Student loan repayments will start at £25,000

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Students starting university courses in 2023/24 will have to start paying back their loans once they have earned more than £25,000, the government has announced.

The threshold for new students starting courses will be set at £25,000 until 2026-27, while the current salary threshold for student loan repayment is £27,295.

The government said this would mean a graduate earning £28,000 would pay back £17 a month.

The student loan repayment term will also be extended to 40 years for students starting their studies in September 2023.

We all know there are young people who get three Es every year who feel pressured and pressured to go to college before they’re ready, and I think that’s doing them a disservice.

The government’s long-awaited response to Augar’s review of higher education funding also announced a “crackdown on shoddy university courses that do not benefit long-term graduates”.

Students who failed to pass Year 4 GCSEs in Maths and English, or two E grades at A level, would potentially be barred from accessing the loans.

A consultation published on Thursday envisages the introduction of minimum entry requirements ‘to ensure that students are not pushed into higher education before they are ready’, as well as checks on the number of students .

The second consultation sets out plans to provide a lifetime loan entitlement allowing people to ‘flexibly retrain at any time in their life’, worth the equivalent of £37,000, or four years of studies after 18 years.

The Department for Education said the changes would “rebalance the burden of student loans more equitably between student and taxpayer and ensure that in future graduates do not repay more than they borrowed in real terms”.

The reforms would mean that more than half (52%) of students who take out a loan to start a full-time university course will pay it back in full, while less than 25% would have to repay their loan in full if the changes go wrong. to come, the government said.

Tuition fees will be capped at £9,250 for a further two years, while interest rates on student loans will not exceed the rate of inflation from 2023/24.

The government said this meant a student starting a three-year course in 2023/24 could see their debts reduced by up to £11,500 by the time they were due to start paying back the loan.

Minister for Higher and Further Education Michelle Donelan (Aaron Chown/PA) (PA wire)

Higher and Further Education Minister Michelle Donelan said the consultation on minimum entry requirements for loans had made it clear that this was not a “set” direction of travel.

“But it’s something that I think it’s fair that we explore as an option. We used to have a two-E entry requirement into this country,” she said.

“We all know there are young people who get three Es every year who feel pressured and pressured to go to college before they’re ready, and I think that’s doing them a disservice,” added Mrs Donelan.

She said the requirements would have exemptions for mature students, and pupils who did not pass the GCSE in English or maths but then achieved the equivalent of three Cs at A level would also be exempt.

In 2021, 4,800 students entered higher education without a pass in English and GCSE maths.

Ms Donelan said the changes were ‘absolutely not’ aimed at getting fewer people to go to university.

“It’s not about pushing people towards or away from college – it’s about having a system designed to be tailored to the individual,” she said, adding that “the obsession” with goals or quotas for students had to stop.

“This is a government that is committed to real social mobility, and real social mobility isn’t about bringing someone to the front door, so it’s not about bringing a child to college and then do some work,” she said.

This set of reforms will ensure that students are offered a range of different pathways, whether higher or further education, which lead to opportunities with the best outcomes.

“It’s not a job done if they drop out after a year or if they then get that degree and it never leads them to a graduate job – it’s not quality education and it’s not not a quality result.”

Ms Donelan said the £161billion debt on the student loans book in April 2021 was a “significant sum” and there needed to be “equity for the taxpayer as well as the graduate”.

Thursday’s announcement included plans to reduce the cost of foundation year courses and a new national state scholarship to help high-achieving students from disadvantaged backgrounds gain access to higher education, continuing education and to learning.

Education Secretary Nadhim Zahawi said: “Our country’s world-class universities and colleges are key to improving opportunities by opening up access to a range of flexible, lifelong post-18 options. of life to help people train, retrain and improve.

“This package of reforms will ensure that students are offered a range of different pathways, whether higher or further education, which lead to opportunities with the best outcomes – and will end the rates once and for all. high interest rates on their student loans. .

“I am delighted to see such a significant investment – ​​almost £900million – bolstered by a revised, fairer and more sustainable student funding system that will keep higher education accessible and accountable.

“These changes will create a fairer system for students and the taxpayer.

Ms Donelan said: “We are providing a fairer system for students, graduates and taxpayers, and the sustainability of the student funding system.

The Skills Bill already before Parliament, the right to lifelong learning, student funding reforms and the refocusing of higher education provide a fair, sustainable and capable of driving the whole economy forward

“We are freezing tuition fees and reducing interest rates for new student borrowers, ensuring that under these terms no one pays back more than they have borrowed in real terms.”

She added: “We are investing an additional £900million in our post-18 education system and bringing about game-changing change in the way students can study, retrain and develop throughout their lives.”

Sir Philip Augar, Chair of Augar’s Higher Education Review, said: ‘The Skills Bill already before Parliament, the right to lifelong learning , student finance reforms and the refocusing of higher education provide a framework that is fair, sustainable and has the potential to drive the entire economy forward.

Here are some key figures:

– If the system remained as it is now, graduates would repay 59p for every pound of their loan over the life of their loan. Under the reforms, graduates will pay 81 pence of each pound.

– This means that the government’s Resource Accounting and Budgeting (RAB) charge (the government’s cost of borrowing to support student loans) will be cut in half. Under the current system, in 2026-27 the RAB load is expected to be 41%, but under the new reforms it will drop to 19%.

– In 2019/20, 40% of 19-year-olds failed to achieve two E grades at A level or their equivalent and 29% failed to pass GCSEs in English and maths.

– The number of students who entered university without taking GCSEs in maths and English in 2021 was 4,800.

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