier in Westminster Hall, Jas Athwal (Lab, Ilford South) had secured a debate on student loans, and there were plenty of MPs present to get their clips for Instagram.

Athwal opened with a straightforward description of the growing debt problem:

The IFS calculations themselves suggest that a graduate would need to earn £63,000 a year just to keep a £50,000 loan from growing. That is an astronomical figure just to stop the interest from growing.

Peter Prinsley (Lab, Bury St Edmunds and Stowmarket) was concerned about intergenerational inequality:

This debate is about aspiration, which simply cannot compete with compound interest. It’s about whether young people begin adult life with opportunity or with decades of liability.

Tim Roca (Lab, Macclesfield) raised issues of the system’s costs and the squeezed middle:

England now has the most expensive public university system in the world. The IFS shows that those in the middle earnings distribution repay the highest share of their lifetime earnings.

Natasha Irons (Lab, Croydon East) led with the Martin Lewis line:

Changing terms of a repayment after a contract has been agreed is fundamentally wrong.

And Rebecca Long-Bailey (Lab, Salford) had a run at free education:

The marketisation of higher education has failed. We should abolish tuition fees and replace them with a sustainable, publicly funded model that provides long-term stability for institutions and genuine opportunity for students, regardless of background.

Labour‘s backbenches can’t seem to work out which of the levers it would want the Treasury to pull to deliver fairness, so it was the Lib Dems that had the most interesting and coherent contribution.

Pull the other one

Ian Sollom (St Neots and Mid Cambridgeshire) is their spokesperson for Universities and Skills, and broadened the debate out to maintenance:

The abolition of maintenance grants after the coalition ended in 2015 loaded the highest debt onto the students least able to bear it. Those from the poorest backgrounds now graduate with significantly more debt, not from their fees, but from the additional maintenance borrowing.

He was also alarmed at the Tories’ proposal to cut 100k places – and may just have been reading his Wonkhe Monday:

The graduate earnings premium has declined in Britain, not because we have too many graduates, but because we have too few skilled jobs. Many of our peers in the OECD have expanded graduate numbers while seeing the earnings premium maintained or even rising. Cutting student numbers accepts that failure as permanent. It is a council of despair.

No fiddling for Sollom – a proper review is required:

What graduates have experienced is not a coherent system operating as originally designed. It is a set of rules that keeps getting rewritten by whoever needs to balance the books that year. That is a core injustice.

The Conservatives had sent along Jack Rankin, MP for Windsor – a first-term MP who studied maths and physics at Warwick and worked as an energy consultant before entering Parliament.

His first big point was the morality of retrospective rule changes – which was a bit rich given his party’s record:

I do think it’s unfair to change the rules post the fact on students who entered loans in good faith when they were 18. And I think there’s lots of graduates who view the government doing this as behaviour of a loan shark, rather than what they would want to see from government.

He went on to argue that the measures announced by the chancellor in the autumn budget were “the most punitive yet” – but given his boss’s “new deal for young people” doesn’t include getting rid of said freeze in the repayment threshold, he looked a little more robotic when it came to reading out what he’d been given by CCHQ:

University isn’t for everyone, and nor should it be, and one of the best ways to escape this debt pile in the first place is to avoid it.

Straw man

Former Edinburgh University Students’ Association president Josh MacAlister has become the DfE short straw holder, and replied for the government.

After some pleasantries about not putting people off, his first gambit was a “decade of freezes” to the threshold:

The threshold for repayment was only £21,000. Having said they would increase the threshold, Conservatives and Liberal Democrats then froze it. They froze it in 2012, its first year. They froze it in 2013, they froze it in 2014, they froze it in 2015… In total, it was a decade’s worth of freezes from parties who designed the very model they now stand here criticising. There is one phrase for this, and it is crocodile tears.

If we ignore the moment when Theresa May actually increased the threshold, it’s not immediately clear who thought it would be a good idea to condemn the opposition for doing something that his own Chancellor has just done again. Inevitable interventions ensued.

He also trumpeted some improvements:

From January 2027, the Lifelong Learning Entitlement will enable learners to use student loans more flexibly than ever before.

As I’ve discussed extensively on the site, the reality is anything but. Politics is about choices, MPs were told:

Just this week, we have announced generational changes to the Special Educational Needs system. Just today, the government are announcing major changes to ensure that people can see timely justice in the courts… investing in free childcare, freezing rail fares…

It was a tough enough sell in 1997, 2003 and 2010 when the idea was that more fees would fund an expansion of university places. The idea that retrospectively changed terms on private loans are now being used to fund a range of other public goods is, I would tentatively suggest, a bloody cheek.

And to support students from the most disadvantaged backgrounds, we are future-proofing our maintenance loan offer with loans for living costs increasing in line with forecast inflation every academic year.

Again as I’ve discussed extensively on the site, raising living costs support by inflation isn’t in real terms… raising it. And anyway, they’re only raising the max – with the parental contribution threshold stuck at £25,000, the entitlement gets worse each year, not better, and HMT will have more of those loans back via the threshold freeze.

This government recognises the strength of feeling on the student loan system, particularly Plan Two, and we will always look at issues that are important to the public. We will continue to keep this system under review.

Round the corner

Maybe a plaster or two will emerge, maybe not. Last night the always reliable Will Hazell (from i News) reported that the Treasury and the Department for Education (DfE) are “holding talks”, with one source telling him that officials are:

…beavering away trying to work out if there is a different combination of the interest rate and the threshold level that makes increasingly influential young graduates stop shouting at them.

Although given the briefings, you don’t get a sense that they’re going well:

The Treasury is trying to foist this on to the DfE as a DfE problem. It’s a Treasury problem of the Treasury’s own making.

If a sticking plaster is found, the wild idea is the idea that that plaster will hold until 2029. Whatever happens in Gorton and Denton on Thursday, the Greens are going to do well. A never ending parade of Plan 2 graduates are going to pop up between now and 2029 – the idea that Labour’s haemorrhaging left flank will run back while the Tories mop up those who think too many go to university seems like a very dangerous gamble indeed.

And just wait until someone notices that parents with two kids at university on £60k between them are about to lose £2,580 a year in maintenance support! It’s as if nobody in government can see around a corner.