Now the dust has settled on the government’s spending review and vice-chancellors have reassured themselves that it wasn’t just a dream, relief is sweeping the higher education sector. Despite the dire warnings of savage cuts, the research budget has been protected. Largely, the spending review will mean business as usual.

But there are changes in the small print. After all, savings had to be found and, as is so often the case, they’ve come at the cost of the most vulnerable and least able to protest. At a time in which it has been reported that student fees in England are the highest in the OECD, and the government tells us we must put “students at the centre”, students will in fact be further squeezed and those from poorer families squeezed the hardest.

Previously, students from families with an annual income below £25,000 qualified for a full grant – a somewhat misleading phrase, as it meant “full” in the sense of “the largest offered” rather than “pays all your fees”. It was worth £3,387 a year and is disappearing, to be replaced with a loan. At my university, University College London, about 25% of UK students qualify for the full grant, with many more on partial grants. If students from low-income families take out all the loans available to them, for maintenance as well as fees, they will graduate owing close to £60,000, even before interest starts to clock up.

How will they pay it back? The basic answer is that they will pay 9% a year of earnings above the threshold of £21,000 until it is repaid, although anything remaining when they hit 55 will be written off. Until the spending review, the earning threshold was to increase with inflation. Now it is being frozen, which creates some of the future savings needed to protect the research budget. But this retrospective change sets a dangerous precedent. What next? Increase the payback rate?

But even as things stand, paying back the loan is no trivial matter. Under UK tax laws, from 2016-17 no tax will be paid on the first £10,800 of income, although national insurance, at a surprisingly high rate of 12%, kicks in at about £8,000. Between earnings of £10,800 and the new upper tax threshold of £42,700 income tax is 20%. When you add student loan repayments of 9% to tax and NI, 41% will be deducted through PAYE on earnings between £21,000 and £42,700, with any contribution to a pension plan on top.

Of course, one advantage of taking a degree is the boost to your earnings, and many graduates will, fairly soon, find themselves in the upper tax band. At this point the rate rises to 40%, but NI falls to 2%, netting out at 42%.

Looked at this way, with a lower deduction band of 32% and a higher deduction of 42%, we are far closer to a regressive flat tax regime than is generally recognised. But still, a higher-rate taxpayer with a student loan will face deductions of 51% on earnings above £42,700. If they have taken a further loan to fund a master’s degree, an additional 6% loan repayment is required, leaving a measly 43p in the pocket per extra £1 earned, even before pension contributions.

These are marginal rates of taxation rarely seen since the pre-Thatcher years. But they’re not for the fat cats. Rather, they hit those at a stage in life when they are trying to buy their first home and raise a family. If you are earning £50,000, you’ll be paying back your student loan for 20 years or more.

Of course, if you didn’t need to take out a loan, or if your family paid it all off for you, this may sound like a lot of fuss about nothing. But for students from modest backgrounds there is no fairy godmother to wave a magic wand. A university degree may well be a ticket to social mobility, but if we wanted to design a funding system to crush aspirations, we could hardly do better.

Jonathan Wolff is professor of philosophy and dean of arts and humanities at University College London