Here’s part of what Martin Lewis, the Money Saving Expert, said on the BBC’s World at One today:
This is the worse type of politics for me. It is the politics that may appeal to people on the surface but it is financially illiterate…If any other party was launching a policy that effectively meant that poorer students would be subsidising city investment banking graduates, which is what this does, there would be protests in the streets and it would be led by the Labour party. I simply don’t understand how they’ve launched this.
Let’s look at this very simply. It’s not the amount that you borrow for university that counts, it’s how much you have to repay. You repay 9% of everything earnt above £21,000 and you do that for 30 years. So, as your previous guest said, most people will not repay in full over 30 years their £6,000 tuition loan and the maintenance loan they get on top. In fact, I’ve done calculations that it will only be graduates on starting salaries of £35,000 a year and we assume that goes up ahead of inflation year after year. That’s why I say city investment bankers, city accountants and city lawyers are the people who will gain from this policy. But to do that universities will be able to give less bursaries for poorer students.
…but the whole concept here of cutting tuition fees is a populist focus group policy that does not benefit the people that the public thinks it does and the sooner we stop calling these things student loans and start calling them what they really are, which is a graduate contribution which only the successful financially actually pay back, the less people will be scared off going to university and the more we can have a constructive discussion about it. And Labour has deliberately, I believe, fallen into the trap of going with the didactic that this is a debt, and all their language is about talking about a debt, when what really counts is how much you repay afterwards and all sides of the political spectrum need to change on this.
Here’s the full audio of what Mr Lewis said on the programme:
Featured article image by the Cabinet Office