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Wednesday, 03 October 2018

If you ask any student what the one thing they don’t like about university, you’re probably going to get the same answer: ‘the debt.’ While it’s a debt that many won’t even begin to pay off until they start earning, more and more people are beginning to question why tuition costs so much money and why it just seems to keep increasing, despite multiple promises that it wouldn’t in years past. With many courses having recently increased their tuition to £9,250 per year, it’s important to take a look at how student loans started and what path they took to develop into the system we have today.


Ancient History


If we go way back, the first instances of student loans we can actually see as early as the 11th century. It came hand in hand with the development of universities across medieval Europe that trained men for positions in the church or in government. Students still needed to pay for the course they attended so borrowed money from local lenders. There wasn’t any system set up for students specifically, so borrowing money for education followed the same rules as any other loan of the time. Many put down valuable items as collateral, which were then locked in iron chests until the end of their studies and this system remained in place for a good few centuries afterwards, some students even ending up in notorious 17th century debtor’s prisons if they could not pay.

Thankfully, we’re now a far cry from leaving our valuables in iron boxes, but modern-day student loans took a while to properly take shape and when they did, they evolved and changed at a rapid pace.


Education Act 1962


The real story of modern student loans begins more than fifty years ago, when the Education Act of 1962 made it a legal requirement for all Local Education Authorities to fund the cost of going to university. They were also required to provide a maintenance grant for living costs that didn’t have to be repaid. Essentially higher education was a free, government-funded service regardless of where a student was studying in the country. The amount awarded in a maintenance grants was scaled depending on the parental income, as it is today, but were payments and not loans. This way of funding students continued until the invention of the Student Loans Company some decades later.



SLC 1990


More than thirty years later is when the Student Loans Company was birthed. While tuition was still being payed by the government and maintenance grants still being given to everyone who attended, some students were still finding it difficult to make ends meet while away from home and taking out loans to cover expenses. The Student Loans company stepped in to offer loans to students in such a situation, but with loans at a much lower interest rate than a standard lend from a bank. It proved to be a popular service with it giving loans to over 180,000 students in its first year, almost 30% of all university students. It continued to thrive even before tuition fees were introduced. It was a far cry from the service it would become with the average loan back then being a mere £390.

And then the millennium rolled around.


The introduction of tuition fees


For years university was seen as something for the academic elite, but as more universities were built that could cater to a wide range of intellectual abilities, attending university was becoming a much more popular option for people leaving school and college. With more people attending, a report made by Sir Ron Dearing in 1997 suggested that students should start making some sort of financial contribution to their university education. The following year, the labour government passed the Teaching and Higher and Education Act which introduced the first proper tuition fees of £1,000 per academic year. This was then raised to £3,000 in 2004 along with an additional maintenance loan calculated by the amount the parents of the student earn. While there was outcry at the notion that many were now having to borrow such huge sums of money for their education, some were placated by the fact that they wouldn’t start paying any back until they started earning over a certain amount (£18,000 annually for the £3,000 a year loans).


£9000 a year


While many complained when fees were increased to £3000, it paled in comparison to when they were tripled in 2010 to £9,000 a year after a recommendation from Lord Browne that this should be the case. Over the history of education funding that was probably the most violent shake up, not helped by the fact that the Lib Dems had previously made a promise to vote against any suggested rise in fees before the previous election.

The government made several comments defending the rising fees, about how universities were desperate for more funding, and that the focus shouldn’t be on lowering tuition, rather aiding maintenance support, especially for low income families.

The rise however didn’t stop there. The news breaking in 2016 that many universities were making plans to raise tuition by £250 per year was met with bitter jokes and sighs of defeat rather than the outrage of the previous rise, many people hoping to attend university resigned to the fact that the state of tuition seemed to be in permanent state of change.


Scotland and Wales


The development of tuition fees has varied wildly across the different countries within Great Britain.  

The current system for tuition fees in Scotland is quite different from that in England. The Student Awards Agency Scotland (SAAS) pays for Scottish students who stay to study in Scotland, so they don’t ever have to pay back any tuition loans. However, Scottish students studying in England and Wales do still have to pay the amount charged by the university (up to £9,250) and even if still studying in Scotland, apply for a maintenance loan to help cover the cost of living.

Tuition is also different in Wales as well. Tuition fees are still capped at £9,000 Wales, but the earning threshold for repayments £25,000, rather than England’s £21,000 when their tuition was at the same price.


The Future?


As for the future of university tuition, it’s hard to say. There’s already been talks in government of raising tuition further to £9,500 per year, but nothing has come of that yet. The odds of loans ever decreasing in the future is unfortunately not looking very likely as when it was suggested, the issue then became whether the government would then have to then pay universities for their lost revenue.

More likely it would be an attempt to lower the interest rate or raise the repayment threshold, something that has already been steadily increasing with each increase of tuition. 



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