Finance guru Martin Lewis has broken down the changes being made to university loan repayments that will affect new students from September this year. Speaking on Good Morning Britain with host Susanna Reid during Wednesday's episode (June 28), the Money Saving Expert founder listed the alterations freshers can expect later this year.
He kicked off by discussing the cost of university and pointing out the new student loan repayment system in England. The new system means future graduates will be able to repay more of their load across a longer period of time.
Comparing it to the current system in place, Martin said: "From the April after you leave university, you start to be eligible to repay the student loan. 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.
"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."
The money expert also spoke about another 'impactful' change coming into force, which see students having to pay off their loan for up to 40 years. This is a 10 year increase on the current repayment period of 30 years, as reported by Manchester Evening News.
He continued: "In practice, that means the vast majority will be repaying for most of their working lives." However, Martin did mention another way to look at the loan for anyone concerned about the cost.
Although student loans are essentially a debt, he told viewers to see them more as a tax. "Only the highest earners will clear it substantially before the 40 years," he explained.
Touching upon concerns parents may have, 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."
In 2022, a record number of students applied for university, with 767,000 applying for full time undergraduate courses in the UK. According to data from the House of Commons library, about 560,000 of these were accepted. In the 2021-2022 academic year there were 2.86 million students at UK higher education institutions in total.
