Martin Lewis warns people against student loan repayment
A warning has been shared by the founder of Money Saving Expert to people who have their student loans to repay, following the announcement of a student loan repayment threshold.
The reaction from Money Saving Expert founder Martin Lewis came after it was announced that graduates from England and Wales who started university in 2012 or later are likely to have to pay more.
It is estimated that students are likely to have to pay around £110 a year more than they would have from April, reports Manchester Live.
Read more: Norfolk News
It comes amid plans to freeze the student loan repayment threshold – the income level at which loans begin to be repaid.
Michelle Donelan, Minister for Further and Further Education, announced on Friday that the salary threshold for student loan repayments in England will be frozen at current levels of £27,295 per year, £2,274 per month or £524 per week for 2022-23.
Some experts have said the freeze represents an increase in real terms of £150 in the amount to be repaid each year.
Martin, who has consistently warned against retroactive student loan modifications, explained the situation in his
latest Twitter thread and video.
Although a “freeze” generally sounds like a good thing, Martin said it really means, in reality, that most graduates will end up getting worse every year, ECHO reports.
The current loan repayment threshold is £27,295 and those with student loans will repay 9% of anything over that threshold.
Next year, however, the threshold will rise to £28,550. This is an increase of 4.6%.
Because the majority of people don’t repay their student loans in full, paying 9% of anything over the threshold for 30 years, before any remaining debt is cleared, most graduates will be made worse by the freeze.
If you want to stay up to date with all the latest news, reviews and features from our beautiful county, you can sign up for our daily newsletter, for a daily digest as well as the latest breaking news delivered straight to your inbox. .
By signing up for the NorfolkLive newsletter, you’ll get the latest news straight to your inbox every day.
It couldn’t be easier and it only takes a few seconds – just click here, enter your email address and follow the instructions.
You can also enter your email address in the box below the image on most desktop and mobile platforms.
An estimated 17% – the highest earners – repay their student loans in full.
Thus, as long as the threshold is raised, these people will repay less.
Everyone else will lose an extra £110 each year, paying off far more than they would have made in total.
Martin said, “Higher-earning graduates will benefit, and low-to-middle income people will pay more.”
If implemented, the change represents a break from previous policy made by the government in 2010 and agreed by former prime minister Theresa May in 2017 that the threshold would be raised each year “in line with average annual growth revenues “.
Find out how you can get more NorfolkLive news straight to your inbox for free HERE.