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Fallout From Government Proposals Regarding University Tuition

by Jim ONeil on December 15, 2010

in Personal Finance News

The British government has proposed tripling university tuition costs. The likely response from the public involves a debate on whether these fees should increase. However, the personal financial implications are much wider for prospective students and the families who support their educational endeavors.

On the positive side, a more simple calculation will be used to determine entitlement to student loans. In addition, students will have the ability to apply for loans at the same time they enroll in courses. This will streamline the process for prospective students. Those rosy aspects aside, there are a lot of reasons for concern.

The government claims the reforms are progressive but when they are investigated further, that may not be the case. The threshold at which loan repayments must commence is proposed to increase from £15,000 to £21,000. However, that increase will not take effect until 2016 and will be at the 2016 prices. Therefore, graduates earning lower pay will begin repayment, with longer repayment terms and higher interest rates, early within their careers.

Included in the proposal is the offer to provide part-time students with fee loans. This threatens to reduce part-time student participation as fees increase rapidly. In addition, an impact assessment

conducted by the government revealed that a large number of part-time students will not qualify for these loans. Though the idea is to introduce a marketplace to higher education, for the benefit of students, that may not be the result.

It is difficult for prospective students and the families that provide them financial support to be rational consumers. Much of the information about the institutions and the courses they provide is hard to find. A lot of it depends on prestige, making the situation even more frustrating. When assessing the proposals provided by the government, the public must read the fine print to understand the big picture.

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