‘We must lower debt burden of students to save the system’
LORD WILLETTS, the architect of the trebling of tuition fees, is no stranger to facing down fierce opposition. But in recent months the former universities minister has unexpectedly found his landmark reforms to higher education at risk of unravelling.
With Jeremy Corbyn riding high on the hopes of a younger generation determined to see Labour dismantle tuition fees, Theresa May has been forced to revisit an area of Conservative policy that, until six months ago, seemed set in stone.
For Lord Willetts, now a Tory peer heading up a social mobility think tank, this has prompted self-reflection. Speaking to The Sunday Telegraph he reveals that while he remains a committed advocate of tuition fees, he feels it is time to be “flexible” with the small print.
He believes that the interest applied to student debt – based on the Retail Price Index (RPI) plus 3 per cent and currently stands at 6.1 per cent – must be lowered to prevent the system from going under.
Speaking ahead of the release of his new book, A University Education, Lord Willetts admits that he never “envisaged” inflation would hit 3 per cent when devising the mechanism used to calculate the interest rate.
“The calculation was put in to reclaim more money from affluent graduates,” Lord Willetts says, at the Resolution Foundation HQ, of which he is now chief executive. “But it is now the main pressure point. We didn’t envisage that the RPI would be up at 3 per cent. [I would] now look at interest rates and at bringing back maintenance grants.”
Research by the Sutton Trust also revealed that with the average student graduating with £50,000 of debt, 72 per cent will never pay back their loans, increasing to 81 per cent if the repayment threshold is raised.
As concerned as he is by Labour’s surge in the polls, Lord Willetts is apprehensive about proposals being floated by his own party.
They include the plans to raise the salary threshold on which graduates begin making repayments from £21,000 to £25,000 and a review into whether to slash fees.
“My view is that we should not be following Corbyn,” he adds. “We should not be leaving universities under-funded through an expensive programme of relief for affluent graduates. Raising the threshold means that during their working lives fewer students will pay back what is owed. You can be infinitely flexible about the detail, what you cannot do is disrupt the system.”
“Because the biggest losers, if they go down that route [of cutting fees], will be students. We will be back to the days of rationing places, we’d soon find that the resource to pay was falling again, and everyone else would lose out.”
One of Lord Willetts’s biggest frustrations has been the Government’s inability to counter Labour’s “absurd” spending pledges by directing public attention to the “real causes” of intergenerational unfairness: an acute housing shortage and stagnant wages.
“It’s a pity,” he says, adding that as an MP he did not deal with a “single surgery case” in which a graduate complained they could not afford their repayments.
“If we had housing costs the same as they were when I left university, I don’t think the graduate repayment scheme would be courting anywhere near the amount of controversy it is today.
“The real problem is that young people’s wages are no better than they were 10 years ago … and so young people’s living standards are far below those 20 years ago.
“The anxiety around [fees] only make sense when you see the much deeper societal pressures facing young people today.”
Lord Willetts remains a highly respected figure in higher education; he is a visiting fellow of King’s College London as well as Nuffield College, Oxford, and a board member of the IFS. Two years on from leaving Government, his new book charts the rise of the modern university and is filled with bold ideas.
A University Education by Lord Willetts is available to order now from Oxford University Press.