Reports this morning claim that students who start university next year could be paying off their loans for 40 years after they graduate.
Loans are written off after 30 years under the current system, but ministers want to extend the repayment period to reduce the bill for taxpayers – a move which Labour says will “hit those on low incomes hardest”.
Under the current system says the Government, more people than ever are going to university but too often, students are racking up debt for low-quality courses that do not lead to a graduate job with a good wage.
This means that some students never even start paying off their student loan. And currently, only a quarter of students who started full-time undergraduate degrees in 2020/21 are forecast to repay their loans in full.
The cost of student loans is increasing quickly. The value of outstanding loans at the end of March 2021 reached £161 billion and it is forecast to rise to half a trillion pounds by 2043.
The government has also announced a consultation on plans in England that would make university student loans unavailable to pupils who fail their maths and English GCSEs, or do not get two A-levels at grade E or above.
The government has also announced the tuition fee cap will be frozen at £9,250 for a further two years – up to and including 2024/25
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 lifelong 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 for all to high interest rates on their student loans.
I am delighted to oversee such a substantial amount of investment – nearly £900m – 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.
Higher and Further Education Minister Michelle Donelan:
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. This Government is delivering on its manifesto pledges.
We are investing an extra £900m in our post 18 education system and bringing about a revolutionary change in the way students can study, retrain and upskill throughout their lifetime.
