For the cohort starting university next year, the changes will mean a big redistribution of who pays what towards higher education
Save time by listening to our audio articles as you multitaskFrom September 2023 this system is set to change. The Department for Education announced a suite of reforms earlier this year. They range from the eye-catching to the wonkish . Taken together, they amount to the biggest overhaul of student finance since tuition fees were tripled in 2012.
. Less punitive interest rates for higher earners mean that those in the top decile of lifetime earnings can expect to pay back £25,000 less than under the current arrangement. Meanwhile, the extended repayment term and the lower earnings threshold mean that lower and middle earners will pay more: around £30,000 more for those in the third income decile.
The reforms have much to recommend them. There is some evidence that the prospect of taking on debt has a deterrent effect on people from poorer backgrounds who are considering going to university. But the earnings threshold continues to protect people from repayments until they are pocketing a certain wage. Taxpayers will save £2.8bn for each university cohort.
But the changes fail to fix some big shortcomings in the current set-up. Mr Waltmann points out that maintenance support, loans to help pay for living costs, is now falling fast in real terms. Payments are based on old forecasts of retail price index inflation that underestimated how quickly the index would rise. He calculates that students from the poorest families will receive £100 a month less than they would have done had their support been linked to actualinflation.
Worse, as well as changing the rules for future students, the reforms also rewrite repayment terms for the roughly 3.5m people who have taken out loans since 2012. A frozen earnings threshold will increase their monthly repayments from this September, just as the rising cost of living really starts to bite. Linking this threshold in the future to the, a flawed measure of inflation that is set to be reformed, bakes in further uncertainty.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Kim Kardashian has the wildest explanation for photoshopping True’s face onto Stormi’s bodyEven for Kim Kardashian, this is…a lot 😭
Read more »
UK warns Putin he is 'outgunned and outnumbered' after chilling nuclear hintDefence Secretary Ben Wallace said he wasn't 'rattled' by Putin's threats - and warned Britain has nuclear-armed submarines 'deep underwater, hiding, waiting, in case Britain needs to be protected'
Read more »
Sainsbury's says shoppers are watching every pennyThe supermarket's profits jump but it warns of tougher times ahead as consumers' finances are squeezed.
Read more »
Q&A: A guide for Ukrainian refugees and their UK hostsHow to navigate finances, benefits, employment rules and avoid sticky situations
Read more »
More foreign criminals face deportation as Govt takes aim at European human rights lawsHuman rights laws will be overhauled to deport serious criminals who come from abroad in most instances under Boris Johnson's new plans.
Read more »
TOWIE's Fran Parman shows off transformation in pics after two stone weight lossTOWIE star Fran Parman overhauled her health and fitness after being targeted by trolls following her brief appearance on the hit ITVBe reality show.
Read more »