UK: Will Students’ Loans Be Replaced by Graduate Tax?

The former Education Secretary, Nicky Morgan, has been appointed to lead an inquiry into the rising costs of the students’ loans in England, and its possible replacement by a graduate tax. An investigation will be launched into the system of student loans by The House of Commons' Treasury select committee which is chaired by Morgan.

This inquiry rose to the surface after the Prime Minister's announcements about the changes to funding and repayments for undergraduates in England. Morgan said that: "Student loan debt is projected to be around £160bn within six years, and the government has announced that it will review the whole student finance system. The committee will scrutinise the current system and any future developments closely."

The committee will examine the possibility of a graduate tax to replace the loans system, as the government plans to sell its stock of student loans. A major political debate has recently started discussing the students' loans issue due to its rising levels of debt carried by graduates after leaving university. The impact of graduate debt on the public finances will also be considered by the committee, and the Institute of Fiscal Studies FSI determined that more than three-quarters of graduates will fail to pay their loans.

“Student loan debt is projected to be around £160bn within six years,” Mrs Morgan said on Saturday. “The committee will scrutinise the current system and any future developments closely.”