Higher interest rates for students

The Russell International Excellence Group, representing twenty leading, research-intensive higher education institutions of the UK, has warned that graduates may be forced to start repaying their student loans before the agreed term and the interest rate will be elevated with the aim of tackling the challenge of underfunding.

After an official inspection of student finance and fees, The Russell Group gave a warning that the existing system endangered the financial sustainability of the UK’s elite universities.

It is warning that the top universities of the UK are likely to be confronted with the problem of funding crisis. It has been estimated that by the year 2013 the deficit will amount to £1.1 billion. Thus, staff and infrastructure cuts will be necessary to cope with the deficit.

Wendy Piatt, Group’ director general, says that with underfunding and the imminent future cuts to manage, with no ways of increasing their income, coping with these challenges seems to be an unaccomplishable task right now.

Moreover, she maintains that the country can lose brilliant scientists who have made discoveries that have improved the lives of millions.
According to the report, universities will be forced to cut costs by reducing the number of employees, increase income by inviting more students from other countries or raising money through domestic tuition fees.

The report also proposes that graduates pay off their loans before the agreed term and at a higher interest rate.

Under the existing system, graduates start repaying their loans when they have a stable income over £15,000 annually and at a low interest rate.
The most logical way out is to change the current system by making student loans carry a real interest rate, which would be equal to the Government’s total cost of borrowing.
 


Articles

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