Reaching higher: Reforming student loans to broaden access to postgraduate study

The principle of fair access is central to debates about higher education: almost everybody agrees that no one should be denied the opportunity to go to university because they cannot afford to pay. This is why we have a subsidised loans system, which means that graduates can pay back the cost of their undergraduate study once they are earning over £21,000 a year. However, this principle of fair access has not been applied to postgraduate study, where there is no subsidised loan system at all.

This is important, because there are significant benefits from postgraduate study, being (in many cases) a requirement for entry to a professional career, and bringing higher lifetime wage returns.

The paper publishes modelling of the costs and risks of a postgraduate loan scheme offering £10,000 for a taught masters course, to be repaid at 9 per cent on future earnings between £15,000 and £21,000, with other features of the scheme consistent with the existing undergraduate loans. The model assumes this is made available to roughly 47,000 full-time students and 24,000 part-time students.

Crucially, the modelling suggests a non-repayment rate (known as the RAB charge) of 6.9 per cent. This is considerably lower than the non-repayment rate of 40–45 per cent estimated for undergraduate loans.

The paper also presents modelling for a range of alternative scenarios, including higher take-up of postgraduate loans, changes to the repayment terms, and making the loans available for long-term postgraduate study, like PhD courses.

Our report is based on original analysis conducted by Gavan Conlon at London Economics for IPPR – download the background analysis paper (PDF).