University tuition fees will be cut from £9,000 to £6,000 a year if Labour wins the General Election, Ed Miliband has today promised.
The new policy would be introduced in September next year, helping those starting new courses then and those already at university, the party leader pledged.
But MoneySavingExpert.com creator Martin Lewis has branded the policy as "financially illiterate". See Martin's blog for more on this and see MoneySavingExpert.com's Student loans mythbusting guide to get the full facts on fees, loans and grants if you're heading to university.
In a speech at Leeds College of Music, Miliband said that under the current system, the average graduate leaves university with more than £44,000 of debt – more than the average income.
He claimed that the proposals will reduce the average debt per student by about £9,000, which should benefit around one million full-time students.
In order to bring in the new plans, graduates who earn more than £42,000 a year would pay a higher rate of interest on their loans – 4% instead of 3% – so the repayment system would be "fairer".
Miliband also unveiled plans to raise maintenance grants for the poorest students to help them with their living costs by £400 a year, from around £3,400 to around £3,800. This will apply to those with family incomes of up to £42,000, which should help more than half of all students.
He also insisted that the move would be fully funded through a reduction in pension tax relief for higher earners and claimed that the proposals will cut the burden on taxpayers by £40 billion by 2030.
Miliband says: "The scourge of debt from tuition fees is not only holding back our young people, it is a burden on our country.
"We're going to change it. We're going to reduce the debt on university students. We're going to reduce the debt on taxpayers."