Universities must pay ‘Mickey Mouse’ loans

UNIVERSITIES should pick up the bill for unpaid loans of students who take “Mickey Mouse” degrees, a think tank has said.

A report by the Centre for Policy Studies (CPS) said that universities would be less willing to offer courses that add little value to their undergraduates’ earning potential if they were forced to accept liability when students default.

Students in the UK leave university with £45,000 of debt on average, but many never repay their loans because they do not earn enough in later life.

Under the present system, loans are written off after 25 years, with the Treasury losing 54 per cent of money lent to students, or £8billion per year.

The CPS’S report recommends that student loans are routed through universities, with institutions borrowing from the Treasury to lend to their students.

The Government could agree a proportion of the loan it expected universities to pay back, with the total students could be charged capped by law.

The system would mean that universities would be liable for their former students’ unpaid debts, which the think tank says would incentivise them to only offer high-value courses.

The CPS’S research suggests that creative arts courses offer no financial benefit to female students,

and harm the earning potential of men who take them.

On average, a student who takes that course receives an effective subsidy of £37,000 from the taxpayer.

The average engineering student “receives” £11,000.

The independent think tank the Institute for Fiscal Studies estimates that 20 per cent of undergraduates will be financially worse off as a result of going to university.