The government accused of “tightening the screw” on students and universities

The government has been accused of “quietly tightening the financial screws” on students and graduates, using high levels of inflation as an excuse to cut student loans.

In a new paper from the Institute of Fiscal Studies (IFS), published on Thursday, researchers said students face “substantial cuts” in maintenance loans while parental income thresholds will remain frozen in terms of cash.

“The increase in lending levels will be well below inflation,” the document said.

It finds that a graduate earning £30,000 will have to pay £113 more on their student loan in the next tax year than the government had previously announced, while “tuition fees will remain frozen in cash for another year, which hits the universities and mainly benefits the taxpayer”.

“The government is saving £2.3bn on student loans under the guise of high inflation,” it says.

Ben Waltmann, senior research economist at IFS, said the government “seems determined to use high inflation as a hedge to reduce the cost of student loans for taxpayers”.

“Significant real-term reductions in maintenance loans could cause real hardship for students on tight budgets,” he added.

Mr Waltmann said the reimbursement threshold freeze would mainly affect middle-income graduates, “whose budgets are already squeezed by the rising cost of living, the personal allowance freeze and the insurance hike. national”.

The freezing of the reimbursement threshold hits above all average graduates, whose budget is already burdened by the rise in the cost of living, the freezing of the personal allowance and the increase in Social Security.

And extending the maximum fee freeze will add further pressure on universities, while only benefiting the highest-earning graduates.

MP Matt Western, minister for Labour’s shadow universities, said the government was using “a smokescreen to hammer students and graduates”.

“Labour would raise money to cut energy bills, through a one-off oil and gas profit tax, saving most households £200 on their bills, with targeted support of £600 in total for those who need it most,” he added.

“The Conservatives have no answer to the cost of living crisis because they are creating the cost of living crisis.

A spokesman for the Department for Education said: “Our student funding system has been designed to ensure that people from the poorest families receive the most support during their studies.

“These students currently have access to the largest ever amounts of cash cost of living support and we have increased the maximum cost of living loans over the past two years.

“The student loan system needs to be fairer for students and the taxpayer.

“With graduate salaries rising, it is fair to ask borrowers who benefit financially from their higher education to contribute reasonably to its costs.

“We are also tackling dropout rates and improving graduate outcomes so students get better value for money, especially those from disadvantaged backgrounds.”

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