Students who started uni post 2012 to repay £4,500 more as Government freezes loan repayment threshold until 2025
Current and former students on Plan 2 loans face much higher repayment costs following sweeping changes made by the Government today (24 February). These students will end up paying roughly £4,500 more over the life of their student loan on the back of further freezes to the repayment threshold.
The current threshold means you pay 9% of everything you earn above £27,295. It was then due to increase to £28,550/yr in April this year but in January the Government said it would freeze the threshold at £27,295.
However, under new plans announced by the Government, the threshold will remain frozen until April 2025. This means that students on Plan 2 loans, those from England and Wales who started university in or after 2012, including current students, will pay back thousands of pounds more.
The Institute for Fiscal Studies had previously worked out that because of the initial freeze, mid-earners could end up paying roughly £2,000 more in total. But the extra few years means these students could pay back roughly £4,500 more in total.
In an episode of The Martin Lewis Money Show broadcast earlier this month, MoneySavingExpert.com founder Martin Lewis explained why the freeze will mean you'll end up paying more.
Martin explains the impact of the threshold being frozen
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