Lowering student loans repayment threshold is cruel

9 October 2021

By Imogen Marchant

The student loans payback threshold is reportedly about to be lowered, with proposals suggesting that changes to the finance system will be some of the largest since 2012.

Currently, graduates begin paying back their loans once they earn an annual income of £27,295 or more, but ministers are intending to lower this figure, according to The Independent.


The Higher Education Policy Institute modelled one potential change which would see graduates paying loans back as soon as they earn £20,000 this year (really?!). A recommendation from the 2019 Augar review of post-19 education said the payback threshold to £23,000.

The proposed government amendment, however, sits at £25,000 per year. 

All of this comes at a time when graduates are being hit with an increase of at least 42.25% in National Insurance payments, following the introduction of the recent health and social care levy.


As it is, only £8.3 billion of the total £17.6 billion lent is forecast to be paid back in the 2021/22 financial cycle. That’s 52.84% of loans that are will not be paid back.

What this means is that graduates are about to be hit with a tight squeeze. For context, the average graduate starting salary is £24,000 per year, but let’s use London as an example, where this figure stands at about £27,256. Conveniently, the point at which one starts paying back the large accrual of student debt.

The average rent for a room in a shared house in London is £8,472 per annum, and the yearly London spending average works out at about £10,000 – not including taxes. That totals a cool eighteen-and-a-half grand of that appealing looking £27,000 before taxes.


I can see why the government is rubbing its hands together with glee at the thought of dipping into the leftover yearly sum. 

This might be fine if you plan on living frugally and not putting anything into savings because you’re busy paying back your student loan. However, the above calculations don’t include water, electricity or gas bills, and puts the price of a meal at an “inexpensive restaurant” at £15.

I don’t know when whoever made this handy calculator last went to a London restaurant, but if I was only paying £15 for a salad and a glass of wine, I’d be jumping up and down like a leprechaun.

God forbid that you do a masters, which costs about £25,000 a year including rent and living expenses, and which you have to pay back immediately after graduation, whatever your financial status. However, all just about affordable, in theory.


Add in this new crunch from both National Insurance and a lowering of the graduate payback threshold, and the financial landscape starts to look scary. 

As we know, repaying the government’s Covid measures has to come from somewhere. However, it seems a little callous to tax those who have been hit by the pandemic the worst. Students have already been abandoned by the government – paying rents for houses that they weren’t living in, putting up with Zoom University without a reduction in fees, and no way of working in the hospitality sector that usually fills the gap between student loan and living costs.

Recommended Reading: Logging out of online learning


Lowering the graduate loan threshold for a demographic that the government wants to be the next generation of leaders, thinkers, and politicians rings unfairly, if I’m entirely honest.

Changing the goalposts for those who have already made the decision to get into debt to pursue education based on current statistics is uncomfortable, and seems undeniably cruel. It hits those who want to go into creative work – such as publishing, journalism, or gallery curation – the hardest. 

It’s been met with outcry all over social media, with the National Union of Students saying it would be “totally opposed” to the suggested action. For a government that insists on the accessibility of university, this is nauseating but unsurprising. I’ll hold out hope that it’s all a fever dream.

Like this article? Please share!