ONLY the highest-earning graduates will fully benefit from Labour’s plans to cut university tuition fees by a third, a leading financial expert has warned.
Institute for Fiscal Studies director Paul Johnson, originally from Shoreham, has spoken out about leader Ed Miliband’s pre-election pledge.
The £9,000 annual fee would be cut to £6,000 under the proposals but Mr Johnson has warned many graduates would notice ‘no difference’.
He said: “Under the current system, most graduates will not end up paying off the full amount of what they borrow to pay student fees.
“This is because payments only start on earnings above £21,000, and there is an interest rate applied which means outstanding debt rises over time. The debt is fully written off after 30 years.”
Mr Johnson added only the highest-earning graduates who would have paid the full amount under the current system will gain the maximum from Labour’s proposed changes.
He said: “Another quarter or so of high earning graduates will gain somewhat. But about half of graduates would not have expected to pay back more than £6,000 of their £9,000 fees in any case.
“They will see no difference to what they pay as a result of today’s announcement.
“That is why the extra £3 billion a year of public spending announced by Labour will benefit only the higher earning half of graduates.”
The party expects to pay for the cut by reducing tax relief on pensions and would come into effect from September, 2016.
They will see no difference to what they pay as a result of today’s announcementPaul Johnson, director, Institute for Fiscal Studies
University chancellors have criticised the idea, who told the national press the policy was ‘implausible’.
Tuition fees proved to be a thorny issue at the last general election, when Liberal Democrat leader Nick Clegg pledged to scrap fees altogether.
He enraged students by backtracking on the promise after entering a coalition with the Conservatives.
Mr Johnson is giving a pre-election talk at the Ropetackle Centre, in Shoreham, on Friday, April 17.
For tickets, call 01273 464440.