UK Government Considers Increasing Student Loan Repayments To Cover COVID Costs
Student loan repayments in England could rise to aid the recovery from COVID-19 and other public finances, according to plans being considered by the Treasury.
Recent reports suggest English universities and students are looking at steep cuts in funding in the coming months in the wake of the pandemic and increasing student loan debt, said to be growing by around £10 billion every year.
In order to alleviate the weight of unpaid loads prior to their expiry, depending on which repayment plan you fall under, the government is reportedly considering upping the payments across the country.
Measures being considered by the Treasury include lowering the income threshold at which money is taken from your pay slip towards your student loan, or extending the repayment window beyond the 30-year mark before they loan is written off, The Times reports. Under the lowest plan, you must be earning £382 a week or £1,657 a month before you start paying back.
Ahead of this autumn’s spending reviews, a vice-chancellor told The Guardian things were ‘looking horrific’ for universities. With the government considering dropping tuition fees from £9,250 to £7,500, previously suggested by the Augar review, institutions will be concerned how that would affect the majority of their income.
Unpaid loans are forecasted to reach $20 billion annually within three years. With this, the Treasury has extra concerns over Prime Minister Boris Johnson’s ‘lifetime skills guarantee,’ which would see extra loans in an effort to provide all adults in England with four years of education and/or training. Putting pressure on student loan repayments would pave the way for more adult loans.
This comes as a result of the ‘Rab charge’, which estimates the bulk of unpaid student loans could severely impact public finances. ‘The Treasury is now being driven by the Rab charge, without really looking hard at why the graduate labour market is struggling so much,’ one vice-chancellor said.
‘We know something is coming and that it’s going to be bad. We just don’t know what it is yet,’ they added.
The student loan system has already been criticised as it is, never mind lowering the threshold, with some people struggling under the weight of six-digits worth of debt made heavier by interest.
Labour’s shadow universities minister Matt Western told Mirror Online: ‘This deeply flawed system, combined with the Conservatives’ abolition of the maintenance grant, often leaves the poorest students graduating with the most debt, deterring others from applying to university altogether.’
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