The estimated cost of government subsidy for full-time undergraduate students in England has remained the same for the second year running – with the public purse expected to be accountable for just over half of student loans taken out in 2020/21.
Figures published today (24 June) by the Department for Education show that the Resource Accounting and Budgeting (RAB) charge for full-time undergraduates this year is 53% – the same as it was in 2019/20. The figure in 2018/19 was 47% – but since then there have been “revisions to the data, economic assumptions, policies and modelling methodology used”, which might make direct comparison unreliable, an accompanying report said.
The RAB accounts for the proportion of student loans issued in a financial year that the government expects to write off. At present, undergraduates expect to have their loans cancelled 30 years after they first become eligible to repay them – any amount unpaid after that point is met by the taxpayer. Just 25% of students that started full-time degrees in 2020/21 are expected to repay their loans in full.
The figures also show that Whitehall forecasts the number of full-time undergraduates will grow by nearly 6%, from 406,000 in 2019/20 to 430,000 in 2025/26 – taking the value of annual student loans from £19.1 million to £22.1m by the middle of this decade.
The overall stock charge – the proportion of the outstanding loan balance that the government does not forecast graduates will repay – is 52% for Plan 2 students (all undergraduates post-2012) and 38% for Plan 1 students (undergraduates between 1998 and 2012). The government predicts that the overall outstanding loan balance will hit £2045.5 billion by 2070/71, equivalent to £498.6bn in today’s prices.
The Treasury is reportedly concerned about the RAB charge level, leading some commentators to speculate that it wishes to reduce taxpayer exposure to tuition fee debt.
A report accompanying the DfE statistics notes that the government response to the Augar review could change its accounting forecasts. “Any changes to student loan eligibility, quantum or terms and conditions, if implemented by the government, could affect the forecasts presented in this publication,” it says.