Student loan repayment threshold to be increased from £21,000 to £25,000

On 1st October Theresa May kicked off the Conservative Party conference with a policy pitch to younger voters, with the Prime Minister announcing plans to raise the repayment threshold for recent graduates.

On Sunday morning, Theresa May tweeted: “My government’s mission is to make the UK a fairer place […] We will look again at student finance, freeze tuition fees and raise the amount you can earn before paying back.” The repayment threshold – the income level that triggers student loan repayments – will rise from £21,000 to £25,000 a year, for recent graduates, in April 2018.

In real term, this means more cash in the pockets of recent graduates with some benefiting by up to £15,700 – according to a publication by the Institute for Fiscal Studies. The IFS also report that this will mean that 83% of students are forecast to not fully repay their loans in the 30-year repayment period (up from 77%).

However this is likely to only apply to graduates who took out the higher rate of student loans introduced in 2012, with graduates from the pre-2012 fee system repaying on earnings over £17,775.

The threshold rise was announced as part of a wider review of student loans and fees with the government also proposing to freeze undergraduate tuition fees at the current cap of £9,250 until 2019; a change in policy from the planned £250 increase in tuition fees for 2018-19.


What do you think of the proposed changes – how might they affect you?  Let us know your thoughts below.


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