Following on from the trebling of tuition fees back in 2012, the Government are now making plans to alter the way in which we pay back student loans, putting us more out of pocket. For anyone who has taken out a loan after 2012, read on: this will affect you.
Currently, graduates are supposed to pay back 9% of anything earned above £21,000 and this figure will increase in correlation with average earnings in order to make this a fair and reasonable system. However, Government now have plans to freeze the repayment threshold and keep it at £21,000. In his blog, Martin Lewis explains this with an example: if the repayment threshold was increased to £23,000, and a graduate was earning £25,000, they would have to pay back £180 per year, whereas if the threshold is frozen, that figure would rise by 50% to a staggering £360. In this instance, the payment will have doubled; this is not the small change that the Government are making it out to be.
This new reform will hit lower paid graduates particularly hard, and those from lower income backgrounds who will have received a higher maintenance loan for the duration of their studies. Indeed, it has been calculated that students will have to pay an extra £2,800 on average, over the thirty years, before the debt is wiped.
Whilst this is bleak news for those of us with mounting student debt, it has not been finalised yet. In fact, there is still another week to have your say via a Government consultation process. If you’re tired of changes which disadvantage students, then follow this link below and email or post in your views.