High inflation, tax rises, and lower maintenance loans to hit students

University students in England are being targeted by stealth cuts and tax rises by a government that is using high inflation to “tighten the financial screws”, according to the Institute for Fiscal Studies (IFS). 

In their report, the IFS highlight that a combination of raising taxes for graduates and decreasing maintenance loans would allow the government to reclaim nearly £2.3 billion. 

The thinktank believes that the parental earning threshold being capped at £25,000 instead of increasing to £34,000 means that many students will not receive the full maintenance loan that they are entitled to. 

The figure by which the level of maintenance loans will be increased currently stands at 2.3%, this fails to meet both the current level of inflation as well as the predicted levels in the future, according to the IFS. 

The IFS also indicate that freezing the repayment threshold at £27,295 means that a graduate earning £30,000 will be obliged to pay £113 more towards their student loan than was originally agreed. 

Ben Waltmann, a senior research economist at the IFS stated: “The government seems determined to use high inflation as a cover for reducing the taxpayer cost of student loans. 

“Large real-term cuts in the maintenance loans could cause genuine hardship for students on tight budgets”, he added. 

A Department for Education (DfE) spokesperson commented: “The student loan system needs to be fairer for both students and the taxpayer. 

It is only fair to ask borrowers who are benefiting financially from their higher education to make a reasonable contribution towards its costs

– DfE Spokesperson

“With graduate salaries rising it is only fair to ask borrowers who are benefiting financially from their higher education to make a reasonable contribution towards its costs”. 

Labour’s Shadow Minister for Further Education and Universities, Matt Western, said: “The Conservative party’s cost of living crisis is hitting peoples’

pockets, yet the government’s response is to raise taxes on the working people”. 

The report comes amid growing uncertainty about the future of higher education funding as well as increasing costs of living resulting in many of the poorest students facing financial hardship. 

Meanwhile, a different report published on the same day signalled that the gap between wealthier and poorer students’ GCSE grades has failed to improve over the past 10 years.