£6k versus £9k tuition fees: the real impact in pictures

by Stephen Tall on September 25, 2011

Today’s announcement by Ed Miliband that Labour would double, not treble, tuition fees from the current £3k pa has prompted much vigorous discussion already. But what would be the actual impact for different income groups of the change in policy?

To find out, I fed different figures into Martin Lewis’s Student Finance Calculator. I made one assumption: that all students would need to take out the maximum maintenance loan to live on while studying. Here’s what the figures show…

Who pays nothing?

With fees at £6k…
fees_6k_impact-nothing-to-pay
… anyone whose salary doesn’t exceed £15,600 in today’s money.

With fees at £9k…
fees_9k_impact-nothing-to-pay
… anyone whose salary doesn’t exceed £15,600 in today’s money.

What if you earn the national average wage?

With fees at £6k…
fees_6k_impact-av-wage
… you pay back £24,940 in today’s money over the next 30 years.

With fees at £9k…
fees_9k_impact-av-wage
… you pay back £24,940 in today’s money over the next 30 years.

What will I be earning to incur the maximum debt?

With fees at £6k…
fees_6k_impact-max-repayment
… if you have a starting salary of £38,300 you will have to pay back £72,890 in today’s money over the next 30 years (the same as you would with £9k fees).

With fees at £9k…
fees_9k_impact-max-repayment1
… if you have a starting salary of £43,300 you will have to pay back £90,200 in today’s money over the next 30 years (compared to £67,380 over 24 years if your fees are £6k pa).

What’s the impact on the wealthiest?

With fees at £6k…
fees_6k_impact-wealthiest
… if you have a starting salary of £60,000 you will have to pay back £57,310 in today’s money over the next 14 years.

With fees at £9k…
fees_9k_impact-wealthiest
… if you have a starting salary of £60,000 you will have to pay back £74,020 in today’s money over the next 17 years.

What do the figures show?

Well, if your starting salary after graduating is under £38,300 there is absolutely no difference between £6k pa tuition fees and £9k pa tuition fees.

But if your starting salary is more than £38,300 you will be better off under Labour’s proposed £6k pa tuition fees.

However, as Labour has said they will fund the cut to tuition fees by increasing the loan repayments for the wealthiest (and a tax on banks), we don’t yet know whether or by how much these wealthier graduates will benefit from Labour’s proposals.

Looked at in this way, it is clear students from poorer backgrounds will not benefit from the cut in tuition fee while they are students. Only those who earn above £38.3k per annum after graduating will actually benefit. Labour’s argument is that the poorest are put off by the fear of debt rather than the actuality, and it is this fear that the fee cut is intended to address.