MSE News: PM pledges to raise student loan repayment threshold 1 October 2017 at 2:12AM edited 2 October 2017 at 12:39PM in Student Money Saving 54 replies 10.3K views

Former_MSE_Steve_1

Prime Minister Theresa May has said the student loan repayment threshold will be increased from £21,000 to £25,000 as part of a wide-ranging review of student finance...

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'Victory for graduates as PM pledges to raise student loan repayment threshold'

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CKhalvashi

Mrs May said: "We know that the cost of higher education is a worry, which is why we are pledging to help students with an immediate freeze in maximum fee levels and by increasing the amount graduates can earn before they start paying their fees back, amounting to a saving of £360 a year, while the Government looks again at the question of funding and student finance."

Sorry, but I have no sympathy with this at all.

The cost of higher education is a worry for some, we know that, however if the tuition fees hadn't been risen by 300% in the first place we wouldn't be seeing that issue now.

I do agree with the policy, however I don't agree with it as surely a much more practical approach for most would be to bring the tuition fees down so it doesn't look so much like a scary number to start with.

silvercar

It's a good move for all those graduates starting out, provided it doesn't have an effect on starting salaries ie employers thinking they don't need to increase starting salaries because new graduates have less to pay out of salary.

silvercar

This para:

"The only losers? The top 23% of graduate earners who’d have cleared the loan within 30 years – because as increasing the threshold means repaying more slowly, it increases their interest (but they can voluntarily overpay so it’s no biggie).

There will be a group for whom the increase means they are saddled with far more interest and will pay that interest. The group that would have cleared the loan in full but now will have a chunk of extra interest added to their total.

The changes also give an indication that the pre-2012 group will have their threshold unchanged in the future. Sure they have a much lower total loan (around 20k for those who had tuition fees around 3k, rather than ~40k for those on 9k) but on lower incomes their threshold remaining at 15k for the foreseeable future means they will feel the pinch. I'm reading the message as this group are not as important as the more recent and future students.

peter3hg

silvercar wrote: »

This para:



There will be a group for whom the increase means they are saddled with far more interest and will pay that interest. The group that would have cleared the loan in full but now will have a chunk of extra interest added to their total.

The changes also give an indication that the pre-2012 group will have their threshold unchanged in the future. Sure they have a much lower total loan (around 20k for those who had tuition fees around 3k, rather than ~40k for those on 9k) but on lower incomes their threshold remaining at 15k for the foreseeable future means they will feel the pinch. I'm reading the message as this group are not as important as the more recent and future students.

The 23% are free to overpay by the difference so they will only be out of pocket if they choose to be.
The pre 2012 loan threshold is already increasing at the rate of average earnings and currently stands at £17,775.

Lorian

I don't think this will buy her any student votes. She'd would need to reduce the fees at least as far as £7.5K to get some traction.

glider3560

Will this just encourage "wasters"?

People who go to university for the parties etc, with no intention of ever getting a graduate level job when they graduate?

silvercar

glider3560 wrote: »

Will this just encourage "wasters"?

People who go to university for the parties etc, with no intention of ever getting a graduate level job when they graduate?

Won't make any difference to them.

zagfles

peter3hg wrote: »

The 23% are free to overpay by the difference so they will only be out of pocket if they choose to be.
The pre 2012 loan threshold is already increasing at the rate of average earnings and currently stands at £17,775.

Indeed - plus that "23%" is probably way too many now - it was 23% with the £21k threshold so with a higher payment threshold and earnings indexation it'll likely be well under 23%. I'll wait for the IFS to do the maths... Or Martin?

Wilt

'Every single graduate earning over £21,000 will pay less'

Can this be removed from the article? Most current graduates wont benefit unless govt pulls something for pre-2012 loans out of the bag.

Ed-1

peter3hg wrote: »

The 23% are free to overpay by the difference so they will only be out of pocket if they choose to be.
The pre 2012 loan threshold is already increasing at the rate of average earnings and currently stands at £17,775.

The pre-2012 threshold increases with RPI, not earnings.