Universities need more funding. When fees were set at £9,000 maximum - even then that was too low. If it had kept pace with inflation it would be nearly £12k now so £12.5k is certainly reasonable.
The student loan system is functionally almost identical to there being no fees, free maintenance grants, and all funded from a graduate tax. The main differences are that the money can theoretically still be collected if the graduate leaves the country, and that the wealthiest get to stop paying eventually (most middle earners will retire before they pay it all back)
I do think it needs reform.
I don't think the burden should fall solely on graduates. We all benefit from a highly educated population in a myriad of academically challenging fields. 10% was far too low a proportion - though it is possible that 50% is too high.
I think there should be places at university for everyone capable of getting at least BCC at ALevel, with some flex in contextual offers for people who get at least CDD from challenging circumstances. There should also be a wide variety of vocational and specialist courses which are not at university level and don't pretend to be, for those who don't reach that attainment level, which it certainly should be possible to deliver for about half the cost of a university place because such colleges do not need to maintain the facilities of a full university.
There should be MUCH higher expectation that anyone who lives within a reasonable commute of a university willing to offer them a place should live at home with their parents and get their university education there, with each university having a quota they can offer to applicants to specialist courses that their local universities don't offer, and a small number of elite universities (not just oxbridge but limited to top 8-10) able to offer to anywhere in the country.
This will massively reduce the burden of funding thousands of 18-21 year olds to live away from home when there's a bed for them at their parents' house. This shift should include extending the child benefit paid to parents until the end of their undergraduate course if the child is living at home, and no maintenance grant unless the household income is so low that having an economically inactive adult at home for 3/4 years would trigger serious hardship.
Those who can't live at home should have a maintenance grant which is enough to pay a reasonable basic rent, eat and cover basic reasonable expenses if their parents have low income. On a sliding scale to zero if their parents have a household income of £100,000+ (with adjustments if there are numerous university age siblings).
There should be significant tax break incentives for parents to save towards such contributions if they are in the relevant income bracket, with appropriate pathways to rewind the tax breaks if the child doesn't need it, and locked into being held in the parents name not the child's unlike the current Child ISA type products (which the child can choose to spend on a car or a holiday when they turn 18) but can only be disbursed to the relevant child if they qualify for the university support.
And fees should be ultimately funded from taxes on everyone. Life is a lottery and not every graduate wins a big salary, and not everyone who wins a big salary is a graduate - but the whole of society benefits when top quality education is available freely to those who can benefit.
The one loophole that makes the loans scheme better than a tax is for capturing payments from those who leave the UK. There must be a way to close that loophole. US citizens have to pay taxes wherever they live, it must be feasible to make some portion of income tax still apply if you leave if you benefited from state-funded education.