When self-styled ‘Money Saving Expert’ Martin Lewis gate-crashed Kemi Badenoch’s Good Morning Britain interview to reprimand the Conservative leader over her plans to cut the interest on student loans, he failed to mention that she was addressing a crisis for which he carries a little of the blame.

For years, Lewis has encouraged prospective students not to be put off by tuition fees, arguing that the loans should be thought of as a ‘graduate contribution system’ rather than traditional debt. This was an investment in their futures, easily paid off through the higher earnings a degree would confer.

But the system has become a tax on aspiration. Graduates on Plan 2 loans – those in England who began university courses between 2012 and 2022, and were the first to pay £9,000 in annual fees – must make loan repayments of 9 per cent of their income above a threshold of £28,470. Their debt also accrues interest: the Retail Price Index rate of inflation plus 3 per cent. The average student in England leaves university with £50,000 of debt. Although most loans are written off after 30 years, on average graduates must earn at least £66,000, two-thirds more than the median wage, before repayments begin to reduce their debt. It’s another painful burden on a generation already battered by lockdowns, the housing crisis, and the disruption of AI.

Moreover, Rachel Reeves’s Budget freeze of the Plan 2 repayment threshold from April next year until 2030 will add hundreds of pounds per year to graduates’ contributions, provoking outrage from those who have had their loan terms changed long after they took them out. Two-thirds of Plan 2 graduates will be unable to settle their debts, leaving taxpayers to write them off. Non-graduates are shouldering the costs of a university system which fails to deliver the expected rewards.

Badenoch is proposing to scrap the 3 per cent supplementary interest on Plan 2 loans. Lewis argued that her plan would only help higher-earning students and that her party should instead push to increase the earnings threshold at which loan repayments must be made.

But the benefit of Badenoch’s plan is that it would mean debt growing more manageably and could be paid for by cutting university numbers by 100,000. That can be accomplished by ending courses which produce graduates who fail to pay back their loans. According to the Institute for Fiscal Studies, for instance, around 75 per cent of loans for creative arts courses are not cleared.

Student loans are a painful burden on a generation battered by lockdowns, the housing crisis and AI

In choosing this approach, Badenoch has underlined the other crucial problem with today’s universities: not just the cost of the education they offer, but its quality. In these pages, Lara Brown recently branded Oxford’s Saïd Business School as ‘a bit of a sham’, one that assesses students largely on their ability to pay for its MBA, with not enough importance placed on ability or tutorial attendance. On this issue, both Wafic Saïd, the school’s founder, and Mette Morsing, its interim dean, push back, pointing out the high international rankings of its MBA course and student satisfaction.

But student satisfaction ratings are a subjective measure of the value of courses; the growing rot Brown identified at Saïd is characteristic of universities across the country. As David Butterfield highlighted two years ago in The Spectator, our universities, from Oxbridge downwards, are in decline, failing to justify the debts being incurred by becoming less rigorous and more bureaucratic, and putting student comfort and increasing numbers ahead of academic excellence or greater employability. As Kingsley Amis once balefully predicted, more has meant worse.

Successive governments share responsibility. John Major’s conversion of the polytechnics; Tony Blair’s aspiration to have half of all school leavers at university; New Labour’s introduction of tuition fees; the coalition’s hiking of them; Boris Johnson’s reintroduction of the graduate visa that saw foreign-student numbers soar. All these have resulted not in greater productivity and creativity via a swelling graduate class, but too many barely solvent institutions serving only to prop up local economies and fleecing disengaged students for degrees of little benefit.

As student numbers have soared, the graduate premium – the higher earnings accruing to degree-holders – has collapsed. Two decades ago, the average graduate earned 2.5 times more than the minimum wage; by 2023, this had fallen to 1.6 times, with some higher apprenticeships now offering higher earnings than degrees. One in five graduates would have been better off for not having gone to university; the Centre for Social Justice has calculated that around 110,000 graduates under 30 are out of work and receiving benefits. Many go straight from university to welfare.

Badenoch’s proposals are the start of tackling the university con. But the ability to act lies in Labour’s hands. If they do not address graduate frustration, they will be outbid by those willing to make more extravagant promises. Pledges to scrap tuition fees boosted Nick Clegg in 2010 and Jeremy Corbyn in 2017. The rapid rise of the Greens under erstwhile Lib Dem boob-whisperer Zack Polanski relies on channelling youthful resentment as well as engaging Muslim voters with disingenuous talk of a genocide in Gaza.

Helping hard-pressed graduates should be a step towards tackling the bankruptcy of our universities: not only the precarity of so many institutions, but the fraud of promising a transformative education but delivering shattered dreams and soaring costs. Rather than badger Badenoch for beginning that work, Lewis should advance it.