Martin Lewis has explained how changes to student loan repayments will impact freshers beginning their studies this September.
The Money Saving Expert joined Susanna Reid to co-host Wednesday's edition of Good Morning Britain (June 28), answering viewers' money questions. A couple of the segments were dedicated to the cost of university - including the new student loan repayment system in England.
It will see future graduates repay more of their student loan over a longer period of time. Martin compared it to the system in place for current students, explaining: "From the April after you leave university, you start to be eligible to repay the student loan.
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"On the current system, you repay nine percent of everything over £27,295. From the new system, it will be nine percent over £25,000."
He continued: "If you earn £30,000 on [the current] system, you're repaying £243 a year. On the new system, you're repaying £450 a year. So you're effectively paying £207 a year more, every year once you're above the threshold on the new system. You pay back more - that's the first thing to understand."
Martin went on to explain the other 'impactful' change being made; new students will have to pay off their loan for up to 40 years. This is a 10 year increase on the current repayment period of 30 years.
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"In practice, that means the vast majority will be repaying for most of their working lives," Martin said. But the Money Saving Expert suggested another way to look at the loan for those worried about the cost.
While the student loan is technically a debt, he advised to look at it as a tax instead. "Only the highest earners will clear it substantially before the 40 years," he added.
Addressing concerned parents, he said: "Don't think about this as £50,000, £60,000 worth of debt. Think about it as "my child will go to university and will pay an additional nine percent of tax." I'm not saying that's cheap, I'm just talking about the practical way you need to frame it.'
Last year saw a record level of university applicants, with 767,000 applying for full time undergraduate courses in the UK. Around 560,000 of these applicants were accepted, according to figures from the House of Commons library.
In the 2021-2022 academic year there were 2.86 million students at UK higher education institutions in total.
