MPs on the Treasury Committee have launched an inquiry into England’s student loan system, including a potential alternative funding system, shortly after the prime minister said there would be a “major review of university funding”.

The Treasury Committee inquiry will look at recent changes to the student loans system announced by Theresa May, including raising the repayment threshold and freezing tuition fees – along with other areas for potential change such as interest rates – and the impact of these on university finances.

MPs will also “examine the impact of higher education on the public finances, a so-called ‘graduate tax’, and the effectiveness of the government’s management of the student loan book”.

The first evidence session will be held on 18 October, with Helen Carasso, lecturer in higher education at the University of Oxford, and Andrew McGettigan, a writer and researcher on higher education, who have both written on the student loan system.

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Nicky Morgan, chair of the Treasury Committee, said the committee “is appointed to examine government expenditure. Student loan debt is projected to be around £160 billion within six years, and the government has announced that it will review the whole student finance system. The committee will scrutinise the current system and any future developments closely.”

The government has yet to announce any details on the make-up, terms of reference or timing of the “major review” announced by Ms May.

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Tim Bradshaw, acting director of the Russell Group, said: “We need a system of student finance that is fair for students, the taxpayer and for universities too.

“The announcement of an increase in the student loan repayment threshold was a positive move that will help recent graduates. I have previously called for the interest rate attached to student loans to be looked at again and am pleased that this will be considered by the committee.”

john.morgan@timeshighereducation.com