'Major changes' planned for student loans

An overhaul to the student loan system, which could ultimately lead to higher tuition fee charges, is being discussed by ministers.

16:49 29 July 2014

BBC Newsnight has revealed that officials and ministers are in the process of discussing plans that will see major changes for student loans. Ultimately, this could lead to changes in loan terms and higher tuition fee charges.

The research, which has yet to be actioned into becoming an official policy, suggests that universities take on some risk so their own students will repay less on their student debt than expected.

The research was commissioned by David Willetts, the former universities minister. Mr Willetts told Newsnight: "Why not give universities that wish it the opportunity of holding the loans belonging to their own graduates?

"So suddenly there's a direct connection between the university and the graduate."

A spokesman for the Department of Business, Innovation, and Skills (BIS), said: "The department regularly conducts research in order to explore the viability of policy suggestions and these play an important role in informing ministers and shaping policy."

At the moment, the Treasury loans students money for their fees and living costs. Students pay back a share of their income in repayments once they graduate and earn over £21k. After 30 years, any outstanding debt is written off.