A study carried out for the Institute for Public Policy Research claims that around four in ten graduates will never earn enough to repay their student loans.
Previously, Ministers had put that figure at one third of the total student loan bill remaining outstanding, since repayments only start when those taking out such loans begin to earn over £21,000 a year.
Any remaining debts are written off at the end of thirty years.
The research results will be formally published on June 10th, and will state that the missing money would be leaving a multi-billion pound gap in the UK's finances, while making the current funding system "unsustainable".
The report also recommends that students living at home and attending their local university should only be charged a maximum of £5,000 a year for their degree course, as opposed to the current annual maximum charge of £9,000.
The government, according to the report, could save £10,000 per student if those choosing to study for a degree could be persuaded to take courses such as these on the basis that they don't borrow money for accommodation or other living expenses.
Dr Wendy Piatt, Director General of the Russell Group, representing 24 leading research universities, says the idea is worth looking into more closely, but adds: “£5,000 may not be enough to offer a high quality degree. For Russell Group universities, which are committed to providing a world-class research-led learning experience, it would be impossible."
