I recommend this piece by Rob Ford on paying for higher education through student fees.
One of the curious aspects of the current discussion of whether or not graduates should pay for the university education they have received (someone has to pay) is that the original thinking behind the current fee and loan system had very little to do with considerations of equity and redistribution. It was meant to solve a very practical problem: British universities were skint. Opening the door to more undergraduates (which I assume most people agree was a good thing) could not be achieved under the existing funding arrangements without accepting an Italian or German style mass system in which all who are qualified can come but there are no guarantees there will be a seat in the lecture theatre, or in some cases even a lecture theatre.
Nobody wanted or was advocating the Lidl version of higher education and it was clear that the Treasury would not be sending extra money in the direction of higher education. Anyone who knows anything about the way departmental negotiations with the Treasury work recognizes that when it comes to divvying out the cash, higher education is a very low priority. The clue is in the fact that the Minister of State for Higher Education does not sit in the cabinet. We might wish the world was different, but politics is about dealing with it as it is.
So, if universities were to expand they needed money immediately and if that money was not going to come from the Treasury the only place it could come from was the consumers. If they took out loans then the Treasury was happy to give universities the money up front and sell off the debt.
As it happens there are also redistributive arguments for graduates paying what is in effect a graduate tax, tempered by debt forgiveness for low earners. There is also a case for financial aid for students from the very poorest backgrounds. But redistribution was not really what the current fee system was about.
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