Huge student loan shake-ups explained – including why you might still be paying back at 60

The student loan repayment period will be extended to 40 years for those starting their studies in September 2023 as part of a massive overhaul of the scheme for new graduates

Ministry of Education figures show that currently only 23% of students will repay their loan in full

Graduates could find themselves repaying their student loans in their 60s under reform plans to be launched next year.

Under current rules, students start repaying their loans when they start earning £27,295.

It then lasts 30 years, after which it is deregistered. The most recent figures from the Department for Education show this means that only 23% of students repay their loans in full.

However, under new measures, students starting university courses in 2023/24 will have to start paying back their loans once they have earned more than £25,000, the government has announced.

The repayment period will then be extended to 40 years, meaning a 21-year-old graduate could still repay their loan at age 61 or more – a time when many are approaching retirement age.

The government said this would mean a graduate earning £28,000 would pay back £17 a month.

But, under the reforms, graduates will repay 81p of each pound. Right now you only pay 59 pence for every pound you borrow.

The reforms would mean that more than half of students who take out a loan to start a full-time university course will pay off their debt in full, the government has said.

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Interest rates will also be reduced for new students so that their loan balance increases with the rate of inflation.

The government’s long-awaited response to Augar’s review of higher education funding also announced a “crackdown on shoddy university courses that do not benefit long-term graduates”.

And students who have failed to achieve Grade 4 GCSEs in maths and English, or two E grades at A level, would potentially be barred from accessing the loans.

A second consultation sets out plans to offer a lifetime loan entitlement for people to ‘flexibly retrain at any point in their lives’, worth the equivalent of £37,000, or four years of studies after 18 years.

The Department for Education said the changes would “rebalance the burden of student loans more equitably between student and taxpayer and ensure that in future graduates do not repay more than they borrowed in real terms”.

Meanwhile, tuition fees will be capped at £9,250 for a further two years, while student loan interest rates will not exceed the rate of inflation from 2023/24.

The government said this meant a student starting a three-year course in 2023/24 could see their debts reduced by up to £11,500 by the time they were due to start paying back the loan.

It comes just weeks after Chancellor Rishi Sunak announced a student loan threshold freeze, meaning many graduates will pay tax on an extra £1,255 this year.

Higher and Further Education Minister Michelle Donelan said the consultation on minimum loan eligibility requirements had made it clear that this was not a “set” direction.

“But it’s something that I think it’s fair that we explore as an option. We used to have a two-E entry requirement into this country,” she said.

“We all know there are young people who get three Es every year who feel pressured and pressured to go to college before they’re ready, and I think that’s doing them a disservice,” added Mrs Donelan.

She said the requirements would have exemptions for mature students, and pupils who did not pass the GCSE in English or maths but then achieved the equivalent of three Cs at A level would also be exempt.

In 2021, 4,800 students entered higher education without a pass in English and GCSE maths



In 2021, 4,800 students entered higher education without a pass in English and GCSE maths.

Ms Donelan said the changes were “absolutely not” aimed at getting fewer people to go to university.

“It’s not about pushing people towards or away from college – it’s about having a system designed to be tailored to the individual,” she said, adding that “the obsession” with goals or quotas for students had to stop.

“This is a government that is committed to real social mobility, and real social mobility isn’t about bringing someone to the front door, so it’s not about bringing a child to college and then do some work,” she said.

“It’s not a job done if they drop out after a year or if they then get that degree and it never leads them to a graduate job – that’s not a quality education and it’s not a job. is not a quality result.”

Ms Donelan said the £161billion debt on the student loans book in April 2021 was a “significant sum” and there needed to be “equity for the taxpayer as well as the graduate”.

Are the changes fair? Let us know your views in the comments section below.

Education Secretary Nadhim Zahawi said: “Our country’s world-class universities and colleges are key to improving opportunities by opening up access to a range of flexible, lifelong post-18 options. life to help people train, retrain and improve.

“These changes will create a fairer system for students and the taxpayer.”

Ms Donelan said: “We are providing a fairer system for students, graduates and taxpayers, and the sustainability of the student funding system.

“We are freezing tuition fees and reducing interest rates for new student borrowers, ensuring that under these terms no one pays back more than they have borrowed in real terms.”

Sir Philip Augar, Chair of Augar’s Higher Education Review, said: “The Skills Bill already before Parliament, the right to lifelong learning , student finance reforms and the refocusing of higher education provide a framework that is fair, sustainable and has the potential to drive the entire economy forward.”

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