Is a degree holding young people back?

Young peoples hopes of getting on the property ladder without turning to the Bank of Mum and Dad took another hit recently, after a proposed government policy change.

Tenants Contents Insurance from just £3.12

  • ✓ Covered up to £30,000
  • ✓ Flexible monthly policies
  • ✓ No hidden fees
Get a quote
First time Buyer mortgage

Changes to the threshold at which students start repaying their student loans are set to lower, so many will find themselves paying back student debts through the tax system out of a much smaller pay cheque. 

Currently, graduates begin paying their loans back when they earn £27,295 or more a year, but ministers are thought to be considering reducing that figure.

The proposal comes as vice-chancellors from several British universities announced that they have written to the government to collectively say that the interest on student loans should be scrapped for the next 15 months.

Michelle Donelan, the Universities Minister, has urged everyone to take a look at the bigger picture. She said:

We will make sure that we are supporting the students who are most in need by getting cash into those students’ pockets, which today’s announcement still achieves.

We continue to monitor the situation and will look at how this affects students in the coming months.

When applying for a mortgage, all applications take into consideration ‘any other debts,’ and vet the applicant on their ability to repay. Ben Waltmann, a senior research economist at the  Institute for Fiscal Studies (IFS), believes that this will have a real impact on property purchases moving forwards. He mentioned that a large majority of graduates will never pay off their student loans, lowering the repayment threshold to £23,000 is effectively a tax rise on graduates with middling earnings worth nearly £2 billion a year.

Making his comments to PA, he said that under this policy, a graduate earning £30,000 a year would have to pay around £400 more per year . Which is to be added on top of more than £500 more in National Insurance contributions under the plans for health and social care announced earlier this month (counting both employee and employer contributions).

Hillary Gyebi-Ababio, vice president for higher education at the National Union Of Students (NUS), has also waded in on the argument. She said:

Like the Government’s decision to increase National Insurance contributions, this burden targets people earning lower incomes – after 18 months of such hardship, and with the looming hike in energy prices set to hit millions of the most vulnerable this winter, the injustice is simply astounding.

They should get their priorities right, end the marketisation of the higher education sector, and scrap tuition fees.

The IFS said also noted that lowering this repayment threshold would cause a “substantial burden” on young graduates.

The issue is scheduled to be debated this week at the Labour party conference.

Comments 0


Tenancy deposit
Money shield
Local heroes
Approved code
Property ombudsman
Open banking
Mashroom is an appointed representative of Adelphi Insurance Brokers Ltd. Adelphi Insurance Brokers Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Their Financial Services Register number is 594620, with permitted business activities being introducing, advising, arranging, dealing as agent, assisting in the administration and performance of general insurance contracts and credit broking in relation to insurance instalment facilities. You may check this on the Financial Services Register by visiting the FCA’s website, or by contacting the FCA on 0800 111 6768