Outrageous Postgraduate Loan Repayment Threshold - £21k (under minimum wage)

Squeaky_Kleen

Hi,

I was just wondering if there are any campaigns by the NUS or any other pressure group regarding the ridiculously low repayment threshold of Postgraduate student loans which is set at just £21k pa (from April 2024 min wage is £23,795 pa based on 40 hr week or £22,308 pa on a 37.5 hr week).  I thought the whole idea of student loans was that you began repaying them when you started earning a half decent wage...not when you earn minimum wage?

 Bearing in mind these loans are repaid in tandem with Undergraduate loans so they're a "double whammy" charge during a time of high rent and high cost of living. I can't be the only one thinking this repayment threshold needs re-examining ASAP?  

Emmia

Squeaky_Kleen said:

Hi,

I was just wondering if there are any campaigns by the NUS or any other pressure group regarding the ridiculously low repayment threshold of Postgraduate student loans which is set at just £21k pa (from April 2024 min wage is £23,795 pa based on 40 hr week or £22,308 pa on a 37.5 hr week).  I thought the whole idea of student loans was that you began repaying them when you started earning a half decent wage...not when you earn minimum wage?

 Bearing in mind these loans are repaid in tandem with Undergraduate loans so they're a "double whammy" charge during a time of high rent and high cost of living. I can't be the only one thinking this repayment threshold needs re-examining ASAP?  

The terms of the loan and repayment schedules are not hidden, they're known when you take the loan out. As with all costs/financial commitments individuals taking the loans have to work out if they can afford it - does the course they're taking mean they should earn enough to offset the loan, and more??

In terms of the "double whammy" some people (such as myself) are doing post graduate study later (i.e. not directly after our first degree) often self funding (as I am). I'm fortunate that I can self fund, and pay my mortgage, bills etc., but to be honest I wouldn't be doing post graduate study if I needed the loan to pay for it, having cleared my student loan once already.

I graduated in 2003, and student loan repayments then started with a salary/earnings of more than £10k - I had two jobs and started repaying pretty quickly after graduation even though I was working for a pretty low hourly rate (£5-£6 p/h).

Personally I think the level of fees for undergraduate degrees are now too high, but I also think that loans/borrowing whether for education, cars, holidays etc., should be repaid. 

Ultimately university study is a choice, not a right and people need to work out if financially it's worth it for them.

sammyjammy

Does this affect you personally or are you just unhappy about it generally as you have noticed it?  I would think anyone that commits to further study after an under graduate course would have to be pretty sure of a job paying more than minimum wage.

Ed-1

Squeaky_Kleen said:

Hi,

I was just wondering if there are any campaigns by the NUS or any other pressure group regarding the ridiculously low repayment threshold of Postgraduate student loans which is set at just £21k pa (from April 2024 min wage is £23,795 pa based on 40 hr week or £22,308 pa on a 37.5 hr week).  I thought the whole idea of student loans was that you began repaying them when you started earning a half decent wage...not when you earn minimum wage?

 Bearing in mind these loans are repaid in tandem with Undergraduate loans so they're a "double whammy" charge during a time of high rent and high cost of living. I can't be the only one thinking this repayment threshold needs re-examining ASAP?  

That threshold is currently subject to annual review and an announcement for April 2024 on the PGL repayment threshold is due imminently. The problem is the relevant RPI figure for March 2023 was 13.5% so they may be tempted to hold the threshold at £21,000 for a further year before linking to RPI like the rest of the repayment plans.

"The income thresholds for repayment of Postgraduate Masters and Doctoral Loans to apply from April 2024 will be announced in due course."

https://www.gov.uk/government/news/student-loans-interest-rates-and-repayment-threshold-announcement--4

Squeaky_Kleen

Wow. 3 replies and not one person able to say "yes that does seem strange and out of order to have a repayment threshold lower than minimum wage".   Though in response to Ed-1, I guess that means there still a chance that common sense will prevail, but I'm not holding my breath.

Emmia

Squeaky_Kleen said:

Wow. 3 replies and not one person able to say "yes that does seem strange and out of order to have a repayment threshold lower than minimum wage".   Though in response to Ed-1, I guess that means there still a chance that common sense will prevail, but I'm not holding my breath.

That's the thing with forums, you don't always get the answers you want.

Ed-1

Squeaky_Kleen said:

Wow. 3 replies and not one person able to say "yes that does seem strange and out of order to have a repayment threshold lower than minimum wage".   Though in response to Ed-1, I guess that means there still a chance that common sense will prevail, but I'm not holding my breath.

The Government would argue that the intention is for postgraduate loans to be fully repaid and the repayment rate is only 6% of marginal earnings so is very generous. Some policy think tanks have suggested aligning student loan thresholds to match income tax thresholds which would mean a threshold of £12,570.

Squeaky_Kleen

Ed-1 said:

Squeaky_Kleen said:

Wow. 3 replies and not one person able to say "yes that does seem strange and out of order to have a repayment threshold lower than minimum wage".   Though in response to Ed-1, I guess that means there still a chance that common sense will prevail, but I'm not holding my breath.

The Government would argue that the intention is for postgraduate loans to be fully repaid and the repayment rate is only 6% of marginal earnings so is very generous. Some policy think tanks have suggested aligning student loan thresholds to match income tax thresholds which would mean a threshold of £12,570.

I imagine the demand for university places would more than half should such repayment thresholds be implemented.  The sad truth is that  48% of graduates do not progress on to getting graduate level jobs.  That's a shocking stat, and will only get worse as AI replaces jobs.   It's quite easy to see how people will opt to do  the Masters out of sheer fear of becoming part of the 48% if they don't.  But still some of those with Masters degrees will not get the jobs they desire, and asking those people to repay their loan from a minimum wage job is vile, disgusting and unconscionable.  

Emmia

Squeaky_Kleen said:

Ed-1 said:

Squeaky_Kleen said:

Wow. 3 replies and not one person able to say "yes that does seem strange and out of order to have a repayment threshold lower than minimum wage".   Though in response to Ed-1, I guess that means there still a chance that common sense will prevail, but I'm not holding my breath.

The Government would argue that the intention is for postgraduate loans to be fully repaid and the repayment rate is only 6% of marginal earnings so is very generous. Some policy think tanks have suggested aligning student loan thresholds to match income tax thresholds which would mean a threshold of £12,570.

I imagine the demand for university places would more than half should such repayment thresholds be implemented.  The sad truth is that  48% of graduates do not progress on to getting graduate level jobs.  That's a shocking stat, and will only get worse as AI replaces jobs.   It's quite easy to see how people will opt to do  the Masters out of sheer fear of becoming part of the 48% if they don't.  But still some of those with Masters degrees will not get the jobs they desire, and asking those people to repay their loan from a minimum wage job is vile, disgusting and unconscionable.  

That's a strong view. perhaps people should consider whether a masters course will give them the employment they want / salary they want before embarking on it??

Or wait 10/20 years and self fund as I have.

Squeaky_Kleen

Emmia said:

Squeaky_Kleen said:

Ed-1 said:

Squeaky_Kleen said:

Wow. 3 replies and not one person able to say "yes that does seem strange and out of order to have a repayment threshold lower than minimum wage".   Though in response to Ed-1, I guess that means there still a chance that common sense will prevail, but I'm not holding my breath.

The Government would argue that the intention is for postgraduate loans to be fully repaid and the repayment rate is only 6% of marginal earnings so is very generous. Some policy think tanks have suggested aligning student loan thresholds to match income tax thresholds which would mean a threshold of £12,570.

I imagine the demand for university places would more than half should such repayment thresholds be implemented.  The sad truth is that  48% of graduates do not progress on to getting graduate level jobs.  That's a shocking stat, and will only get worse as AI replaces jobs.   It's quite easy to see how people will opt to do  the Masters out of sheer fear of becoming part of the 48% if they don't.  But still some of those with Masters degrees will not get the jobs they desire, and asking those people to repay their loan from a minimum wage job is vile, disgusting and unconscionable.  

That's a strong view. perhaps people should consider whether a masters course will give them the employment they want / salary they want before embarking on it??

Or wait 10/20 years and self fund as I have.

Factually anyone evidence based would say "yes, taking a Masters does statistically improve your likely earning potential". But as with undergraduate degrees, the student loans should start to be repaid once you're seeing the financial benefit. This is the correct way to implement student loan repayments. 

I'm not sure why you're so keen for people earning minimum wage to be forced to repay their postgraduate loans? Living on the breadline is hard enough as it is.

Emmia

Squeaky_Kleen said:

Emmia said:

Squeaky_Kleen said:

Ed-1 said:

Squeaky_Kleen said:

Wow. 3 replies and not one person able to say "yes that does seem strange and out of order to have a repayment threshold lower than minimum wage".   Though in response to Ed-1, I guess that means there still a chance that common sense will prevail, but I'm not holding my breath.

The Government would argue that the intention is for postgraduate loans to be fully repaid and the repayment rate is only 6% of marginal earnings so is very generous. Some policy think tanks have suggested aligning student loan thresholds to match income tax thresholds which would mean a threshold of £12,570.

I imagine the demand for university places would more than half should such repayment thresholds be implemented.  The sad truth is that  48% of graduates do not progress on to getting graduate level jobs.  That's a shocking stat, and will only get worse as AI replaces jobs.   It's quite easy to see how people will opt to do  the Masters out of sheer fear of becoming part of the 48% if they don't.  But still some of those with Masters degrees will not get the jobs they desire, and asking those people to repay their loan from a minimum wage job is vile, disgusting and unconscionable.  

That's a strong view. perhaps people should consider whether a masters course will give them the employment they want / salary they want before embarking on it??

Or wait 10/20 years and self fund as I have.

Factually anyone evidence based would say "yes, taking a Masters does statistically improve your likely earning potential". But as with undergraduate degrees, the student loans should start to be repaid once you're seeing the financial benefit. This is the correct way to implement student loan repayments. 

I'm not sure why you're so keen for people earning minimum wage to be forced to repay their postgraduate loans? Living on the breadline is hard enough as it is.

A masters is a choice, much like many things in life.

I'm not in favour of borrowing (of any sort) which isn't repaid by the borrower, and that includes student loans. If you take a normal loan out, they don't wait until you earn £x for repayments - you start repaying pretty quickly.

I don't understand why you think repayment is outrageous.