Starting from 2023, students could be in debt up to 40 years after graduating.
Currently, student loan debt is written off after 30 years. The changes effective for courses beginning in 2023 onwards have met with both scrutiny and praise. University fees will be capped per course per year at £9250 for the next two years.
The salary threshold for paying back loans will be lowered, meaning graduates will begin repaying when earning above £25,000, down from £27,295.
Interest rates will be reduced to match the current RPI (Retail Price Index), rather than RPI plus up to 3% whilst at university, and varies dependent on graduate salary from the April after graduation.
Graduates are more likely to have to pay debt back under new rules. Education secretary Nadhim Zahawi says the £900million investment will reform the current system to make student finance “fairer.”
More people than ever are going to University, and increased demand inevitably makes quantity supersede quality. The Government pledges to “clampdown on poor-quality university courses” that don’t lead to a graduate job with a good wage.
This aims to reduce outstanding student debt, which reached £161 billion in March 2021, and relieve pressure from taxpayers to cover these costs. But plans to cut student finance for students without Maths and English GCSEs met substantial criticism on Twitter.
Only 25% of students that began undergraduate courses in 2020 are projected to pay their loans back in full. It’s not clear whether the new rules benefit graduates, taxpayers or universities most. But one thing is clear: low-earners benefit the least.
Highly-paid graduates will be most advantageous under the proposed changes, as high earners currently pay interest of up to 3% plus RPI, but most likely pay their loans off in full regardless. The new fixed rate means they will end up paying back 26% less. Students from the north of England, Yorkshire and the Humber and the Midlands, will see their repayments rise by up to 150%.
The government is also considering introducing minimum eligibility requirements to reduce the number of undergraduate students, and ensure they aren’t being manoeuvred towards ill-suited and low-cost courses.
Many predict the phasing out of degrees deemed “low quality” would target students in creative and vocational subjects.
In addition, the argument that 52% of students from disadvantaged backgrounds achieve a 4 and above GCSE Maths and English, in comparison to 71% of students in England from other backgrounds. Guardian columnist, Laura McInerney even suggested that the reforms “let rich kids avoid these rule[s].”
