Labor could use wealthier graduates to fund the return of student bursaries

Ms Phillipson described the current university funding system as “the worst of all worlds”. Photo: Charlotte Graham

But she added: “The modeling I've seen shows how even within the existing package, that is, without any additional borrowing or spending, you can create a more progressive system that delivers monthly reductions contribution required from graduates.»

It is understood Ms Phillipson was referring to modeling outlined in a paper published in May by consultancy London Economics. It sets out two alternatives to the system announced by ministers last month.

Both proposals would see the return of maintenance grants, funded by higher interest rates for wealthier graduates. One model predicts the total debt burden will double for some people on higher incomes.

From last month, students going to university will have to pay nine per cent of their income on earnings over £25,000 as a repayment rate , more than 40 years.

London Economics' two models reintroduce real interest rates (interest rates linked to inflation) to three percent for people on higher incomes, increasing overall debt burdens while graduates make monthly payments based on the marginal rate.

They also involve «stepping repayments», so the rate cap level will gradually increase from two per cent to nine per cent, depending on how much individual graduates earn, rather than introducing nine per cent for each graduate. cent rate for all graduates whose salary exceeds the £25,000 threshold.

The document says: «The extra payments will be concentrated among graduates with the highest incomes, while those on low and middle incomes will pay less.»

< Mr Cameron scrapped the maintenance grant, which was paid to students from families with an income of less than £25,000, which he said then allowed the government to lift the cap on student numbers. The London Economy Model suggests the restored grant could be worth up to £4,009.

The report comes after Jeremy Hunt, the Chancellor, said separately that Labor was «clearly planning» to use «dangerous accounting tricks» that will allow it to borrow billions of pounds more under fiscal rules.

The announcement was based on Labour's announcement that it would «take greater consideration of public sector assets as well as debt in fiscal policy».

On Saturday, the Institute for Fiscal Studies warned of the risk that such a move «will be taken as a signal that the government can afford to borrow more.»