Uploaded February 2026 | Updated September 2026, 2 weeks ago
Your student debt keeps growing even as you pay it off. Sound familiar? Callum Price breaks down why the student loan system is failing students, taxpayers, and universities alike, and why tinkering with interest rates will never be enough. The real problem is that universities are paid to recruit students, not educate them, creating a system with completely misaligned incentives.
The solution requires genuine structural reform: make universities financially responsible for the degrees they offer. If universities had to fund degrees themselves, they would have a real incentive to ensure graduates land well-paying jobs. Lift the tuition fee cap, allow proper market competition, and let third-party funders into the space.
But fixing universities alone is not enough. The Government's Employment Rights Act, National Insurance hikes, and minimum wage increases are making it harder and more expensive for businesses to hire young people. Until that changes, even the best-educated graduates will struggle to find the jobs that make their degrees worthwhile.
The Institute of Economic Affairs is a registered educational charity. It does not endorse or give support for any political party in the UK or elsewhere. Our mission is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The views represented here are those of the speakers alone, not those of the Institute, its Managing Trustees, Academic Advisory Council members or senior staff.
Your student debt keeps growing even as you pay it off. Sound familiar? Callum Price breaks down why the student loan system is failing students, taxpayers, and universities alike, and why tinkering with interest rates will never be enough. The real problem is that universities are paid to recruit students, not educate them, creating a system with completely misaligned incentives.
The solution requires genuine structural reform: make universities financially responsible for the degrees they offer. If universities had to fund degrees themselves, they would have a real incentive to ensure graduates land well-paying jobs. Lift the tuition fee cap, allow proper market competition, and let third-party funders into the space.
But fixing universities alone is not enough. The Government's Employment Rights Act, National Insurance hikes, and minimum wage increases are making it harder and more expensive for businesses to hire young people. Until that changes, even the best-educated graduates will struggle to find the jobs that make their degrees worthwhile.
The Institute of Economic Affairs is a registered educational charity. It does not endorse or give support for any political party in the UK or elsewhere. Our mission is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The views represented here are those of the speakers alone, not those of the Institute, its Managing Trustees, Academic Advisory Council members or senior staff.
