Decades ago, university was the privilege of the wealthy,most people didn't have a degree and most jobs didn't need a degree. The privileged few who went to university got the top jobs and got to be in the privileged wealthiest who sent their offspring to university and so the privilege was baked in generation after generation.
Then came along the golden age of grammar schools and full grants. Ordinary people from non-wealthy families could go to university completely for free and could end up in the top jobs. New universities were founded and started to thrive. Gradually two things happened. Because there were more graduates around, more jobs started specifying that they wanted a graduate. But meanwhile the country was being de-industrialised and youth unemployment started growing. Youth unemployment coukd be significantly affected by encouraging even more young people into university - a student is not unemployed, and there's a growing number of jobs asking for graduates.
But as the 1990s drew to a close it became clear that the cost to universities to educate each student was beginning to significantly exceed the amount that government would pay. The universities had been trying to address this by charging much higher fees to overseas students but that wasn't enough. There had to start being a contribution from the students, which started out as a mere £1000 per year -means tested so those without the ability to pay paid nothing, and grants for living expenses were replaced with loans. The government was still paying most of the cost, the fees were just a contribution to make up the amount the government paid to an amount that the universities could afford to operate with. The fees were relatively modest and in keeping with the higher salaries that graduates could usually command. At the same time a whole bunch of colleges were granted the right to call themselves universities. These institutions were focused on teaching rather than research so theoretically could have lower running costs.
The £1000 became £3000 but as the number of students spiralled up and up it was getting more and more unaffordable to keep it all spinning, and it was really clear that something had to give. In the run-up to the 2010 election it was a hot topic - universities desperately needed their income to catch up with their costs, but the idea of pushing fees further up was unacceptable to the left and not policy for the centrist libdems either. They had plans to reduce or eliminate fees and replace them with a graduate tax, which would ensure that those who got the high-paying top-5%-income jobs paid heavily for the gift of the education that got them there. Pledges were paraded on TV in the run up to the election saying "no increase in university fees". But then the outcome of that election was no overall majority and the coalition government was born.
Two parties with opposing views on what should happen had to work out a compromise. The compromise was to create a scheme for loans combined with fees going up to an eyewatering £9000, and the loan repayments system structured to mimic a graduate tax in all but name.
The justification for this remained the higher salaries that graduates earn but this difference was continuing to erode. Yes there were still some graduates going into really well-paid jobs but the supply of graduates had really well outstripped demand and although the average graduate salary remained higher skewed by a small number of very high salaries, the vast majority of graduates weren't earning very much more than people of the same age group who didn't have a degree.
In theory this shouldn't matter. When the big change to £9000 fees and massive loans happended, the average uk salary was £26,500 and someone on minimum wage was on about £11,000, and the threshold to start repaying your loan was set at £21,000 so you only started paying if you were getting close to that average wage and significantly above minimum wage - ie only those whose education boosted them to be significantly better off than if they hadn't got a degree were paying anything. The less lucky ones who did their degree and then ended up in an ordinary job on an ordinary wage not much better than their non-graduate peers wouldn't pay anything.
If all these figures had kept pace with inflation since 2012 the current fees would be £13,795 but you wouldn't have to start paying anything until you were earning £32,189pa. Instead, fees have been kept artificially low, still not much more than £9000 (a small increase was recently agreed but not enough, universities are teetering on the brink of bankruptcy) but you have to start paying at a salary of £25,000 when the full time salary on minimum wage is £22,500 ish so you have to start paying even if your degree brought you absolutely no benefit whatsoever
Which is why the whole system is broken. It is built on the premise that getting a degree gets you a higher salary, so it's right for you to contribute more. However, that premise isn't true and those who didn't benefit much are paying disproportionately and getting very poor value for money.
You can't really tell, with a random sample of 100 reasonably bright 18 year olds, which 5 will end up earning £100kpa+ thanks to their university education and which will end up in a bog standard job on a less-than-average salary that isn't much more than if they hadn't bothered. It's a gamble. In a civilised society when it's not possible to properly assess the risks and outcomes, the ethical thing to do is to even-up the score with a progressive taxation system where the ones who win the gamble subsidise the ones who lose. The right thing to do would be to write off all student loans and place the whole load of paying the same total burden of revenue into an integrated tax system.