Originally published on 12 November 2022

The Augar Review and Student Finance Reforms

5 mins
Article hero image
The Government expects that around half of new borrowers from 2023/24 will repay their loans in full, compared to 25% of current students.

What Is the Augar Review and What Reforms Does It Suggest?

The Augar review (officially known as 'The Independent panel report to the Review of Post-18 Education and Funding') is a report published on 30 May 2019, containing 53 recommendations on the future structure and funding proposals for the UK's student finance system.

The review is in response to the announcement made by then Prime Minister Theresa May, in February of 2018, to assess post-18 education and funding.

Some of the headline recommendations made by the panel of the review are:

  • To reduce tuition fees to £7,500 per year
  • Increasing the loan repayment period from 30 to 40 years
  • A reduction to the interest charged on student loans whilst students are studying
  • Capping total repayments on student loans to 1.2 times the loan cost
  • Decreasing the income threshold for student loan repayments from £25,000 to £23,000
  • Reintroducing maintenance grants

Government Proposed Reforms

After the publication of the Augar Review, the government went away to come up with it's own set of reforms. The government concluded its review on 24 February 2022, 4 years after it was first announced, and shared several reforms.

The summary of government policy interventions are as follows (they can be found in section 2.1 of the published conclusion):

For new students starting in academic year 2023/24:

  • The repayment threshold will be set at £25,000 until academic year 2026/27, and thereafter will increase in-line with inflation as measured by RPI
  • The repayment period will be extended from 30 to 40 years
  • The maximum interest rate that can be applied to loans will be RPI + 0%, as opposed to RPI + 3% under the current system

For current students:

  • The repayment threshold will be frozen at £27,295 until academic year 2024/25, and then increase in-line with inflation as measured by RPI. Currently the repayment threshold increase in line with UK average earnings
  • Tuition fees will be frozen at £9,250 for a further two years, until academic year 2024/25

Impact of Government Reforms

According to the government's own equality analysis of these reforms:

The Government expects that around half of new borrowers from 2023/24 will repay their loans in full, compared to a quarter of current students. The proposed reforms will result in higher repayments among middle and lower earning graduates, but lower repayments for those who earn the highest.
Among new full-time HE borrowers, lifetime repayments are higher for the bottom 80% of lifetime earners under the new system, but lower for the top 20%. Similarly, among post 2012 full-time HE borrowers, lifetime repayments are expected to increase for the bottom 90% of lifetime earners but be marginally lower for the top 10%.
On average, lifetime repayments increase by £5,800 (30%) in FY2021-22 prices, and borrowers repay for 2 more years (from 30 to 32 years).

You can read the full analysis for more detailed information, but in short, the cost of taking out a loan will increase for the majority of people, and the highest earners will end up paying less overall (and still pay it off).

What Else Is Happening?

The government has consultations open for a few proposals, such as capping the number of students going to university by:

  • Introducing student number controls
  • Establishing minimum eligibility requirements for student finance

Concluding Words

In summary, the reforms are there to recoup more money, as the overall cost of higher education to the taxpayer is rising. The government wants to ensure there are sustainable funding arrangements in place for the student finance system to continue providing value.

Another point to keep in mind is that the government can make changes to repayment terms which can apply to student loans taken out in the past, as outlined in the terms and conditions document on the Student Loans Company site. Whilst they haven't yet, this is a possibility in the future.

For now the government has said that:

[...] it will keep the student finance system, including all loan repayment terms, under review “to ensure that they are delivering value for money for both students and the taxpayer.”

If you are considering delaying your undergraduate studies until 2023, it might cost you more than you think.