By Amber Hodson
University students and graduates who took out students loans from 2012 onwards are set to be faced with an increase in loan repayment costs due to a hidden change to the system in the Chancellor’s Autumn Statement.
Under the current loan system which was launched in 2012, the government increased the threshold above which income was taxed to service the loan from £15,000 to £21,000 after university fees were risen three fold. The government also pledged to ensure that the threshold rose with inflation, however the Chancellor has backtracked on this pledge by freezing the threshold at £21,000.
Martin Lewis, financial expert insisted, “This is a retrospective change to student loans. Millions of people across the country will have to pay more each month”.
“It is risking fundamentally threatening any trust people have in the student finance system. It is one thing to set up a system that is unpopular but it is entirely different to make retrospective changes that mean you cannot even rely on what you were promised at the time you started to study,” he stated.
This means that on average a student will have to pay back £3,000 extra, whilst already disadvantaged students will be worse off. Those earning close to median incomes for graduates would pay back an extra £6,000, The Institute for Fiscal Studies (IFS) said.
To find out more about student loan repayments you can visit GOV.UK.
Photo credit: Got Credit