On February 24th, the UK Government announced a series of reforms starting in September 2023/24, the first time changes to the student loan were made since 2012 when fees were tripled. The new reforms see a variety of new rules and changes put in place in hopes to ease the pressure on young people feeling forced to go to University as soon as possible.
As reported by the Institute of Fiscal Studies: ‘Graduates will pay more towards their student loans each year and their loan balances will only be written off 40 years after they start repayments’. These significant changes will see Student loans wholly reformed.
However, one of the significant changes, which has many people concerned, is that higher income individuals will end up paying less whilst low-income individuals will end up paying more. Under this new system, those with higher and middling income jobs can entirely comfortably pay off their student debt by retirement.
But those from low income households, according to the IFS ‘stand to lose the most at around £28,000, as they will in many cases still not pay off their student loans under the new system,’ because of this, low income earners will have to make repayments for an additional ten years and will end up paying away more of their earnings.
Another significant change is that students who fail their Maths or English GCSEs will not be able to apply for a student loan. The Department of Education stated that this ensured that ‘poor quality, low-cost courses aren’t incentivised to grow uncontrollably’. This means that students who do not achieve at least a 4 in GCSE Maths or English will have a much harder time getting into higher education.
This heavily impacts students with learning disabilities such as dyslexia and dyscalculia who were struggling to pass these exams already and pushing them further into low earning jobs. For the average person, these changes mean that their student loan will be fully paid off by retirement; however, for those struggling in education and heading into lower-earning jobs, these changes do not bode well for their future financial security.
Image Credit: TechCrunch
Updated: 16th May
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