Graduates Face Repaying Double Their Student Loans

Fri, 18 Mar 2011

Hundreds of thousands of graduates in England could be forced to pay back almost double the amount they borrowed on their original student loans, new figures have suggested.

Data collected by leading accountants for the BBC has revealed that under the new fees system undergraduates who take out a £39,000 loan for a three-year course could find themselves repaying up to £83,000 in cash terms.

In addition, the government has confirmed that parents who try to help their children by clearing some of their debt could face penalties.

However, the coalition insists the new system is fair and will reduce the burden on graduates, who currently only have to start loan repayments when their annual income exceeds £15,000.

Speaking to the BBC, universities minister David Willetts, said: "What we are looking at is whether, if people wish to repay early having taken out a loan, there should be any payment for that and on that we are going to be consulting people to seek their views."

"The question on which we will consult is whether or not there should be a penalty for people."

Defending the new fees system, which is due to come into force in September 2012, he added: "For many people, what will matter the most will be the size of the monthly repayments and those, of course, are lower under our proposals than the current schemes because you start paying back when your earnings are more than £21,000 and you only pay 9 per cent of anything above £21,000."

"At the moment you start paying back when you're earning over £15,000, so people's monthly repayments will be lower under our scheme. I fully accept that, in turn, means that you'll be quite possibly making those monthly repayments for longer."
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