Student Finance: The Biggest Change in a Decade
With the new academic year coming up, there will be changes within the student loan system. In this article, we will discuss these changes and how they will impact.
When you take out a student loan you must agree to repay your loan in line with the regulations that apply at the time the repayments are due, subject to the regulations being amended from time to time.
There are three major changes coming to new university students in England this September, as highlighted by Martin Lewis.
What impact will the three changes have?
These changes are only for students in England and will have a long-term effect on costs to students.
Two of these changes will have a negative effect on students, but a positive impact for the taxpayer. The first two that we will mention in this article are also only valid for new students starting in September 2023.
Let’s dive into the 3 changes…
Repayment threshold lowered
The annual wage you will need to earn before you must start repaying your loans will be lowered. Students starting in September 2023 will need to earn more than £25k a year before they have to start repaying their loans.
40 years to repay
The next change coming to student loans in September is that the repayment timeframe will be increased from 30 years to 40 years. This means that students will basically be repaying their student loans their whole working life, making it more like a graduate tax than a loan.
Interest rate lowered
The interest rate on student loans is currently above inflation, however it is being lowered to be in line with inflation rates. Meaning that in real terms, students won’t be paying any added interest.
What does this mean?
Currently, students are paying 56p in the pound, and the state are paying 44p. After these changes are implemented, students will be paying 81p in the pound compared to 19p from the state.
All this means that many graduates will now be paying double in the new system, moving funding from the taxpayer to the student themself.
Read more about student loans here.
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