By Kate Brown
English and Welsh students who took out student loans from September 2012 (when University fees in England rose to £9,000 a year) will now start to pay back their loan when they earn £25,000 a year instead of £21,000. The change will also lower the repayments of those earning over £25,000 as the percentage of salary paid back will be on a smaller amount.
According to The Department for Education, some 600,000 graduates will benefit over the next financial year alone, with yearly savings up to £360. Research from the Institute for Fiscal Studies (IFS) found that raising the repayment threshold to £25,000 has meant that middle-earning graduates are benefited most with approximate savings of up to £15,700 in repayments over their lifetime. It is also predicted that lower-earning graduates will see a smaller reduction in lifetime repayments as they will likely earn below the threshold for a significant part of their career. High-earning graduates who repay their loans in full will see a reduction in yearly repayments.
Economist Laura van der Erve from the IFS said: “Overall, repayments will fall by around £10,000 for the average graduate as a result of the threshold increase”. The National Union of Students welcomed the change and said it was a “relief” for many.
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