Balfor Recruitment Group explores the impact the Student Finance reforms will have on the UK Education sector.
The 2019 Augar Review of post-16 education states that the student loan interest rate will leap from 4.5% to 12% this academic year.
This is the highest jump in interest rates since 2012 when the government increased university tuition fees to £9,000.
Many worry this will deter disadvantaged students from applying to university, as higher interest rates would hit this group hardest.
Recent research by the Institute for Fiscal Studies (IFS) has found that poorer students would be affected most by paying £30,000 more than current graduates.
Another change to student finance would be the repayments spread across 40 years, rather than 30.
However, this change would only benefit graduates in the highest income brackets – as they would be able to pay off the loans quicker.
As well as this, the government are imposing a new requirement that undergraduates must pass their GCSE English and maths to qualify for a student loan.
This alteration has caused quite the controversy amongst the public, as this would mainly affect students from disadvantaged backgrounds or that are in ethnic minorities.
However, there are opposing views as to how much these changes will affect students from actually applying to university.
The Vice-Chancellor of Sheffield Hallam University, Chris Husbands, explains: “The first view is that none of this will have any impact… View number two is this will affect families in places like East Barnsley [reinforcing historically low rates of participation]”.
Some worry that the growing interest rates will lead back to the university established in the 1950s, predominantly consisting of middle-class people.
In March 2023, a cap will be put on the interest rate, only benefiting students beginning their degree that year.
Hillary Gyebi-Ababio, from the National Union of Students, described the current situation as “brutal” for students.
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