Martin Lewis has called the changes to student loan repayments a “lifetime tax on graduates” that will affect people well “into their 60s”.
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.
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The government said this would mean a graduate earning £28,000 would pay back £17 a month.
Interest rates will be reduced for new students so that their loan balance increases with the rate of inflation.
The student loan repayment term will also be extended to 40 years for students starting their studies in September 2023.
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.
But MoneySavingExpert founder Martin Lewis said the changes would see graduates repay their loans “until their 60s”.
Martin said: “The plans will see most university graduates pay significantly more for their degrees over their lifetime than they do now.
“It effectively completes the transformation of student ‘loans’, for the most part, into a tax on graduates throughout working life.
“The decision to extend repayments to age 40, combined with the other measures, will leave most of those who start college straight after school paying it back into their 60s.”
He added: “Since 1991, the cost of higher and higher education has effectively been split between the individual and the state.
“Now the pendulum will once again swing sharply towards the individual, who will pay far more for their education. The government’s own data shows that the state’s contribution to student loans will drop from 44 pence a pound to 19 pence under of the new system.
“So for anyone finishing school this year and considering taking a gap year to start in 2023, it’s well worth considering. For most, starting this year will save you thousands of pounds. on your professional life in relation to the adjournment.”
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