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Refunding tuition fees would only benefit highest earners

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MPs will debate a number of petitions today (16 Nov) relating to university tuition fees. The petitioners argue that the university strikes and now the COVID-19 outbreak have disrupted university education so much that students should be entitled to a reimbursement on their fees. While not all of the petitions are explicit on who should pay whom, the general presumption seems to be that it would be universities paying back whoever paid them in the first place.

In a new IFS observation we show that this kind of tuition fee refund would only, eventually, benefit the highest-earning graduates. While one could make the case for other forms of direct compensation, those young people not going to university will have been worse affected by the pandemic on average. There is no clear case for compensating students but not other young people.

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Ben Waltmann, a Research Economist at IFS, said: 

‘For the majority of undergraduates domiciled in England, a straightforward tuition fee refund would lower their student loan balance, but would make no difference to their current incomes and no substantial difference to their repayments later in life. If instead the student loan balance stayed the same and students were paid directly, all students could benefit by the same amount. But that policy would be more accurately described as a compensation payment rather than a reimbursement. Given the disruption they have suffered there may be a case for compensation. But it is hard to make the case that university students are more deserving of such compensation than other young people. We know that youth unemployment has risen dramatically and those not attending university may well be suffering much worse consequences of the pandemic in the form of unemployment, and indeed poverty.’

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