University students in England are offering to accept higher interest rates on their loans in exchange for an immediate £2,700 discount on their tuition fees as compensation for the disruption to their education caused by the Covid pandemic.

A group of students unions led by the London School of Economics and the University of Sheffield have written to the education secretary, Gavin Williamson, and the universities minister, Michelle Donelan, to propose that the government funds a 30% tuition fee rebate for all students this year by increasing interest rates by 3% to 6.2%, meaning it would be repaid only by the highest earning graduates.

The letter stated: “We are asking for immediate financial justice for Covid-affected cohorts of university students. In an ideal world, education should be free; however, in a year when students are calling for compensation on their fees, we have created a fiscally neutral solution to adjust tuition fees, supporting students with a one-off payment.”

The student leaders, who are all from research universities in the Russell Group, based their calculations on modelling from the London Economics consultancy. It suggested that increasing the interest rate on student loans would mean that the £1bn cost of the 30% rebate would be paid for by high-earning graduates, because loans are written off after 30 years, rather than the taxpayer or graduates on low incomes.

The average male graduate would pay £6,500 more in loan repayments over their lifetime, with the very highest earners paying up to £29,800 more, but female graduates on average salaries could repay the same amount because their lifetime earnings are lower.

The pandemic meant most students were barred from their campuses from the end of the autumn term until 17 May, so they missed out on in-person teaching, access to facilities such as libraries, and social and extracurricular activities. Many were frustrated to find themselves unable to access rooms in halls of residence and flats they had already paid for.

“Universities pitched themselves wrong in the summer of 2020. They were overzealous in their recruitment of students, which contributed to unrealistic expectations of what this academic year would look and feel like. It’s led to a situation where students are extremely angry they’re being charged extortionate prices for their education,” said David Gordon, the general secretary of LSE students’ union.

Some students have voiced their anger with universities this year through rent strikes, building occupations and socially-distanced protests. Gordon said the refund modelling was an attempt to find a constructive way to speak to the government about compensation after exhausting other avenues, including the Competition and Markets Authority, the Office of the Independent Adjudicator, which handles student complaints, and the Office for Students, the higher education regulator for England.

The letter was signed by 17 students’ unions from LSE, UCL, King’s College and Queen Mary in London, Queen’s University in Belfast, and the universities of Exeter, Edinburgh, Liverpool, Leeds, York, Glasgow, Durham, Manchester, Cardiff, Sheffield and Bristol. Students in Scotland, Wales and Northern Ireland signed the letter in a display of solidarity with unions in England.

A Department for Education spokesperson said: “Universities have a strong track record in delivering excellent blended tuition, and we have been clear from the start of the pandemic that the quality and quantity should not drop.

“The Office for Students will be monitoring to ensure this is the case, and universities should be open about what students can expect.”