The cost of writing off tuition fee loans
DfE accounts published last week show that post-2012 loan debt had a face value of £46bn at the end of March 2017.
Tuition fee loans make up about 2/3rds of that. So abolishing post-2012 tuition fee loan debt would create a one-off hit of roughly £30bn to capital expenditure in the national accounts.
In the financial year 2016/17, £8.1bn of undergraduate tuition fee loans were issued. We can expect the debt write-off figure to increase by something like that every year, depending on future tuition fee rises.
The Green Party manifesto pledges to write off all outstanding student loan debt. It estimates that this would mean foregoing £14billion in loan repaments over the course of the next parliament.
Unfortunately, serious consideration of this proposal has to sidestep the Greens’ own analysis, which is amateurish.
Firstly, the OBR figures cited by the Greens are for the whole of the UK, whereas HE is devolved issue and the UK government only has oversight of the English system. To measure the short-term cashflow impact on the national finances of abolishing English student loan debt (also includes tuition fee loans made to EU nationals studying at English universities) you need to subtract roughly £0.3bn per year to exclude the repayments being made by students from the rest of the UK. This brings the short-term cashflow figure down to about £13bn.
Secondly, you have to ignore the fact that they are…
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