New plans could mean higher amount of student loan repaid


The government intends to change the way student loans are repaid, which could result in people who took their loan out after 2012 paying back a higher amount of their wage than they expected.

The minimum annual salary you must earn before paying back your loan will be frozen at £21,000. Previously, this threshold increased with average earnings at the same rate, and it would mean the pay-back date for many was delayed.

This is being done in an attempt to reduce the amount of debt the country has, but the plans have been criticised.

Lower-paid graduates will be hit hard by the changes, campaigners say, as a larger percentage of their monthly income ends up being paid to the government.

If you received a loan after 2012, you will have expected to have to repay 9 per cent of everything you earn above £21,000 (until the loan has been fully repaid).

Giving an example of how it would work if the threshold does not rise with the average salary, the NUS said: “If you earn £25,000 and the threshold is £23,000, you repay £180 a year. If the threshold is frozen at £21,000, you pay £360 a year.”

Approximately 190,000 people are likely to be affected by the change by 2020. Currently, university students in England and Wales can be charged up to £9,000 a year by their universities.

“Freezing the repayment threshold won’t just affect new students but those who started studying from 2012/13. It will have a real impact on the income of graduates, particularly the most disadvantaged and those on lower earnings,” said Sorana Vieru, of the NUS.