Associate Professor Steven McCabe and Professor Alex de Ruyter, political economists at Birmingham City University, have called for a reconfiguration of the UK’s student and university funding model – including tax cuts - to refresh the higher education system, after the Labour Party pledged to reverse changes to the student loan system planned by the current Conservative government.

Under Sir Keir Starmer’s proposals, Tory reforms to lower earning thresholds for replaying student loans and extending the life of student loans from 30 to 40 years will be scrapped if Labour take back power at the next General Election.

Associate Professor McCabe said: “An interest rate cut for student loans would certainly ease the burden of repayment. This would allow a cut without costing money upfront and allow Labour to fulfil its putative pledge to current, future, and past students. 

“The problem remains that in this country we have ended up with a situation which appears awful for students and dreadful for universities. Students expect world class education, delivered by committed staff, and not to be burdened by repayments for the rest of their lives. Universities need adequate funding to achieve the standards expected of them. 

“Little wonder so many believe the current funding system for higher education is utterly broken, with universities struggling to achieve their mission and staff discontented with pay and conditions. A reconfiguration of what higher education should be expected to achieve - and the resources it needs to do this effectively - is urgently needed.

“A vital part of this is funding for universities and the methods by which students are taxed. If we could develop a radically different culture in which the development of young people is accepted as essential in the country's strategic aspiration to become a vibrant and modern economy, where graduates can play their part and earn decent salaries, this would remedy the problem. 

“Labour's proposal may assist in such a transition. Sadly, however, higher education is likely to be an example of 'pork barrel politics' whereby the two main parties make claims about what they will give to young people in return for their votes and concentrate on cost - without really addressing the value of a world class system of higher education. 

“It's time for some real vision and honesty about our future.” Professor de Ruyter said: “Labour absolutely should have a vested interest in getting rid of student fees altogether, rather than just promising to cut monthly student loan repayments.

“The rate of interest is set at the Retail Price Index (currently at 11.4%) plus 3% and come August will still be set at the RPI, but with the repayment annual wage and salary threshold dropping to £25,000 - so there is a whole generation of young people seeing their debts piling up. On top of cost-of-living pressures, and with rents skyrocketing, home ownership for these people is becoming increasingly out of reach.

“There should be no surprise then, that a survey conducted by Ownard, a centre-right thinktank, suggests that only 21% of those aged in their late 20s to early 40s (soon to overtake baby boomers as the largest demographic age group) would vote Tory. This should be an electoral goldmine for Labour. Will they grasp it sufficiently?

“Their promise to reduce monthly payments for graduates whilst refusing to say how they will do this without any additional government spending does not sound convincing. Why not go all the way all write off all student debt and scrap student fees? They could always fund this by taxing the wealthy more.”