Michelle Donelan is Minister of State for Higher and Further Education, and MP for Chippenham.

As we today conclude our response to the Augar Review of Post-18 Education and Funding, we do so in the light of a decade in which, under Conservative leadership, our superb universities have gone from strength to strength. My passion for high quality, high value education that lifts both students and our country up has been realised in action.

We have four universities in the global top ten, and have beaten our target to attract over 600,000 international students almost a decade early. Our top university cities – Cambridge, Oxford, Bristol, Manchester and London – all consistently feature in Europe’s Top 20 cities for tech investment and, of our 53 British unicorn companies, valued at over a billion dollars each, two-thirds have been founded by UK higher education graduates. Our powerhouses of research have not only led the world in vaccine discovery, but have produced a Nobel prize winner each year for the last two decades.

A particularly personal mission of mine has been to reform interest rates paid on student loans. At the heart of our response is a new, fairer, deal for students, who rightly feel it is unfair that they are borrowing money at interest rates well above inflation. For some, their debt goes up in real terms every year even as they are paying it back – though less than a quarter of students are expected to repay their loans in full.

I am pleased to announce that we are abolishing interest rates above inflation for new students throughout the entire period of the loan – meaning that no student will pay back more than they borrow in real terms.

On top of this, we are extending the freeze to maximum tuition fees so that they remain at £9,250 until 2025. In combination, the reduction in interest rates and the ongoing fee freeze mean a typical borrower entering a three-year course in September 2023 would see their debt reduced by up to £6,500 at the point at which they become eligible to repay.

In return, we are asking students to help rebalance the burden placed on the taxpayer, which is currently far too high. The UK’s student loan book currently stands at £161 billion – enough to pay the entire country’s annual council tax five times over. Without action now, it will be at half a trillion pounds by 2043. Taxpayers – most of whom have not been to university themselves – are funding 44p of every pound of student loans. I want a fairer deal for taxpayers as well as students.

To fix this, we will be lowering the repayment threshold for new students to £25,000, which is still well above the median salary for a young non-graduate of £21,500, meaning more graduates make a modest contribution to paying back their loan, but only after they start to receive financial benefits from their degree. As it is now, this will be based on their ability to pay, with a graduate earning £28,000 paying only £17 a month, ensuring they will never repay, in real terms, more than they have borrowed.

However, there remains the problem that if you have a degree, you are likely to be at or near your peak salary in your 50s, yet right now this is the time when the loan is written off by the Government and handed back to the taxpayer to deal with. It is not right that taxpayers take the hit when those who benefit from the higher education system stand to benefit the most/are most able to afford the repayment.

So we are extending the repayment period from 30 to 40 years. Combined with the reductions to the interest rate, our changes will ensure that graduates contribute in a way that is both fairer and that better reflects the changing length of careers – with more than half of students repaying their loan in full. It is also fairer to taxpayers, who in future, will fund less than 20 pence in the pound each year – which is less than half of what it is now.

At the same time, I am determined to ensure that no high-achieving student should have the door of opportunity shut in their face simply because they are concerned it is too expensive. I grew up in an area where I saw many people left behind because they felt it was not for them, so I feel a personal duty to put this right.

Reflecting my passion for opportunity, we are announcing up to £75 million for a new national state scholarship scheme – making sure that our brightest are not held back because of their backgrounds whether they want to go to university, further education or do an apprenticeship after A Levels. And we are proposing to slash the cost of foundation years, to make them affordable for those who need a second chance at education.

Last but not least, I am announcing an investment of almost £900 million in the universities which have helped to make this nation great. This includes £750 million – the largest increase in grant funding in a decade – in high quality teaching and new state-of-the-art facilities in subjects and courses that deliver the skills this nation need including in science and engineering, subjects that support the NHS and degree apprenticeships.

We are also going to be seeking the public’s views on stopping the growth of the small pocket of poor quality courses, as well as very low level minimum eligibility requirements to prevent students being sucked onto courses they are not yet ready for. These are certainly not set in stone – but I think it is right that we have the conversation.

For example, should we return to our old requirement of two ‘E’ grades to go to University? Of course, any requirements would be caveated with exemptions, including for mature students. We would also not be closing the door to university but helping them to prepare for university with a foundation year, or pursuing an apprenticeship or further education.

Our reforms are not only designed to drive up quality in Higher Education but also to ensure that the education system moves away from a one size fits all model and delivers for the individual and their needs. The transformational Lifelong Loan Entitlement (LLE) is at the heart of this. LLE will be introduced from 2025, providing individuals with a loan entitlement to the equivalent of four years of post-18 education to use over their lifetime. Everyone will have their own account that they can draw down from when they need to.

Under this new, modern, flexible skills system, people can take modules to build to reskill and upskill over their lifetime and have a real choice in how and when they study.

LLE turns education from a narrow, set destination into to an accessible, flexible journey. Our LLE consultation is a huge opportunity to allow everyone to take part in the discussion, and it will help us to realise the transformational potential of LLE.

The reforms I have set out today will deliver a fairer deal for students, universities and the taxpayer. We are fulfilling our manifesto commitments on quality and on reducing student debt. We have shown, once again that this Conservative Government is not afraid to take big decisions. We will ensure that our universities not only survive, but thrive: creating opportunity, driving innovation and powering our economy for the next decade and beyond.