The government has “seriously” miscalculated the cost of its higher education policy, the Higher Education Policy Institute (Hepi) claims.
The research body says the government underestimated how much universities charge in fees and overestimated how much graduates will earn in future.
It says the revenue the government expects to get back from loans made to students is “highly uncertain”.
The Office for Budget Responsibility has said that loans will add 0.2% to inflation the first year they are introduced which could lead to “bigger rises in various state benefits and civil service pensions”, the study says.
It says ministers were wrong to think universities would charge average fees of £7,500 a year, saying tuition fees actually average nearly £1,000 more than this.
Hepi is also concerned that the government has overestimated the future earning potential of graduates at £75,000 per year, down from an earlier assumption of £100,000.
Hepi says this is still an “extremely optimistic assumption” given the nature of the world economy and the UK’s in particular.
"That is based on an assumption that the future will be like the past, which is an optimistic and probably unwise assumption," the report says.
It also raises concerns that the government has assumed the rate of salary increases will be evenly spread among all graduates.
Hepi says that over the past 30 years top earning graduates have increased their salaries “very substantially”, while those earning the median or less have had more modest increases if any.
"If low earners increase their incomes by less than higher earners, as has happened in the past, then this seriously impacts on the repayments that the government will receive."
"One of these is that they have assumed average fees of £7,500 - we know that average fees are over £8,200. They haven’t changed their assumption."
"If we are right, and the new policies cost very much more than has been budgeted - and may actually cost more than the arrangements that they have replaced - then there could be serious consequences - for the higher education sector, but more widely as well.
"Either future taxpayers will need to pay more, or other parts of the higher education budget will need to be cut, or student numbers will need to be held down even further than presently planned, or former students will have to repay more."
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For some reason putting people in debt to the tune of a small mortgage, upon the assumption they may get a good job, at a time when the job market is plummeting faster than a lead zeppelin, wasn’t a good idea.
WHO KNEW!? (Most people actually … but it’s nice to see that HEPI and the Beeb are catching up with us on that one …)