Is it fair students are saddled with debt until after they retire - poll
Students starting university this year are being hit with major changes to their academic loans in what is being described as the “biggest shift in a decade” - and we want to know what you think.
From September, the repayment threshold will plummet from the current £27,295 to £25,000, meaning students will start paying their loans back much earlier than those who previously studied. This threshold will also remain in place until 2027 when it is "planned" to rise with inflation.
Those attending university pay 9% of everything earned over this amount and interest starts accruing from the date the loan is taken out. Therefore, a graduate earning £30,000 would be £5,000 above the threshold and will repay 9% of that - around £450 a year.
Under the old system they would be £2,705 above the threshold, meaning they’d fork out £243 annually - almost half of the new cost. The Government have labelled this change "Plan 5 loans" and if you earn less than £25k a year then you won't have to start paying back your loan until you exceed that.
The student loan repayment changes will also mean that graduates will now need to repay their loans for up to 40 years rather than it being cleared after 30 years. This particular change will see new students making repayments for nearly all of their working lives. Money saving expert Martin Lewis has previously described the new system as a form of “graduate tax” essentially.
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The consumer champion said: "It is going to be more expensive and I think the most important thing about this is everyone should consider, before they go to university, is it the right move? It should no longer be I've got nothing else to do, not that it was, I'm going to go to university because I don't know what I'm doing.
"But you look at apprenticeships, you look at other things, but if university is right for you, many people who go to university earn more."
These changes will only affect new starters, not those who are already enrolled at university, or who have already graduated. Those starting a course on or after August 1 will be automatically enrolled as Plan 5, this includes undergrads, post grads, or you take out an advance learner loan.
You should also be aware that the new "Plan 5" loan repayments will not actually begin until April 2026 at the earliest - this means if you drop out early your repayments wouldn't actually start until then.
Do you think it’s fair that students will have to pay off loans until after they retire? Vote in our poll to have your say. Let us know which couple you voted for and why in the comments section below.
The Mirror will also be discussing the topic with you below in the comments and you can join in! All you have to do is sign up, submit your comment, register your details and then you can take part.
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