Student Finance Shake-Up in England 2023
You may be asking yourself, has student funding changed? The answer is yes. There have been three recent changes to student funding in England. If you’re hoping to start university from September 2023, it’s important to read about the changes to student loans in England. At Host, we’ve looked at the new student loan changes and outlined what we think you should pay particular attention to before you start your university chapter.
So what are the proposed changes to student loans in England?
1. Start paying off earlier:
The amount you have to earn before paying off the loan has decreased.
Students in England were originally supposed to start repaying loans from Student Finance England when they start earning more than £27,295 a year. This reduced by £2,295 to £25,000. This means that students starting their studies from September 2023 who earn more than £25,000 a year after graduating must start repaying their loans. Graduates are likely to start paying off their student loans earlier in their careers. If you find yourself earning less than this new limit when you graduate, you won’t be expected to start making repayments. Although those earning more than £25,000 will be paying back their student finance. The more you earn, the more you pay and faster.
Find out more about repaying your student loan at gov.uk.
2. Paying off longer:
Graduate students will have 40 years to repay their student loans.
The current repayment period for a student loan in England was 30 years from the year of graduation. This means that if you still have to repay the entire loan 30 years after graduation, the debt is erased. This period was extended by ten years. Students from England starting University from September 2023 will now have to repay their loans over a maximum of 40 years. Paying off for the next ten years probably means you’ll be paying back most of your working life. This extension could result in low and middle income earners paying longer, while the highest earners are likely to be able to repay within 30 years and be less affected.
Are you ready to apply for your student loan? Find out how your parents’ income can affect your loan.
3. Lower interest rates:
Interest rates for new students will decrease in line with inflation.
For current students and graduates, student loan interest rates are above inflation (RPI +3%). Interest rates will be controlled to match the Retail Price Index (RPI), a measure of inflation that tracks the cost of everyday items. If you never earn more than £25,000 a year after you graduate, you’ll never have to repay your loan, so you won’t be affected.
Martin Lewis of Money Saving Expert recently explained when talking about the current higher and further education system that the state pays 40p in the pound while a student pays around 56p. When we switch to the new system in September, the state will pay 19p in the pound and the student will pay 81p. Graduate tax will mean 9% for those earning more than £25,000 a year.
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