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Scottish and NI grads from English unis will pay more of their loan back

Martin Lewis: These graduates ‘face the worst of both world’

If you’re a student or grad from England or Wales, then there’s some good news (for once): the repayment threshold for student loans will rise from £21,000 to £25,000 from April onwards, check over here.

While this is a welcome step, it does add to the inequality that exists in the student loans system for grads across the UK.

For those from Northern Ireland and Scotland, the repayment threshold will be £6,670 lower at £18,330. Grads from here belong to the student loan ‘Plan 1’, whereas recent English and Welsh grads are in ‘Plan 2’.

Arguably, the impact of this is mitigated for most Scottish and Northern Irish grads who have studied in their own nation, given their free tuition or fees being capped at £4,000, respectively.

For those students from NI and Scotland who’ve decided to study elsewhere in the UK, they not only face the enormous debts that come with £9,000 a year tuition, but also the much lower repayment threshold. There is a sizable minority of students in this category, given a third of Northern Irish students study in the rest of UK.

To give an example of how this plays out in reality, we can take the example of two Psychology second years at the University of Chester. Hollie Walker is from England and Laura Whiteside comes from Northern Ireland. Let’s say they both get the exact same grad jobs and earn a salary of £30,000 a year. Under the current system, Hollie’s ‘Plan 2’ loan repayments would be around £450 per year. Laura, on the other hand will face over double that, with £1,050 in repayments.

Rightly or wrongly, the Tory-Lib Dem coalition raised tuition fees to £9,000 on the basis that it would only be those benefiting from the increased earnings gained through their degree that would have to repay. Under Plan 1, the repayment threshold for Scottish and Northern Irish students is below even the average graduate starting salary.

The Tab spoke to the founder of, Martin Lewis, who said, “You’re right. While the numbers are limited, those students that are on Plan 1 loans with the full debt of studying in England do face the worst of both worlds”.

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Martin Lewis

He explains that this system can lead to grads facing issues such as getting a mortgage or in where they can afford to rent. While the loan doesn’t represent a debt on a graduates credit file, the larger loan repayments do mean a drop in their disposable income, which will of course limit their options. There are, however, solutions that one can opt for with any debt help site.

When asked about the disparity, Laura, a Northern Irish second year at the University of Chester said, “I don’t see why students from certain parts of the UK are being financially punished just for being from outside England and Wales. We’ve all graduated from the same uni so should be treated as such”.

A spokesperson in Northern Ireland’s Department for the Economy told The Tab: “There are currently no plans to increase the student loan repayment threshold in line with England and Wales”.

The statement went on to argue that while the threshold may be lower for “domiciled” Northern Irish students, the impact is limited since the debt is written off in 25 years, as opposed to 30 years for English and Welsh graduates. The spokesperson also points out the much lower interest rates for students on Plan 1.

However, even with the shorter loan terms, Northern Irish graduates will still pay more of their loans back compared with their English counterparts on a similar salary. Even worse for Scottish grads, their loan terms are five years longer than that of the English and Welsh, at 35 years.

The Tab reached out to the Scottish government for comment, but they have so far declined.