UK Students to Save Over £300 a Year on Loan Repayments

UK graduates will now be able to earn more before repaying their student loans, due to changes in the repayment threshold from today, saving them up to £360 per year.

If you took out student loans anytime from September 2012, you’ll now only need to start paying them back when you’re earning at least £25,000 a year. Previously, the loan repayment threshold was just £21,000.

Around 600,000 graduates, as well as thousands of current students, will benefit from these changes.

For those who took out their loans before September 2012, the repayment threshold has also risen, albeit with a less significant benefit, to £18,330 - up from £17,775 - in line with inflation. 

Amatey Doku, the vice-president for higher education at the National Union of Students (NUS), said: "This change will be a welcome relief for many of the lowest-earning graduates.”

However, research by the Institute for Fiscal Studies found that middle-earning graduates will benefit the most from the change, saving them up to £15,700 in repayments over their lifetimes.

Universities Minister Sam Gyimah called the move a key milestone: “We are seeing more 18-year-olds than ever before attend university, including the highest ever number from disadvantaged backgrounds and we want to give these students a fair deal, both during their studies and afterwards too.”

Is there more to be done?

While today’s news will be welcomed by many graduates, Mr Doku also stressed that the UK government needs to do more to tackle the wider issue of student finance and make studying in the UK more accessible.

“This will not change the fact that our maintenance model is fundamentally regressive - students from the lowest income families accrue £57,000 of debt, compared to £42,000 for their more privileged peers."

Maintenance grants for the poorest students were scrapped and replaced by loans in 2016, and tuition fees remain high at up to £9,250 a year, arguably making studying at university difficult for students from lower income backgrounds. Student loan interest rates are also a concern, as they’re currently set at 6.1 percent. 

Prime Minister Theresa May announced a review of tuition fees and student funding in February, in which she ruled out scrapping tuition fees altogether, but recognized that "the level of fees charged do not relate to the cost or quality of the course".

What do you think? Are you affected by this change? Leave your thoughts in the comments below.