Students to repay loans after earning £25,000 per year

Graduates will be required to pay back their loans when they earn £25,000, instead of £27,295 per year

Author: Majid MohammedPublished 24th Feb 2022
Last updated 27th May 2022

The government has announced they are lowering the threshold for repayment of student loans to start at an annual income of £25,000 per year. In addition, the government is also extending the repayment period.

Currently, graduates are required to pay down their student debts once they earn £27,295 per year. However, under new plans from the government, students will start repaying once they earn £25,000 per year.

The government also plans to cut the interest rate on new student loans so their loan balance rises with the rate of inflation.

The repayment period will also be extended from 30 years to 40 years for students starting their course in September next year.

These announcements come after the release of the long-awaited Augar review into higher education funding, which also recommended freezing tuition fees for a further two years at £9,250 per year.

The government claims by making these changes, graduates will pay back 81 pence of every pound of their student debt. Currently graduates by 59 pence of every pound.

Improving standards

Higher and Further Education Minister Michelle Donelan said, “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."

In addition to lowering the threshold for repayments and adjusting the interest rate charged, the government is looking into clamping down on “poor-quality university courses that don't benefit graduates in the long-term".

One measure is potentially blocking students who fail to achieve grade 4 in GSCE Maths and English, or two E grades at A-level from accessing student loans.

A consultation published on Thursday 24th February considered introducing a minimum entry requirement, “to ensure students aren't being pushed into higher education before they are ready", as well as student number controls.

Lifelong Loan Entitlement

A second consultation sets out plans for Lifelong Loan Entitlement for people to “retrain flexibly at any time in their lives” worth the equivalent of £37,000, or four years of post-18 education”.

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 life-long, flexible post-18 options to help people train, retrain and upskill.

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