Estimating the costs associated with the student support offer – December 2017

Practice area: Economics of Education | Education and Labour Markets | Higher education
Client: N/A
Published: 13 December, 2017
Keywords: 2017 analysis of economic developments economics of education education England EU impact assessment labour market economics quantitative analysis

London Economics’ modelling estimates that the recent decision of the government to raise the repayment threshold on student loan repayments to £25,000, alongside an increase in the interest rate thresholds will cost approximately £2.85 billion a cohort. Breaking down this estimate, the additional Exchequer expenditure includes £1.09 billion in costs associated with the lower level of maintenance loan repayment and £1.76 billion in additional costs associated with tuition fee loans. Compared to the previous student finance system, the increase (and un-freezing) of the loan repayment and interest rate thresholds results in an increase in the proportion of the value of the loans never repaid (the ‘RAB charge’) from 27.6% to 45.1%.