Department for Education releases plans to reform student loans
24 February 2022
On 24 February 2022, Secretary of State for Education, Nadhim Zahawi, and Minister for Higher and Further Education, Michelle Donelan issued a press release detailing student loan reform.
For new borrowers, starting courses from the 2023/24 academic year, Interest rates will be set at RPI+0% to ensure graduates do not “repay more than they borrowed in real terms”. This is stated to meet the manifesto commitment of addressing interest rates of student loans.
Tuition Fees will be capped at £9,250 for another two years, up to 2024/25 inclusive.
Borrowers starting courses from September 2023 will have their repayment threshold set to £25,000 until 2026/27. There is no mention in the press release as to if this will require an addition plan type, perhaps plan 5, to embed this with the current student loan plans.
New borrowers from September 2023 will also have their repayment term extended to 40 years to ensure more student loans are repaid in full. This is an increase of 10 years over the write off period current borrowers would face.
The government will be publishing two consultations seeking views around student loans. The first looks into how to encourage young people to choose the right courses that do not lead to poor outcomes and employment opportunities.
The second explores plans to implement a Lifelong Loan Entitlement (LLE) worth the equivalent of 4 years post-18 education. This would “support students to study, train, retrain or upskill at any stage throughout their lives through flexible and modular courses”
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