Let universities underwrite student loans to reduce burden on taxpayer

The Guardian is reporting that proposals to allow universities to underwrite student loans have been drawn up by civil servants as part of research into how to shift the burden away from the taxpayer as a result of some students being unable to repay their loans…

The plans were commissioned by David Willetts, who was universities minister until the recent cabinet reshuffle. He believes that universities should be allowed to buy up the debt and then be repaid by students who would, in theory, benefit from a supportive long-term relationship with third-level institutions.

While the idea is that universities could make money if graduates earn more than expected, it is also controversial, not least because of fears that universities might expect to be allowed to raise the £9,000 cap on fees in exchange for taking responsibility for some of the risk of recouping loans.

There are also concerns that raising the importance of students’ future earnings could mean there would be fewer incentives to offer courses that do not lead to high earnings, such as those in the humanities and social services.

Advocates of the idea suggest however that students would benefit from a long-term relationship with universities, who would have an interest in providing retraining and further career support. The BBC’s Newsnight reported that at least half a dozen universities had expressed support for the proposals.

Willetts told the programme: “The main point of the idea is to give universities a stronger incentive to focus on the jobs and the earnings prospects of their graduates and to keep the graduate and the university in contact with each other…

A spokesperson for the Department for Business, Innovation and Skillssaid: “The department regularly conducts research in order to explore the viability of policy suggestions and these play an important role in informing ministers and shaping policy.

“David Willetts commissioned this research when he was the universities and science minister and it does not represent government policy.”…

More at: Let universities underwrite student loans to reduce burden on taxpayer


Do you see any merit in the ideas suggested in this report? Would there be a potential win-win situation for both students and universities if the loan arrangement was between them rather than between students and the government? Please let us know what you think in the comments or via Twitter…

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Categories: Higher Education.


  1. garrodt

    SchoolsImprove No ! No ! It’ll put up prices & eventually close the minor Unis.Will someone put Tory Moron Willitts out of his misery.

  2. SallyHoward3

    Bad news. It’s time we made Universities state their core purpose. Is it education or training?! Is it long term gains through the ‘creation’ of creative critical thinkers for an unknown future or a quick tip journey to a ‘job’.
    No please no!

  3. andylutwyche

    SchoolsImprove The student loan system will always lose money, so not sure how universities will benefit

  4. jess_madge

    JonathanPSadler SchoolsImprove Might make universities at least think about employability of graduates. Don’t have to be HIGH earners.

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