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Anger after uni grads to start paying back loans at 25k instead of 27k under new plans
24 February 2022, 00:01 | Updated: 24 February 2022, 00:52
There has been growing anger from students after plans were announced to hit them with earlier loan repayments.
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The Government has announced that students starting university courses in 2023/24 will have to start paying back their loans once they earn more than £25,000.
The current salary threshold for repaying student loans is £27,295.
On top of this, the student loan repayment period will be extended to 40 years for students starting courses in September 2023.
The current repayment term is 30 years, after which the loan is written off.
The Government has said the change will mean a graduate earning £28,000 would pay back £17 a month.
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But the plans have been criticised, with education bosses saying it offered students "a devil's bargain" at a time where the cost of living in the UK is soaring.
University and College Union general secretary Jo Grady said young people would be faced with "saddling themselves with a lifetime of debt in an effort to improve their life chances".
Geoff Barton, general secretary of the Association of School and College Leaders, said he understood the need to take action and welcomed another Government announcement of an interest rate cap, but said the plans also had a "sting in the tail".
"We welcome steps to reduce student loan interest rates and we understand the need to address the scale of the student loan book," he said.
"However, this comes with a sting in the tail as students will now face 40 years rather than 30 years of repayments."
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The reforms would mean that more than half - 52 per cent - of students who take out a loan to start a full-time university course will repay this in full, while under 25 per cent were expected to repay their loans fully if the changes did not go ahead, the Government said.
The repayment threshold for new students starting courses will be set at £25,000 until 2026-27.
Tuition fees will be capped at £9,250 for a further two years, while student loan interest rates will be set at no higher than the rate of inflation from 2023/24.
The Government said this meant that a student starting a three-year course in 2023/24 could see their debts reduced by up to £11,500 at the point where they had to start repaying the loan.
The long-awaited Government response to the Augar review into higher education funding also announced a "clampdown on poor-quality university courses that don't benefit graduates in the long-term" - which, according to a consultation published on Thursday, could include blocking students who did not gain grade 4 GCSE passes in maths and English from getting student loans.
The move is partly to "ensure students aren't being pushed into higher education before they are ready".
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A second consultation sets out plans for delivering a Lifelong Loan Entitlement for people to "retrain flexibly at any time in their lives", worth the equivalent of £37,000, or four years of post-18 education.
The Department for Education said the changes would "rebalance the burden of student loans more fairly between the student and the taxpayer and ensure that in future graduates don't pay back more than they borrowed in real terms".
Higher and further education minister Michelle Donelan said the £161 billion debt on the student loan book as of April 2021 was a "sizeable sum" and that there needed to be "a fairness for the taxpayer as well as for the graduate".
Education Secretary Nadhim Zahawi said: "Our country's world-leading universities and colleges are key to levelling up opportunity by opening up access to a range of life-long, flexible post-18 options to help people train, retrain and upskill.
"This package of reforms will ensure students are being offered a range of different pathways, whether that is higher or further education, that lead to opportunities with the best outcomes - and put an end once and for all to high interest rates on their student loans.
"I am delighted to see such a substantial amount of investment - nearly £900 million - reinforced by a revised, fairer and more sustainable student finance system which will keep higher education accessible and accountable.
"These changes will create a fairer system for both students and the taxpayer."
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Ms Donelan said: "We are delivering a fairer system for students, graduates and taxpayers as well as future-proofing the student finance system.
"We are freezing tuition fees and slashing interest rates for new student loan borrowers, making sure that under these terms no-one will pay back more than they have borrowed in real terms."
She added: "We are investing an extra £900 million in our post-18 education system and bringing about revolutionary change in the way students can study, retrain and upskill throughout their lifetime."
Sir Philip Augar, chairman of the Augar review into higher education, said: "The Skills Bill already going through Parliament, the lifelong learning entitlement, the reforms to student finance and the refocusing of HE provide a framework that is fair, sustainable and has the potential to drive the whole economy forward."