Student Loan Threshold Freeze?

Freeze to student loan repayment threshold would cost students thousands, says report.

19:06 24 September 2015

The Sutton Trust has warned that freezing the £21,000 earnings threshold for repaying student loans in England will significantly increase the cost the going to university.

 

In July, George Osborne has proposed to freeze the student loan repayment threshold forcing graduates whose earnings exceed £21,000 to start repaying their loans starting April 2016.

 

The Sutton Trust warns that should the scheme takes effect, it will affect those from poor backgrounds the hardest. It added that it risks undermining pledges by successive governments to improve social mobility, as well as raising uncertainty in students’ minds over the terms of their borrowing.

 

Based on the report’s calculations, a typical borrower taking out £36,000 over three years will pay an additional £2,800 over 30 years – up from £30,650 to £33,400.

 

Sir Peter Lampl, chairman of the Sutton Trust said: "The fact that this measure will adversely affect low earners and graduates from low income homes, who are already being penalised by the budget shift from grants to loans, is a serious cause for concern."

 

A spokesman for the Department for Business, Innovation and Skills said: "We want our world-class higher education system to remain financially sustainable and welcome responses to our current consultation on the threshold for student loan repayments.

 

"Our reforms to student finance will mean that students from low-income backgrounds receive a substantial increase in the cash-in-hand to help with living costs whilst at university."