Theresa May has revealed plans to freeze tuition fees and raise the amount graduates can earn before they start to repay loans.
But will the policy package be enough to win over cash-strapped millennials?
What are the Tories offering?
In a series of tweets on Sunday, Mrs May promised her government would “look again at student finance, freeze tuition fees and raise the amount you can earn before paying back”.
She told The Sun on Sunday that fees will be frozen at £9,250 a year, and that next year’s planned rise to £9,500 will be abandoned.
The second prong of the announcement will see the repayment threshold for graduates rise. As it stands, graduates start paying off their debt once they’re earning £21,000 a year. The Tories will up that to £25,000.
Who are the winners and losers?
Students-to-be
If you’ve yet to start university, you’ll “only” pay £9,250 a year in fees, rather than the £9,500 bill you would have got.
This is perhaps the feeblest part of the Tory offering. It’ll be hard for students to get enthusiastic about “saving” £250 a year out of a total graduate debt of £43,000 to £57,000.
Lower and middle earning graduates
Where things get a bit more interesting is on the repayment threshold. Martin Lewis, founder of Money Saving Expert, says upping the threshold to £25,000 “will save many lower and middle earning graduates £1,000s”.
“Currently earn £25,000 and as you repay 9% of everything above £21,000, you repay £360 a year. Increase the threshold to £25,000 and you’ll repay nothing. In fact, every single graduate earning over £21,000 a year will pay less”.
High-earning graduates
By Lewis’ calculations, the “only losers” from this policy will be the “top 23% of graduate earners who’d have cleared the loan within 30yrs”. He explains they’ll lose out because top earners would be well over the repayment threshold anyway. The change means they’ll pay back the loan more slowly, and therefore be hit by more interest payments.
Although, as Lewis points out, high earners can choose to repay their loan faster to avoid this.
Graduates from the pre-2012 fee system
Students who started university before 1 September 2012 (when the £9,000 fees came in) start repaying their loans when they’re earning just £17,775.
That means under the current system, students from the £3,000 fee era are worse off than post-2012 students in one regard. They are hit by loan repayments much earlier in their careers than those who started to university after 2012.
Graduates who studied under the £9,000 fee regime may have little sympathy for this, given they paid three times as much to go to university in the first place. But week’s announcement will widen the repayment gap between those who started university before and after 2012.
If the Tories plan to win over the under-30s with this policy, they may find it wanting: it will only benefit around half of voters in that age group.
How does this compare with Labour’s policies?
If the Tories are serious about attracting the youth vote, they’ll need to do better than Labour, who won over two thirds under-30s at the election.
During the campaign, Jeremy Corbyn promised to scrap fees for new students (as opposed to writing off existing debt – we don’t think he ever made that promises, despite repeated claims to that effect from political opponents).
As Labour MP Luke Pollard said in a tweet after Mrs May’s latest announcement: “So your choice is annual tuition fees of £9,250 with the Conservatives or annual tuition fees of £0 with Labour.”
Although Labour’s position on existing debt is less clear. Speaking at last week’s Labour party conference, the shadow chancellor John McDonnell called on the government to “act now” on existing loans, suggesting that his party would write off “the Tories student debt”. We’re still not clear about some of the detail.
FactCheck verdict
Theresa May and her party have clearly woken up to the idea that young voters are a formidable force and need to be on side if the Conservatives are to win the next general election.
But the Tory offer on student fees is limited. Simply offering not to increase fees by £250 a year as planned will be little consolation to students graduating with £43,000 to £57,000 of debt.
Raising the salary threshold at which graduates start paying back their loans will have a more tangible effect on young people’s finances when they start their careers. But even this policy will only help those who started university after 2012 – which we estimate to be only half of voters under 30.