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.
The new system will mean that future graduates will repay more of their student loan over a longer period of time. He compared it to the system that is currently in place for 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 9% of everything over £27,295. From the new system, it will be 9% 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 then explained the other impactful change being made to new students. They will have to pay off their loan for up to 40 years which is a 10 year increase on the current repayment period of 30 years.
He said: “In practice, that means the vast majority will be repaying for most of their working lives," but the Money Saving Expert suggested looking at student loans as a tax instead.
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."
A record 767,000 university applicants applied for full time undergraduate courses in the UK last year. 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.
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