Students who start uni next year will be still paying for it in their 60s, plans say
The government says the new plans will reduce the bill for taxpayers
Students who start university next year could be paying off their student loans into their 60s as part of new government proposals for student finance.
Currently, student loans are written off if they've not been paid back after 30 years.
However the government plans to scrap this measure and extend the repayment period to 40 years, in a move that they say will reduce the amount taxpayers have to pay.
Labour has said the plans will "hit those on low incomes hardest," the BBC reports.
The new plans would come into effect for students in England starting university courses from September 2023.
Other proposals in the plans are:
- The maximum a university can charge for a course per year will be frozen at £9,250 for a further two years.
- The income level at which graduates start repaying their student loan will be reduced from £27,295 to £25,000 and this will remain set until 2026-27.
- The interest rate will be cut to the Retail Price Index (RPI) only.
The student finance shake-up is in response to the 2019 Augar review of post-18 education. Although this suggested that repayments should be extended to 40 years, it also said that tuition fees should be cut to £7,500.
There are no suggestions that tuition fees should be lowered.
More students than ever are going to university but only a quarter of students who started in 2020 are expected to pay back their loans in full.
According to government figures, the average debt for students finishing their studies in 2020 was £45,000.
With the extension to the repayment period - and plans to make graduates start repaying once they are earning £25,000 or more - the government hopes more graduates will pay back their loans in full.
The amount of loan repaid is tied to monthly income. At the moment, students in England or Wales who started an undergraduate course after September 1 2012 start repaying their loan once their income is more than £27,295.
They then repay nine per cent of the amount they earn over this threshold. Higher-earning graduates will therefore clear their debt much quicker than middle and low-earning graduates.
Labour has said the new plans "simply store up problems for the future" instead of "fixing the broken system."
Shadow Education Secretary Bridget Phillipson called it a "stealth tax for new graduates starting out on their working lives, which will hit those on low incomes hardest."
She added: "Instead of fixing the broken system, these changes simply store up problems for the future.
"Ministers are kicking the can down the road while seeking to limit young people's aspirations to study at university."
You can find out more about student loan repayments on the government website.
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