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UK Student Loan Repayment Threshold Has Been Increased From Today

UK Student Loan Repayment Threshold Has Been Increased From Today

If you began your university course in 2012 or later, the threshold at which you begin to pay your fees back will be raised to £25,000

Mike Wood

Mike Wood

A significant change in the way that UK student loans are repaid will come into effect today. If you began your university course in 2012 or later, then the threshold at which you begin to pay your fees back will be raised to £25,000 ($35,000) from a previous level of £21,000 ($29,400).

The Government has raised the threshold with the intention of easing the burden on graduates, though many are debating whether it will actually do this.

While the low end has now been raised, it doesn't change the vast amount that is still owed, and of course, if you pay off a debt more slowly, it will take longer to pay it off, with more to be paid in the long run because the interest rate will go up to 6.1 percent.

For those who began their studies before 2012, the threshold remains at £18,330 ($25,700) at an interest rate of 1.5 percent, so there is no change at all for the vast majority of those who are currently repaying student debt.

PA

Of course, if you began university before 1999 - like almost every UK politician did - you didn't receive any student loan at all and thus have no repayments.

Many have also pointed out that the threshold has been raised for the first time since 2013, meaning that the new level has merely gone up to reflect the changes in the cost of living that have occurred since then. According to the Bank of England, £21,000 would be at least £23,000 ($32,200) when inflation is factored in.

"The increase in the student repayment threshold marks a key milestone," said Universities minister Sam Gyimah, who went to Oxford University in the mid-1990s and didn't pay a penny for the privilege.

Universities minister Sam Gyimah.
UK Parliament

"[It] is another example of the steps the Government is taking to support those in higher education. Not only will it benefit hundreds of thousands of graduates in the next financial year alone, but millions in the years to come."

The Labour Party has floated the idea of abolishing student debt. John McDonnell, the Shadow Chancellor of the Exchequer, spoke on the issue on the BBC on Sunday, describing abolishing debt as 'an ambition'.

He said: "We recognise young people are coming out of college now with debts of £50,000. They cannot even think about buying a house or getting on the property ladder. So we've got to tackle that.

"But the issue is, the system's got to be tackled anyway, because it's falling apart."

Featured Image Credit: PA

Topics: uk news