Graduates will be paying university fees into their 60s after the government announced plans to extend the period before student loans are written off.
Student debt will be wiped out after 40 years, rather than the existing 30, under proposals which have been likened to a “working-life-long graduate tax”.
The government said the extension would ensure a greater proportion of student loans are paid back, reducing the burden on taxpayers.
But the changes mean lower-income graduates will have to repay their loans earlier, as well as for longer, with the threshold at which payments begin cut from £27,295 to £25,000 for those beginning courses at September 2023.
Martin Lewis, founder of MoneySavingExpert.com, said: “The plans will see most university leavers pay far more for their degrees over their lifetime than they do now.
“It effectively completes the transformation of student ‘loans’ for most, into a working-life-long graduate tax.”
Michelle Donelan, minister for higher and further education, insisted the reforms would create a “fairer system for students, graduates and taxpayers” and were “future-proofing the student finance system”.
She added the removal of interest rates from loans after 2023 meant graduates will not have to repay more than they borrow.
Nadhim Zahawi, education secretary, described the new student finance system is “more sustainable” and said it would “put an end once for all to high interest rates on their student loans” as well as keep “higher education accessible and accountable”.
Secretary of State for Education Nadim Zahawi
Government figures show the value of outstanding loans at the end of March 2021 reached £16bn, a figure which is forecast to rise to a half a trillion pounds by 2043.
The changes to student finance come alongside wider reforms set out in Augur review into higher education, and a freezing of tuition fees for a further two years.
But Paul Blomfield, chair of the parliamentary All-Party Group for Students, warned: “Freezing tuition fees, without additional teaching grant, reduces resources available to universities and means future students will be paying more for less.”
