Threshold for student loan repayment rises

Apr 6, 2018


By Kate Brown

English and Welsh students who took out student loans from September 2012 (when University fees in England rose to £9,000 a year) will now start to pay back their loan when they earn £25,000 a year instead of £21,000. The change will also lower the repayments of those earning over £25,000 as the percentage of salary paid back will be on a smaller amount.

According to The Department for Education, some 600,000 graduates will benefit over the next financial year alone, with yearly savings up to £360. Research from the Institute for Fiscal Studies (IFS) found that raising the repayment threshold to £25,000 has meant that middle-earning graduates are benefited most with approximate savings of up to £15,700 in repayments over their lifetime. It is also predicted that lower-earning graduates will see a smaller reduction in lifetime repayments as they will likely earn below the threshold for a significant part of their career. High-earning graduates who repay their loans in full will see a reduction in yearly repayments.

Economist Laura van der Erve from the IFS said: “Overall, repayments will fall by around £10,000 for the average graduate as a result of the threshold increase”. The National Union of Students welcomed the change and said it was a “relief” for many.

Related Articles:

Student loans – a tax on the intelligent

University fees and funding under scrutiny

Uncapped fees rather than graduate tax for students



Other posts you might like:

Get a helping hand for your business.