The Times last today revealed some shocking statistics around student loans, including the possibility that some students might still be paying off their loans when close to retirement.
It is not all bad news – the existing interest rate (3% above the RPI, and broadly considered as quite excessive) will be replaced by just the RPI. However, the existing £27,200 salary threshold for repayments will be reduced to £25,000 and the loan terms stretched from 30 to 40 years.
Thus, a student graduating at 21 years of age, may still be repaying their loan when they are 61.
The changes come as part of the Government’s response to the recommendations within the 2019 Augar report – a wide-ranging review of post-18 education in England.
Parents and advisors should be made aware of these changes, as they may play a significant part in helping a young person to decide whether to pursue a University degree, or to opt for an earn-while-you-study apprenticeship programme.