The Government are set to lower the salary levels at which graduates begin repaying student loans, according to reports.
Students currently start paying back student loans when the salary hits £27,295, but it has been reported that the Government are preparing to cut that figure.
According to the Financial Times (FT), Chancellor Rishi Sunak is planning an “overhaul” of student financing in his spending review ahead of next month’s Budget.
The Augar review of post-18 education in 2019 advised the threshold be reduced to £23,000. The Higher Education Policy Institute looked into the possibility of a cut to less than £20,000.
The FT report that “no final decisions on the new level have been taken” but a minister has informed them a £20,000 threshold would be “a bit low”.
With a threshold of £23,000, any graduates earning the current threshold would have their take-home pay cut by more than £800 each year.
It comes after plenty of young people were impacted heavily by the increase to national insurance contributions announced earlier this month.
The average debt by graduates is more than £45,000 in maintenance and tuition loans from the Government. These are paid with additional interest through a 9 per cent cut of earnings and written off after 30 years.
A cut to the student loan repayment threshold would be a reversal on Theresa May’s decision in 2017 to raise the threshold to £25,000.
One Conservative supporting student, who wished to remain anonymous, said: “If there was an election tomorrow, I wouldn’t be voting conservative.”
Faith Pring, a recent Spanish and Linguistics graduate, said: “I don’t think it would be right to lower the salary needed to pay back your student loan.
“Whilst I admit it is a rather high salary that you would need, I’ve known many people who have been put off attending university due to the high tuition fees and loans.
“It gives those from a less fortunate economic background a disadvantage because those are the ones that need the financial support.
“If it were means tested, it might be preferable, but taxing someone based solely on their income is hard to do, and lowering the amount will only make things worse.”
The Department for Education has been approached for comment.
Lead Photo: Dave Strom / Flickr