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Graduates Are Going To Have To Repay More On Their Student Loans

The figures were buried in the small print of George Osborne's Autumn Statement.

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Students and graduates who have taken out student loans since 2012 will have to repay up to £300 a year more than expected.

Chancellor George Osborne is freezing the "student loan repayment threshold" until April 2021. The statement was buried in the small print of his Autumn Statement on Wednesday.

It means that he has decided to go ahead with plans, revealed by BuzzFeed News last month, to increase the amount most students will repay each year in order to reduce the balance of student debt.

That is despite 84% of respondents opposing the move in a government consultation.

The Department for Business, Innovation and Skills disclosed earlier this month that "of the 489 responses received, 410 did not support Option 1". Only 5% were in favour.

Here is the line in the Autumn Statement setting out how the student loan repayment threshold will be frozen.

HM Treasury

It confirms that the threshold for "Plan 2 borrowers" – those who took out loans from 2012 onwards – will be frozen until April 2021.

At the moment, students start repaying their loan when they earn at least £21,000 – paying 9% of everything they earn above that level. It means a graduate in low-paid work repays less than a graduate with a high-paying job.

When the last government introduced top-up fees, it said the £21,000 threshold would increase each year in line with average earnings. But now ministers are freezing this threshold.

The National Union of Students said it means graduates will end up paying more each month than they were promised when they took out the loan.

Sorana Vieru, NUS vice president for higher education, said in a statement: "For example, if you earn £25,000 and the threshold is £23,000, you repay £180 a year. If the threshold is frozen at £21,000, you pay £360 a year.

"This is yet another betrayal by the government and part of a long list of political measures that shows complete disdain to students and their futures. Freezing the repayment threshold won't just affect new students but those who started studying from 2012-13, and will have a real impact on the income of graduates, particularly the most disadvantaged and those on lower earnings.

"If the repayment threshold is frozen at £21,000 for five years from 2016, the typical borrower is estimated to repay an extra £2,800."

Martin Lewis
Andrew Matthews / PA Wire

Martin Lewis

Martin Lewis, founder of MoneySavingExpert, said it meant 2 million graduates would end up paying £306 more each year by 2020–21.

In a statement, he said: "This is a disgraceful move and a breach of trust by the government that betrays a generation of students. It has chosen to freeze the repayment threshold even though 95% of the consultation responses did not support the freeze - what was the point of a consultation if when there's huge objection it does it anyway?

"The fact that the chancellor didn't even have the balls to put it in his Autumn Statement speech shows that he knew how unpopular it would be. If a commercial company made retrospective changes to their loan terms in this way they'd be slapped hard by the regulator – the government shouldn't be allowed to get away with it either."

And there was another surprise for students too. Grants for student nurses are being replaced with loans.

HM Treasury

The Spending Review document says the current grant system means there is a "cap on student nurses and over half of all applicants to nursing courses are turned away".

It adds: "This reform will enable universities to provide up to 10,000 additional nursing and other health professional training places this Parliament."

But Janet Davies, chief executive of the Royal College of Nursing, said: "Student nurses aren't like other students. 50% of their time is spent in clinical practice working directly with patients and their families and they have a longer academic year.

"These proposals will saddle future generations of these student nurses with even more debt and financial pressures and unless nurses pay improves, many graduates will never be in a position to pay their loans back.

"The ring-fence to nursing student funding has been removed and a precious link between the NHS and its nurses is potentially at risk, making it harder to plan for the future workforce."

This Labour MP wasn't impressed.

Telling that Osborne didn't justify charging nurses for training or changing students and graduates' repayment conditions retrospectively.

Wes Streeting, a former NUS president, told Osborne: "Imagine my disappointment on page 93 of the book to find not only are student finance payment conditions being changed in a regressive way, they are being applied retrospectively.

"Not only do I regard this as a personal betrayal, but how can any applicant trust the information they are given by government at the point of application?"

Osborne replied: "You wouldn't guess from your outburst that it was a Labour government that introduced tuition fees and it was a Labour government that introduced top-up fees. The changes we are making to student fees enable us to expand student places, remove the cap not just on nurse training places. ...

"I would have thought as a former head of the National Union of Students you would have welcomed that."

Emily Ashton is a senior political correspondent for BuzzFeed News and is based in London.

Contact Emily Ashton at

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