Currently for most university students, tuitions are on average £9,000 a year, and most undergraduate degrees are a three (3) year programme. Yes, that adds up to £27,000, and we are still not factoring in housing, transport, food, etc.
Unless the student, or their family, has £27,000, most uni students take out student loans.
These student loans are considered by many to be a good investment, or good debt, an investment in the student’s future and future earnings.
And in many ways it is a good investment, but it is also a lot of debt.
One of the more attractive aspects about student loans is the repayment process, which has changed a little over the years, but presently works like this:
Until you earn more that £27,295 annually, you have no repayments to be made on your student loans.
Once you go over that threshold of £27,295, you pay back 9%, of the amount you earn over the threshold.
An example is this:
You earn £30,000 a year, which is £2,705 annually over the £27,295 threshold.
You then pay back 9% of this amount or £243.45, or £20 a month. (rounding down, or £21 a month, rounding up).
A pretty easy repayment system, low payments, but two issues here:
- You could be in debt with student loans a very, very long time.
- The government does not get as much money paid back.
The solution….the government is considering lowering the income or earnings threshold to £25,000 a year, and some are seeking it even lower to £23,000, or possibly £20,000.
This will affect millions of graduates, and their loan payments will increase.
As to when this possible change will be voted on, and put into place, has not been stated.