Graduates could pay back double their student loans, say BBC

There may no longer be protests on the streets of London, but the debate over the new fee system for student loans is far from over.

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The BBC has today released new figures which suggest some graduates will have to pay double the amount of money originally borrowed.

A group of leading accountants worked out that, in cash terms, a student who borrows £39,000 for a three-year course could end up paying back £83,000 in total.

The new fee system, which is due to come into force in 2012, will see graduates paying back nine per cent of their earnings for up to 30 years.

Universities can charge up to £9,000 per year, which will paid up front by the government - but which the student begins to pay back once he or she is earning £21,000 or more.

Of course, most students don't just need to borrow money to pay tuition fees - they also need to cover the cost of living while they study. For that, they can borrow up to £5,288, depending on how much their family earns.

Speaking to the BBC, John Whiting of the Chartered Institute of Taxation said the system was a bit like a student "buying their education on hire purchase, a bit like a mortgage".

"If somebody takes a significant loan it's going to take them a long time to pay it back, and they are going to be paying twice or even three times the amount if it takes them a long time to pay it back," he said.

However, the government says the new fee system is fairer and more progressive than the one currently in place.

Professor Nick Barr of the London School of Economics believes the system is fairer because it's proportional to the person's earnings.

He said: "It's a payroll deduction. It's week by week, it's month by month, it's exactly tailored to each individual's earnings and therefore it's not something that harms people. It's what gives them an opportunity to go to university," he said.

While the BBC figures do not account for the way the value of money will change because of inflation over the period during which the loan is paid off, they do paint a depressing picture of life-long debt for most students.

What do you think? Is the new system going to be fair - or is it wrong for young people to start life with that much debt? Leave a comment below...