Cut student loan burden, says architect of £9,000 fees

STUDENT loan repayment fees must be reduced because they are unfair, the architect of the system is to tell the Government.

David Willetts, the former universities minister who orchestrated raising tuition fees to £9,000 per year, will urge a government review of the system to end the three per cent-aboveinflation interest rate on repayments.

Dropping the charge, which adds around £3,000 to student debts on graduation and an additional £13,000 on average by the age of 40, would cost the Government £1.3billion.

Lord Willetts, now a Tory peer and the chief executive of the Resolution Foundation think-tank, told The Sunday Times: “For the greater good of preserving a viable graduate repayment system that is politically acceptable, the extra three per cent on the interest rate should be dropped. It was done to collect more money from affluent graduates but there are limits to that.”

Lord Willetts’s comments have called into question the viability of a system that burdens students with tens of thousands of pounds worth of debt, a large proportion of which is never expected to be paid back.

In an interview with The Sunday Telegraph last month, he called the rate the “main pressure point” and admitted that he never “envisaged” inflation would hit three per cent when devising the mechanism used to calculate the interest rate applied to student debt.

Students are charged interest based on the Retail Price Index plus three per cent. The rate is currently 6.1 per cent.