Government Makes Controversial Updates To Student Finance & Access To University

Government updates to the way student loans are repaid have been on the cards since 2018, but now the final changes have finally been announced.

Today, the government published its long-awaited response to the Augar review of higher education funding, letting us know what their plans are.

Why are they making changes?

As of the end of March, the outstanding student debt will be at £161 billion a pretty big number that's set to rise to a quarter of a trillion by 2043.

The idea is, that by making changes now, the government can make this debt more manageable for future generations.

They have also said they want to make the system fairer, with access to some form of education for everyone, while also getting rid of some university courses that aren't seen to benefit students in the long run. It remains to be seen whether this will actually be the case.

What are the changes?

1. Student loan interest rate set at RPI+0%

The student loan interest rate will be set at RPI+0% for new borrowers this will be for courses starting from 2023/24.

This will mean that the next generation of graduates will no longer repay more than they borrowed in real terms which is pretty great. This meets a key manifesto commitment to address student loan interest rates in this parliament.

Currently, students pay back their student loan, plus inflation+ 3% in-study interest rate which means that many graduates will never pay back the full amount, with the debt mounting up over the years.

2. Repayment threshold lowered to £25,000

Instead of repaying your student loan when you start earning £27,295, this will now be lowered to £25,000 from 2023. This means that students will start repaying their loans far sooner than previously.

On top of rises in national insurance, this could mean that graduate incomes are significantly reduced.

With two-thirds (69%) of students saying they're worried about being able to afford the basic living costs at university, while over half (54%) are concerned about covering the costs of studying.

These extra pressures will add to the growing financial concerns affecting student mental health.

3. Repayment period extended to 40 years

Currently, student debts are written off after 30 years while this is still a long time, pushing this up to 40 years will mean that graduates are paying back the loan for their entire working life.

This leaves less money for pensions and other savings, such as putting your own children through university. The 40-year rule will come into effect for students starting in September 2023 and the government has justified the rise by saying that we're all living and working longer, so can afford to pay back for longer too.

4. Fees capped at £9,250

Student university fees will be capped at £9,250 for the next two years. This is probably one of the only good bits of news to come out of the review. This would be up to and include the student intake of 2024-25.

5. Paths reviewed for young people

Perhaps the most controversial point to come from the review is the government's idea to refuse university student loans to those who failed their GCSE Maths and English exams.

They'll also be looking at removing courses that are seen as 'poor quality' or that aren't seen to benefit students in the long run. This will include limiting foundation courses to college rather than as a way to access university.

Instead, they're offering a Lifelong Loan Entitlement (LLE) worth the equivalent of four years of post-18 education (i.e. £37,000 in today's fees) to support students to study, train, retrain or upskill at any stage throughout their lives through flexible and modular courses.

It's unclear as to whether this will be worth the same as a university degree and would block students from low-income backgrounds, who are young carers, are facing familial displacement, or who are otherwise disadvantaged will be unable to access university education.

How are students responding?

This has obviously enraged students, with many speaking out against the injustice of removing access to further education purely because of their exam performance on the day.

The social post above by Student Beans on the topic also elicited some outraged responses:

This is ridiculous. I am a second year university student doing really well getting firsts in my essays and I've not got my maths GCSE and I can still excel

It completely discriminates against people with developmental disabilities or neurodivergent people that may have struggled in school but have many talents and skills to contribute to society but need to access funding.

I failed maths at school, it's now 8 years later and I'm doing a law degree which I'm excelling at. I wouldn't have been able to do this without my student loan!

It's safe to say that these changes, while packaged as beneficial for students, are mostly only helpful in reducing the national student debt and may ultimately leave graduates worse off.

Join in with the conversation on our social posts, or if this news is worrying you, then reach out to your university guidance team for support.

If you're unsure on anything to do with student loans, or have any concerns, you can check out our detailed student loan guide.