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On average graduates in England are leaving university £45,000 in debt. The Centre for Policy Studies think-tank describes it as “a millstone that stays with them for decades”.

It is proposing reforms that would encourage students to take up courses like engineering that leave them and the country better off.

The Institute for Fiscal Studies estimates that about 20 percent of undergraduates will be poorer because of their debts.

In addition, the Government is only able to recover 46 percent of the value of the loans as many never earn enough to make repayments. It is the equivalent of an £8billion-a-year loss.

Currently English and Welsh students pay nine percent of everything they earn above £27,295 per year while the median UK graduate salary is £24,000. 

In tune with the Daily Express’s fair-deal crusade, the centre said too many courses are not delivering for students or for the country.

Creative arts has zero impact on earnings for the average female graduate and negative impact for the male graduate.

Yet it receives the largest subsidy of any subject at £1.2billion. That works out at £37,000 per student compared to £11,000 for engineers.

The centre’s Value Of University report, published today, proposes a change to the way fees are paid to ensure that “high-productivity” and “rewarding” courses receive more investment. 

It suggested that the loan system should be reformed so universities would still receive funding from the Government.

But if too many students defaulted, it would be the university that bore the cost.

This would make the system self-financing by pruning the courses which are offering students the worst returns and would incentivise students towards the “high-productivity” courses.

This would save the Treasury money without increasing the amount of debt students have. It would eventually result in savings of £7billion.

A Government spokesperson said: “We will continue to support students and the student loan system will always ensure that those with the talent and desire to attend university can do so.”

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