Middle class grads must pay back £6000 more in student loans

And the poorest will have £53k of debt

Graduates with middle class incomes will have to pay back a staggering £6000 more than expected once student loan repayments start.

Experts warn those on middle incomes will be hammered with a higher bill thanks to the budget cuts earlier this month.

Maintenance grants were scrapped for good, chunkier loans were introduced and the the loan threshold was frozen for five years at £21,000.

But fixing the figure – rather than raising it with inflation – means grads will have to pay back their loans much earlier.

This means we’ll end up handing over even more over our lifetimes.


The smiles won’t last when the debt sinks in

The Institute for Fiscal Studies (IFS) said the change would hit graduates on middle incomes much harder than poorer students.

This is because they will end up paying a larger amount per year for a longer part of their repayment period.

Those on average graduate earnings – bringing in around £23,000 in their early 20s, rising to £34,000 in their early 50s – will end up repaying over £6,000 more in total over their lifetimes.

The IFS said that freezing the repayment threshold will bring it close to the value of the pre-2012 level of £15,000 in real terms by the end of the freeze period.

And this will reduce the long-term cost to government of issuing student loans by around £1.4billion per yearly intake of students.

But this doesn’t mean it’s good news for poorer students either.

The economists said getting rid of maintenance grants will see the poorest 40 per cent of students going to uni and graduating with debts of up to £53,000.


The loan repayment threshold means we’ll have to pay back £6000 more

This repayment figure had previously peaked at just £40,500.

So students from low income backgrounds – up to £23,000 – might have a bit more cash in their pocket during their time at uni, but they’ll also be stung with £12,500 more debt.

The changes will come in from the 2016-17 year and it is not thought current students will be affected.

Jack Britton, research economist at the IFS, said: “While the small increase in support for living costs available to students from lower-income families will undoubtedly be welcomed by many, the switch from maintenance grants to maintenance loans will result in substantially higher debt for the poorest students.”

“For most, though, it is the freezing of the repayment threshold which will do more to raise loan repayments, and hence increase the cost of higher education.

“The 2012 reforms appear not to have had a negative effect on higher education participation amongst full-time students from poorer backgrounds.

“This likely reflected the fact that the system was designed to protect both that group and those with low expected lifetime earnings.

“Only time will tell whether these new changes will be similarly benign in their effect.”