Student Loan Repayment Threshold to Rise to £25k | Redbrick | University of Birmingham

Student Loan Repayment Threshold to Rise to £25k

An estimated 600,000 graduates are set to benefit from a rise in the student loan repayment threshold, meaning that they will have to earn an annual salary of £25,000 before having to repay any money

The change affects English and Welsh students who took out loans after September 2012, the year in which tuition fees rose to £9,000 a year, and could save them up to £15,700 over their lifetimes according to calculations by the Institute for Fiscal Studies (IFS).

Last autumn, Theresa May announced that the previous threshold of £21,000 was set to rise from this financial year, but the new figure was only confirmed this week. The controversial interest rate of 6.1% remains unchanged.

Doku: I hope that this will not preclude a more in-depth consideration as part of the upcoming review into post-18 funding, lest this becomes patching up the holes on a sinking ship

Although the IFS predict that middle-earning graduates will benefit the most from the rise, those earning less will also see reductions in their yearly repayments before their debts are written off after 30 years, with the average graduate saving a total of £10,000 across that period – boiling down to around £330 a year, or just under a pound a day.

Those with larger pay packets will only experience an extension to the time that have to repay, as they are more likely to pay back their loans in full.

Amatey Doku, the National Union of Students’ vice-president for higher education, has praised the rise as a ‘welcome relief for many of the lowest-earning graduates’. He added: ‘In recent years the expected repayment for the lowest-earning graduates has increased by 30%, thanks to the freezing of the cap at £21,000 instead of rising slightly each year.

‘However in making this change, the government has at least acknowledged that there are serious flaws in how we fund higher education in this country.

‘I hope that this will not preclude a more in-depth consideration as part of the upcoming review into post-18 funding, lest this becomes patching up the holes on a sinking ship’.

Gyimah: Not only will it benefit hundreds of thousands of graduates in the next financial year alone, but millions in the years to come

The IFS’ Laura van der Erve has warned that the rise will, however, ‘significantly increase’ the government’s cost of providing higher education, which she predicts will rise ‘by more than £2bn a year, an increase of nearly 40%’.

Despite this, Universities Minister Sam Gyimah has also welcomed the change as a ‘key milestone’ in the government’s support of students in higher education, saying: ‘Not only will it benefit hundreds of thousands of graduates in the next financial year alone, but millions in the years to come’.

Speaking to Redbrick, a second year English student commented: ‘Yes, the threshold rise is progress in a sense, but it’s the high interest rate that is problematic for most students’.

A recent UoB graduate added: ‘I’m very unlikely to pay the debt off anyway, so this change will not make any real difference’.

Redbrick News Editor & Elections Editor 2018. 2nd Year BA English Language and Literature. (@ErinSantillo)



Published

10th April 2018 at 9:00 am



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Faustin Tuyambaze



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