Students in England to pay back loans over 40 years instead of 30
Students in England will have to pay back university loans over 40 years instead of 30 under swingeing reforms designed to save the Treasury tens of billions of pounds.
The number of students expected to pay back their loan in full is expected to double from under a quarter (23%) to more than half (52%) as a result of the changes, which will see many graduates paying for their degree until retirement in what was described as a “lifelong graduate tax”.
In a move designed to sugar the pill, interest rates on student loans will be slashed for new borrowers and set at no higher than the rate of inflation from next year – but experts said this would disproportionately benefit higher earning graduates.
The controversial measures form the backbone of the government’s long-awaited response to the Augar review of post-18 education and funding, which will be detailed in a statement to parliament on Thursday.
In a double whammy, graduates will also be asked to start paying off their debt sooner after the government confirmed the repayment threshold will be cut from £27,295 to £25,000 for new borrowers starting courses from September 2023.
Annual tuition fees will be capped at £9,250 for a further two years, keeping costs down for students but hitting universities, which have seen the value of tuition fees eroded over the years due to inflation.
The Department for Education (DfE) said the changes would “rebalance the burden of student loans more fairly between the student and the taxpayer and ensure that in future graduates don’t pay back more than they borrowed in real terms”.
But Martin Lewis, founder of MoneySavingExpert.com, warned that most university leavers would pay thousands of pounds more for their degrees over their lifetime
Read more on theguardian.com
