Irish Government to Part-Fund University Housing
25th Nov 2022
The government are proposing changes to student loan repayment periods as part of their much-anticipated response to the Augar review of post-18 education and funding. Changes would affect students due to start university from September 2023.
Under the current system, graduates start repaying loans when they reach an income level of £27,295, and the loans are written off after 30 years.
The proposed government changes mean that new students could be paying off their loans for 40 years after their graduation, in what is being referred to as a "lifelong graduation tax".
Graduates will also have to start paying off their loans sooner, as the repayment threshold would be cut to £25,000.
The government have said that the changes to the repayment period will reduce the bill for taxpayers. The number of students attending university is at an all time high, and only 25% of students who enrolled in full-time undergraduate courses in 2020 are expected to fully repay their loans.
According to the government's Student Loan Statistics report released in December 2021 "The average debt among the cohort of borrowers who finished their courses in 2020 was £45,000." At the end of March 2021, £161bn was yet to be paid back in student loans. This has been forecasted to rise to £500bn by 2043.
The proposed changes will significantly increase the number of graduates fully repaying their loans, from the current 23% to 52%.
Along with the proposal, the government have stated that annual tuition fees will remain capped at £9,250 for a further 2 years.
They have also said that interest rates will be cut to match the Retail Price Index (RPI). Currently student's interest is RPI plus up to 3% while attending university, and varies depending on income from the April after graduation. The government have said that this means "that graduates will no longer repay more than they borrowed in real terms".
The Department of Education have said that the proposed changes would "rebalance the burden of student loans more fairly between the student and the taxpayer and ensure that in future graduates don't pay back more than they borrowed in real terms".
However, Labour's shadow education secretary, Bridget Phillipson, has called the proposal a "stealth tax for new graduates starting out on their working lives, which will hit those on low incomes hardest".
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