Tories woo students on loans

The Conservatives today wooed students with the promise of lower loan repayments and pledged ?golden goodbyes? for universities to set them free of government interference

Outlining the party?s higher education proposals fore the coming general election, education spokeswoman Theresa May said the next Conservative government would raise the earnings threshold at which graduates would have to start paying back student loans from ?10,000 to ?20,000. This would mean graduates going into careers like nursing and teaching would not start paying off their loans for many years.

A Tory government would sell off student loan debt to banks and financial institutions who would be able to charge real rates of interest (at present graduates repay only the money they borrow plus inflation) but it would introduce tax relief worth around ?3,500 a year on repayments.

Universities would be endowed with the money raised from selling student loan debt - an estimated ?1.6bn a year - and the sale of state assets like radio wavelengths.

Some commentators have estimated the value of the analogue spectrum, large parts of which will become free once television switches over to digital transmission, could be upwards of ?50 billion. Universities UK, the sector?s umbrella body which said it would study plans from all political parties, has estimated that the total cost of endowing all of Britain?s higher education institutions would be ?80 billion.

But although the Conservatives say universities would be freed from state interference, they would not be free to set their own tuition fees - something vice-chancellors at elite institutions are debating.

Top-up fees are seen as a potential vote-loser by the main parties, although some of the top universities insist they need more money to maintain the quality of students? education, and David Blunkett, the education secretary, has hinted the government might reconsider its opposition after the election.

The Conservatives' endowment fund for universities would be kick-started with a one-off payment of ?3.5 billion of taxpayers? money.

Over a fixed 10-year period, the average graduate would pay back ?18,759 on a ?10,000 loan, offset by ?7,000 of tax relief, meaning the net repayment was ?11,759. That compared with current average repayments of ?12,811 over eight years, giving a saving of ?1,052, say the Tories.

Higher education minister Baroness Blackstone declared: "The Tory plans to privatise universities are uncosted and unworkable - they will mean a huge hike in fees for students and parents without giving a penny more to the universities. In contrast, Labour will invest nearly ?1 billion extra in higher education over the next three years, increasing the funding per student for the first time in well over a decade."

Mrs May dismissed her criticisms, saying: "Frankly, she needs to go to one of her own Government's numeracy classes. "We believe that this will be attractive to students because we have made a conscious effort to meet the concerns that they have been raising about top-up fees."