Bank of Mum and Dad to save better-off students up to £12,000 under Browne proposals

12 October 2010

Today's proposals for student finance from the Browne Review will leave graduates who borrow through the Browne system with a growing burden of student debt, while better-off students can opt out of the loans system saving thousands of pounds in interest, according to new analysis from the Social Market Foundation (SMF).

Commenting, Director of the SMF Ian Mulheirn said:

"Our analysis shows that students who can access the Bank of Mum and Dad effectively get a £12,000 discount on the cost of their degree over their lifetimes compared to a middle-earning graduate.

The Browne proposals will introduce a market in HE, which is to be welcomed. But the distributional consequences of the funding proposals are unfair and risk deterring less well-off students from taking a degree."

Editor's Notes

  • The Browne Review of Higher Education funding was launched today.

  • SMF analysis based on a course charging £7,000 per year, and current student debt levels.

  • The SMF analysis is of data contained in the 2010 Labour Force survey compiled by ONS.

  • The analysis shows those who will be hardest hit will be the group currently averaging around £27k per annum across the repayment period.

  • SMF released an alternative model over the weekend which would provide no incentive for students from well-off backgrounds to opt out of student finance, ensuring those who earn more always pay more, regardless of background.

Figure 1: Distributional consequences of 2.2% real interest on student loans when graduates earn over £21,000.

Comments:

Leave a Reply
  1. (Your email will not be publicly displayed.)
  2. Captcha Code

    Click the image to see another captcha.

    Please type the letters and numbers shown in the image.

Website by: Commotion