The government recently announced plans that would massively impact those with a student loan.
Ministers are unveiling a long-awaited shake-up of student financing, which critics say will hammer the poorest graduates, reports The Mirror.
The plans include freezing the student loan repayment threshold - the earnings level at which loans begin to be repaid.
READ MORE: Martin Lewis issues urgent warning to people with student loans to repay
And while a "freeze" may sound good, what it means in practice is that most graduates will be around £207 worse off each year.
Shadow education secretary, Bridget Phillipson, said: "The Tories are delivering another stealth tax for new graduates starting out on their working lives which will hit those on low incomes hardest.
“Instead of fixing the broken system these changes simply store up problems for the future. Ministers are kicking the can down the road while seeking to limit young people’s aspirations to study at university.”
The changes will impact all students and graduates from England and Wales who started university from 2012 and who took out a loan.
So what are the major changes that may affect you?
Graduates will have to pay back £207 a year more
The current loan repayment threshold is £27,295 and those with student loans will repay 9% of everything earned above that.
Next year, however, the threshold will go up to £28,550 - a 4.6% increase.
Because the majority of people do not repay their student loans in full, paying 9% of anything above the threshold for 30 years, before any remaining debt is wiped, most graduates will be left worse off by the freeze.
An estimated 17% - the highest earners - repay their student loans in full.
So while the threshold is raised, these people will repay less.
Everybody else will lose out on an extra £207 each year, repaying much more than they would have done in total.
Martin Lewis, founder of MoneySavingExpert.com, said: “Everyone who earns above the threshold will repay more each year than under the current scheme, typically by £207/year – reducing disposable incomes.”
Graduates could be repaying their debts into their 60s
In a further blow, the length of time graduates have to pay off their loan will be extended to 40 years.
That means the majority will be repaying their student debt into their 60s.
Outstanding debt is currently written off after 30 years.
But student loans are so high, only 23% of students ever repay their loan in full before the 30 years are up.
Changes to the plans will mean 52% of borrowers pay off their loans, according to the Department for Education.
Mr Lewis added: “The majority of lower and mid earners will keep paying for many more years, increasing their costs by £1,000s.
“Yet the highest earners who would clear within the current 30 years won’t be impacted.”
Pupils who fail their GCSE Maths and English could be barred from student loans
A consultation will be published whether to impose minimum entry requirements of Level 4 GCSE passes in English and Maths - or two Es at A-Level.
This means pupils who fail their Maths and English GCSEs - or get lower A-Level grades - could be barred from getting student loans.
Around 4,800 people went to university last year who didn’t get these passes in their GCSEs.
Another consultation will look at creating a Lifelong Loan Entitlement (LLE), worth around £37,000 or the equivalent of four years of post-18 education, to support students to study, train, retrain or upskill at any stage.
Sir Peter Lampl, executive chair of social mobility charity the Sutton Trust, raised concerns about plans to shut out those with lower grades.
He said: "The introduction of any minimum grade requirement is always going to have the biggest impact on the poorest young people, as they are more likely to have lower grades because of the disadvantages they have faced in their schooling."
Demand for maintenance grant quietly ditched
The reforms are based on the Augar review of student loan financing in 2019. Some of what the review promised would have helped students.
For example, it demanded the return of maintenance grants for poorer students, which were axed in 2016.
But these have been ignored, despite Tory ministers happily taking some of the less appetising dishes on the Augar menu.
Paul Blomfield MP, Chair of the All-Party Group for Students, said:
“Future students will be paying more for less.
“Philip Augar’s important proposal for the reintroduction of maintenance grants for the poorest students has been quietly dropped and there’s nothing to address rising living costs, which affect those without family support the most.”
Tuition fees to remain at £9,250 - despite demand for them to be slashed
Tory ministers have announced the tuition fee cap will be frozen at £9,250 for a further two years - up to and including 2024/25.
This will, at least, mean students don’t pay more for their tuition than they currently do.
But the Tories have quietly rejected the Augar report's key call to slash tuition fees to £7,500-a-year - instead keeping the annual cap at £9,250 until 2024/25.
Cutting tuition fees was the top line from the Augar report - and the reason suggested extending the repayment window.
NUS UK President Larissa Kennedy said: “These changes will cost new graduates on lower and middle incomes tens of thousands of pounds over the course of their careers.
“At a time where the cost of living is soaring and grad salaries crashing, for many, these changes could be the difference between heating and eating.
“The Minister is saddling young people with unimaginable debt for the next 40 years of their lives. This is nothing more than an attack on opportunity.”
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