Professor Ron Johnston of the School of Geographical Sciences found that graduates with high starting incomes will repay their loans fairly quickly, at relatively low cost.  But those who start on relatively low post-graduation incomes will not only be repaying their loans for most, if not all, of the 30 years before they are written-off but will also pay back much more in total than their contemporaries with higher incomes.

Professor Johnston said: "Those who benefit most, in higher salaries, from the state lending them money to fund their university education will pay back less than those whose returns are less substantial.  This seems both counter-intuitive and inequitable – most welfare state systems are based on the principle that those who gain most from the state’s largesse should repay more: from each according to his ability, to each according to his needs.  The Government's system will protect the poorly-paid; those with high incomes will soon clear their debts; and the losers will be those in the 'squeezed middle'."

Using a repayments calculator on the Government website, Professor Johnston compared how much graduates would repay depending on their starting income, plus assumed changes over subsequent years in income, the rate of inflation, and the interest rate to be charged (that apply to all graduates whatever their starting salaries).  He found that the more graduates earn from the start of their career onwards the less they pay back, and the sooner they clear their debt.   

For a graduate who borrowed £27,000 to cover the fees for a three-year degree commencing in 2012, the figures were:

£25,000 starting salary; total to repay £57,526 over 17 years, 8 months;

£30,000 starting salary; total to repay £50,943 over 13 years, 9 months;

£35,000 starting salary; total to repay £47,012 over 11 years, 4 months.

Taking out a maintenance loan as well increases the amount to be repaid very substantially, especially for those who start on relatively low incomes.  For a graduate who borrowed £50,025 for fees and maintenance, the figures were: 

£25,000 starting salary; total to repay £159,899 with £26,664 outstanding after 30 years;

£30,000 starting salary; total to repay £135,914 over 23 years, 9 months;

£35,000 starting salary; total to repay £115,807 over 19 years, 1 month.

Professor Johnston said: "Women graduates on average start on lower salaries in most professions and so will be making repayments for longer (they are more likely than males to be still in debt when the 30 year maximum period is up), and could well pay back more depending on their chosen occupation – with the same degrees as their male contemporaries!"

For example, in banking, finance and insurance – the sector with one of the highest starting salaries – a woman graduate borrowing £43,500 with the average starting salary of £22,500 will pay back £131,416 (and still owe £31,796 after 30 years) whereas a male colleague starting on an average of £29,000 will only pay back £109,766 and be debt-free after 21 years and 10 months.

Professor Johnston said: "My analysis, based on the Government’s own data, provides strong evidence that the scheme is neither as progressive nor as fair as many of its proponents and initial supporters claim.  It is clear that a newer, fairer system is required."

Paper

'England’s new scheme for funding higher education through student fees: ‘fair and progressive’?' by Ron Johnston in The Political Quarterly