Students will be paying off their student loans until they retire.
The Department for Education (DfE) announced today that undergraduate students will pay back loans over 40 years rather than 30.
The starting salary benchmark for repayments is being reduced to £25,000 from £27,200 as well.
The changes are in response to the 2019 Augar review, which recommended the longer period for repayments. The review also recommended a cut in university fees, though this is not part of the changes.
This means future students will be paying off their loans into their 60s. The new system limits interest rates to the current rate of inflation but despite this, students will pay more and for longer.
The DfE said: “These changes will lead to significant savings, ensuring the student finance system is sustainable for the long term and can continue to benefit hundreds of thousands of students each year.”
Nadhim Zahawi, Education Secretary said the changes would “put an end once and for all to high interest rates on their student loans.”
There have been concerns about the new system.
Martin Lewis, founder of MoneySavingExpert tweeted an extensive analysis this morning, calling the system a “lifelong graduate tax” and saying that lower earners will feel the brunt of the changes.
Members of the public were quick to echo Lewis’ concerns.
Twitter user @girl_afraid82 said they are terrified for what the future holds for their daughter
I really don't understand how my degree only cost around 3.5k in total and only 18 years later this is what we're doing to these poor kids. I'm terrified of how much debt my daughter might be saddled with one day.
— Julie (@girl_afraid82) February 24, 2022
Current students were also left frustrated with the new changes.
Becca Butler, 23, said: “I think it makes studying at university less accessible to a lot of people from worse-off backgrounds. It just seems like a hidden tax increase.”
Ruben Hussey, 21, said: “It’s absolutely outrageous.”
Featured image from Max Pixel Creative Commons Licence