Students starting university in England from September 2023 could be repaying their loans for up to 40 years after graduation, under new government proposals. Currently, loans are written off after 30 years. The government says extending the repayment period will reduce the burden on taxpayers, but Labour warns it will hit those on low incomes hardest.
The plans, part of a response to the 2019 Augar review, include freezing the maximum tuition fee at £9,250 for two years, lowering the repayment threshold from £27,295 to £25,000, and cutting interest rates to match the Retail Price Index (RPI). Graduates will start repaying at a lower income level and continue for an extra decade.
Only 25% of students who started full-time degrees in 2020 are expected to repay their loans in full, with average debt at £45,000. Outstanding loans reached £161bn by March 2021, forecast to rise to £500bn by 2043. The government hopes these changes will increase full repayments.
Students like Sonal and Maryam, who plan to start university this year, expressed concern about the impact on peers taking gap years. Sonal said the policy seemed unfair and raised questions about who pays most. Maryam welcomed the focus on degree quality but worried about minimum grade requirements for loans, especially for non-native English speakers.
Education Secretary Nadhim Zahawi said the reforms would make student finance fairer and more sustainable. However, analysis suggests middle earners will pay longer, while high earners benefit most from lower interest rates. The highest lifetime earners could see repayments fall by 26%, creating political risks for the government's levelling-up agenda.
